Automation, Cost Pressure and Sustainability Reshape Retail Packaging

New research from Smithers, the global authority on the packaging industry, finds that global retail was worth approximately $29.2 trillion in 2025, with growth slowing to an estimated 3.8% as inflation and cost-of-living pressures made consumers more price-sensitive and selective. According to its latest report, The Impact of Retail Trends on Packaging to 2031, automation, data, sustainability, value and cost pressures are now converging to reshape retail packaging over the next five years.

Growth remained strongest in value goods and essential items, while discretionary spend and luxury categories weakened. The report identifies five trends shaping the packaging industry’s trajectory to 2031.

Automation is moving packaging from a static asset to a dynamic part of the retail AI ecosystem. As retailers scale dark stores and micro-fulfilment centres, robotics and AI vision systems are demanding greater consistency, predictability and machine readability. By 2031, packaging is expected to carry machine-readable identifiers and digital product passports as standard, with modular, consistent formats enabling packs to move quickly and reliably through automated sortation and fulfilment systems.

Packaging is also becoming a data and engagement platform. Retail-integrated smart packaging is turning the pack into a traceability tool and authentication device, with image systems able to capture information directly from packaging. Brands and retailers that adopt these features stand to gain measurable lifts in loyalty and reduced counterfeiting.

Sustainability requirements are converging. Plastic reduction, EPR, reuse and refill systems, and anti-greenwashing scrutiny mean packaging must deliver measurable circularity – higher recycled content, mono-materials or proven reusability – while still meeting automation and protection needs. Regulation is reinforcing this shift, with EPR-driven redesign and mandatory digital labelling standardising on-pack information and turning packaging into a compliance vehicle as much as a brand asset.

Value and premiumisation are pulling packaging in two directions at once. Shoppers are seeking value through private-label growth and pack-size engineering, whilst also paying premiums for quality perception and convenience. Packaging must therefore deliver cost-engineered simplicity for value tiers while offering premium cues, such as easy-open and resealable features, that justify higher margins elsewhere.

Cost pressure is reshaping vendor–retailer relationships, and the report identifies the resulting margin squeeze as arguably the key challenge facing packaging vendors. Inflation in labour, energy and logistics, combined with retailer consolidation and longer payment cycles, is placing acute working capital strain on vendors, who must also hold higher inventory to meet demand without failing on lead times. Those able to engineer cost-efficient, automation-ready and traceable formats will be best placed to respond.

The Impact of Retail Trends on Packaging to 2031 provides comprehensive analysis and forecasts on the automation, sustainability, regulatory and cost pressures reshaping retail packaging, along with recommendations for vendors navigating the shift.