Five Things Retailers Wish CPG Brands Understood About the Shelf

WHAT LOOKS TO MOST brand-side executives like a routine operations issue has become a key threat to the retailer-brand collaboration.

IHL Group studied major U.S. grocery, drug, mass merchant, and supercenter retailers with annual revenue over $500 million and found something CPG executives rarely hear directly from their retail partners. Two-thirds of these retailers struggle with inventory problems weekly or daily, and they admit that those problems are straining their most valuable brand relationships.

CPG brands don't need another retailer scorecard. They need to see the things retailers are already absorbing that shape every conversation at the category review table, whether or not either side names them out loud, as we do here:

1. The relationship is already strained, and retailers know it first

IHL's Shelf Intelligence Report found that 65% of retailers say inventory problems create moderate to extreme strain on their brand partnerships. The gap is between intention and execution: 65% of retailers call inventory accuracy mission-critical, yet fewer than 22% achieve above 80% compliance on any of the three fundamental shelf metrics, on-shelf availability, planogram compliance, or promotional compliance.

And even those that are growing the fastest are struggling with the same reality. Retailers with the highest sales growth rates report strained partner relationships 87% higher than sales laggards. The faster a retailer grows, the faster the shelf execution gap widens, however, the reasons for strain are often different. Where those struggling with sales often have bad forecasting, the fastest growing retailers often cannot get enough inventory to meet their sales needs.

2. The $1.7 trillion inventory distortion bill lands on both sides of the register

IHL has tracked inventory distortion, the combined cost of out-of-stocks and overstocks, for nearly 20 years. Our most recent edition, Fixing Inventory Distortion: Who's Winning, Who's Failing, and What's Working puts the current global figure in excess of $1.7 trillion annually. That works out to roughly $4.7 billion disappearing from shelves and stockrooms worldwide every single day.

The breakdown matters more to CPG brands than the headline number. Supplier-related problems account for more than $300 billion of that total. Supplier shipment accuracy and case-pack integrity are brand-controlled variables, which means a meaningful share of the $300 billion supplier-related figure traces back to a CPG company's own DC and transportation 

3. Retail media dollars are only as good as the data underneath them

Global retail media network revenues are expected to reach over $55 billion this year. Walmart Connect advertising revenue alone grew 46% year-over-year to $6.4 billion in a single quarter, now representing roughly a third of Walmart's operating income.  Target's Roundel network passed $2 billion in value in most recent reports.

None of that changes the underlying constraint. Retail media unit economics depend entirely on first-party data quality and customer matching accuracy. Retailers with immature customer data platforms are selling a targeting product they can't fully back up. This can be because of operational deficiencies or outright theft. Before shifting trade dollars into a retailer's media network, brands should ask how match rate and data freshness are measured, not just how much reach is on offer.

4. Forecasts both sides know are unreliable still set the order

A May 2026 survey of inventory management professionals by DOSS found that 51% had proceeded with demand forecasts they knew were unreliable simply because no better option existed. Sixteen percent don't formally measure forecast accuracy at all. Sixty-four percent had not deployed AI or machine learning tools for inventory management, and 59% of the non-adopters said AI use simply wasn't a current priority.

In the DOSS survey, TikTok drove 60% of the viral inventory swings reported, and 74% of retailers hit by a viral spike needed one to six months to recover. A brand forecast built on last year's shipment history rather than actual sell-through propagates the same unreliable forecast problem retailers are already fighting internally. Joint business planning sessions should carry a standing agenda item on forecast accuracy, not just volume commitments.

5. Returns have become a shared line item, not a retailer cost center

IHL's global research puts the cost of retail returns at $1.9 trillion annually. Ninety-one percent of retailers report that returns growth is now outpacing their sales growth. While apparel carries the highest exposure of any category, with more than $52 billion in merchandise returned annually, (a figure that exceeds the combined annual revenue of Kohl's and Macy's), returns exposure is hitting every category of retail.

The returns line is already a factor in brand conversations, whether either side names it directly. And as the economy has soured, returns have become all the more critical to the profitability of many retailers. Brands in high-return categories should bring their own return-rate and reason-code data to category reviews before retailers bring it to them. The degree of partnership helps both sides in ways the other might not be fully aware.

What this means for CPG brands

None of these findings make retailers the injured party and brands the cause. IHL's data shows a system where inventory distortion, unreliable forecasting, and returns costs move through both sides of the P&L, tracked or not. The opportunity is to work together proactively rather than waiting to see it show up in tighter terms and greater misunderstanding.

Greg Buzek is President of IHL Group, a global research and advisory firm specializing in retail and hospitality technology. For further resources, click here.