7 Trends Dominating the Retail Packaging Market

This article was originally published on the blog page of Smurfit Westrock, a global leader in retail packaging. It is excerpted here for Ahead of the Curve readers in packaging trends. Read the complete article on the SW website.

Retailers enter 2026 facing continued volatility driven by AI adoption, tariffs, and shifting consumer behavior. These trends highlight where packaging, merchandising, and supply chain strategy must evolve to stay competitive.

Seeing the potential to streamline business, retailers have quickly adopted AI applications. This only makes sense as it complements the industry's current focus on ecommerce, which is expected to grow from US$6.4 trillion in total sales in 2025 to US$7.9 trillion by 2028. 

Considering these and other factors, our resident retail expert, Leon Nicholas, VP of retail insights and solutions at Smurfit Westrock, generated his list of top retail trends for 2026.

1. Manufacturers and retailers will double-down on tariff mitigation strategies.

Number one on this list is no surprise, as it seems to be the greatest part of any conversation about the global marketplace. While the US administration has been quietly rolling back tariffs on some grocery items, many remain in place and could be re-imposed without much warning. 

Though tariffs have been largely absorbed by manufacturers and retailers to date, Goldman Sachs claims that around 55 percent of them will be absorbed by consumers moving forward. That will leave retailers and manufacturers to absorb or mitigate 45 percent of tariff costs. 

 What this means for packaging: Packaging providers will play a critical role by leveraging both sustainable supply chain optimization and expertise in ecosystem efficiency. “Smart” palletization, eliminating void space with right-size packaging, and redesigning packaging to use less material will be critical drivers for cost reduction. Experienced supply chain analysts can evaluate supply chains for opportunities that generate greater efficiency, reduce costs and lower carbon emissions.   

2. Consumers will seek to offset the impact of tariffs.

Consumers will try to manage the 55 percent of tariff costs left to them, which Goldman Sachs suggests may rise to as much as 70 percent by the end of 2026. With most consumers already feeling the pinch from inflation, Nicholas says they will continue to “trade down” or “trade out” when it comes to purchasing behavior. 

“It’s more expensive to eat out, so instead of doing that, shoppers will trade down, or opt for the frozen pizza category instead, perhaps favoring the premium varieties, as those can be cheaper than eating out. They may cut back on fresh vegetables, but they’ll buy more frozen to compensate,” Nicholas said.  

What this means for packaging: “Displays and shelf merchandising will matter more because brands have to work harder to convey the value proposition to shoppers trading down or out,” Nicholas explained. Thematic and stylistic consistency among primary packaging, retail ready packaging and display signage is one way to drive visibility across in-store media. In addition, brand or attribute blocking on shelves can maximize conversion by driving shopper efficiency.

3. Established brands must pivot under pressure from emerging brands and private label growth.

Consumers are showing they prefer what’s innovative with their wallets. A majority of product innovation is concentrated among emerging brands; while those brands account for less than two percent of market share in their categories, they achieved 39 percent of category growth in 2024, up from 17 percent in 2023. 2025 data will likely show even greater impact.  
 
At the same time, retailers continue to launch more affordable private-label alternatives at the other end of the price spectrum. Private label sales are projected to reach US$277 billion by the end of 2025. In response to consumer demand for innovation, some established brands are adopting a responsive “challenger mindset.” 

“Established brands must operationalize an agile innovation mindset so that they can launch a new product in short order, versus operating with the lengthy testing process that many brands have in place today,” he added. “AI will only take you so far if you can’t operationalize the innovation.” 

What this means for packaging: Agility is the name of the game. Packaging providers need to be able to meet demands from emerging brands, private labels, and large-brand innovators in an accelerated fashion. Development and design teams that can offer rapid prototyping and production in the context of high-impact design will win.   
 
4. Brick & mortar merchandising will stay strong but evolve with greater co-equity merchandising.

While ecommerce continues to grow at a faster pace than brick & mortar, around 80 percent of all shopping still takes place in a physical store; even by 2030, Kantar forecasts that stores will maintain a 76 percent share of sales. However, the power of brick and mortar will not eliminate the need for merchandising to evolve. A new level of in-store merchandising is emerging, emphasizing co-equity drivers that will vary by retailer. “Each retailer will need to assess growth and profitability by category for the three types of brands today: private labels, emerging brands and established brands,” added Nicholas.

At the same time, displays will align more closely with retailers’ increasingly assertive brand propositions, especially for core categories. This will require alignment with retailer marketing themes and taglines in ways that may challenge traditional brands.

What this means for packaging: Insights-driven packaging and display design will extend beyond traditional demographic and attribute analyses to increasingly incorporate a broader framework around equity and conversion power. How can packaging design aid in attaining shelf space in store that has a section labeled “Trending?” Packaging providers with this level of shopper and retailer strategy insights will rise to the forefront in this environment.  

5. Manufacturers will further increase focus on three retail giants.

Kantar reports that Walmart, Amazon and Costco combined will account for a third of all US retail sales and 32 percent of all US online spending in 2025 for the retail chains they track. Kantar expects these same retailers to generate 57 percent of all retail growth through 2030. All three use very different commerce models, each requiring unique approaches for brands wanting to gain access to their marketplaces.  

“Your company must have deep domain expertise in each of these three retailers, leveraging different components of your architecture to align with them,” said Nicholas. “Depending on the retailer, manufacturers must uniquely emphasize AI-optimized media, ecommerce packaging specifications, custom display or just plain price reduction.” 
 
What this means for packaging: Leading packaging suppliers should provide you with expertise on the go-to-market strategies of these retailers and how they are manifested in their respective shelf, display, sustainability and ecommerce requirements. Rely on the seasoning of experts to guide your execution.  
 

6. Connected packaging will broaden its reach.

As connected surfaces multiply, manufacturers and retailers will now be able to capitalize on their investments to support supply chain efficiencies, relying more heavily on real-time traceability. For example, electronic shelf labels (ESLs) will communicate with smart packaging to indicate inventory levels, which can then inform online shoppers about product availability before placing their orders. Connected surfaces will also educate shoppers about how they can recycle products and drive sustainability scorecard accountability for manufacturers and retailers alike. Additionally, we’ll see more use of connected packaging to market to shoppers in dynamic ways.  
  
“If a shopper on dietary restrictions passes by a connected display that engages their mobile device, an AI agent can remind the shopper to monitor certain ingredients and further notify them when scanning the package. The shopper’s agent will guide the purchases in collaboration with smart surfaces,” said Nicholas. 
 
What this means for packaging: Over the next several years, manufacturers should operate on the assumption that all packaging and displays will be connected. Supply chain tracking and display compliance alone will demand it.  In addition, if AI provides a useful recipe for customer engagement, then connected surfaces are a necessary ingredient. Packaging providers must be able to accommodate brands’ and retailers’ need for packaging to act as an interactive portals.  
  

7. Sustainability commitments will deepen.

While the topic isn’t as urgent to current US leaders, commitment across the world has only grown. Consumer demand is increasing steadily, as are regulations requiring sustainability and transparency from producers globally. As a result, sustainability will remain critical to manufacturers, retailers and shoppers in 2026, and, if anything, deepen their commitments.  

"In some cases, the goals have become stricter when you consider extended producer responsibility (EPR) laws in places like California and Europe. The complexity has, therefore, increased,” added Nicholas. 

Furthermore, shoppers, especially in the Millennial and Gen Z generations, express a preference for transparent brands that prioritize sustainability. Not coincidentally, emerging brands’ success with providing greater sustainability further drives share growth among those groups. 

What this means for packaging: Packaging providers must commit to renewable and recyclable options, especially alternatives to plastic packaging, as more regulations against single-use plastics are enacted. Alignment with retailer and supplier scorecards will become more important as both brands and retailers double-down on achieving 2030 commitments.  

The article presented here is only an excerpt; read the full version online. Smurfit Westrock leverages a vast portfolio of primary, secondary and AI-driven insight tools not only to drive design innovation, but also to craft a brand narrative tailored to the equity conversation.