Retail and consumer packaged goods (CPG) companies are rapidly transforming their operations by integrating AI in retail and advanced analytics, according to a newly released report from Information Services Group (ISG), a leading AI-focused technology research and advisory firm.

As companies continue to explore the full capabilities of artificial intelligence, ISG highlights that the most cutting-edge AI tools are just beginning to scale within the sector. However, the upside is substantial those that embrace this transformation are expected to see significant gains in both efficiency and profitability.

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AI and Analytics Powering End-to-End Business Functions

In its 2025 ISG Provider Lens Global Specialty Analytics Services Retail and CPG report, ISG reveals that businesses are embedding data-driven decision-making across every facet of their operations. From product development and merchandising to sales and customer engagement, AI and machine learning are enabling smarter, faster, and more tailored experiences.

Companies are now using AI-powered customer data platforms to analyze consumer behavior, including purchase history and digital activity. This allows for more refined customer segmentation and hyper-personalized experiences. In addition, predictive analytics helps optimize promotions and recommend products with greater accuracy. Dynamic pricing strategies driven by real-time data such as demand fluctuations and time of day are replacing traditional intuition-based models.

Smarter Supply Chains and Creative Innovation

Furthermore, the report highlights that emerging tools are transforming supply chain management. With machine learning, businesses can forecast demand using historical sales, social media trends, weather conditions, and even anomalies like sudden spikes. Some retailers are deploying AI shelf scanners that detect low stock and automatically place restock orders improving inventory control and logistics efficiency.

Retail and CPG firms are also embracing generative AI and agentic AI to automate tasks such as social media content creation, email personalization, packaging designs, and even ideating new products. Some innovators are piloting autonomous AI agents that reroute shipments or update orders in real time based on evolving forecasts.

Specialized Providers Leading the Charge

Specialist analytics service providers are stepping in where traditional firms fall short. By combining deep domain expertise with AI and ML innovation, these partners are guiding retail and CPG businesses through end-to-end transformations. Companies like Fractal Analytics, Tiger Analytics, Tredence, and others have been recognized as leaders, while Sigmoid emerged as a promising rising star.

Manav Deep Sachdeva, principal analyst at ISG, emphasized that “by working with specialized analytics firms, brands not only solve current business challenges but also future-proof their operations for the evolving tech landscape.”

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FAQs

1. What are the key benefits of using AI in retail?

AI in retail enables businesses to deliver personalized customer experiences, optimize inventory, predict demand more accurately, and enhance overall operational efficiency. It also supports dynamic pricing and targeted promotions, leading to higher customer satisfaction and profitability.

2. How does CPG analytics help consumer brands?

CPG analytics allows brands to harness data from various sources sales, social media, customer behavior to improve decision-making in product development, marketing, and supply chain. It leads to faster innovation, more accurate forecasting, and reduced operational costs.

3. What is the role of generative AI in the retail and CPG industry?

Generative AI plays a critical role in automating content creation, designing marketing assets, and even innovating new product ideas. Retailers also use it to personalize communication and enhance creativity in branding, helping companies stay competitive in a dynamic market.

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