Procter & Gamble (NYSE:PG) is one of the consumer goods companies that has long been a bellwether for the market. But over the past decade, it's been under fire from all sides. Direct-to-consumer upstarts have entered every one of its fields from razors to diapers, while online retail has changed everything about the company's distribution model. 

As fast as the business has changed in the last 10 years, the next 10 will likely be even more disruptive. Here's where I think we'll see the company a decade from now. 

Man shaving with white towel around neck.

Image source: Getty Images.

Where Procter & Gamble stands today

Procter & Gamble has been essentially running in place for the past decade, selling and acquiring companies to try to optimize its business, but revenue hasn't moved much at all. Over the past year, we've seen some signs that the moves are starting to work, and the business is turning around. Organic sales growth in the fourth quarter of fiscal 2019 was 7%, with volume up 3%. With higher margins and lower taxes, currency-neutral EPS growth was 26%.

PG Revenue (TTM) Chart

PG Revenue (TTM) data by YCharts. TTM = trailing 12 months.

You can see that revenue is slowly trending higher, but margins are what investors have been concerned about the past few years -- and they're starting to move higher lately. Now that the ship appears to be heading in a better direction, the company has to battle the changing retail landscape; over the next decade, that'll be its key focus. 

How retail is changing

Today, more and more products are being sold online, taking share from big box retailers, where P&G commands a large amount of shelf space. To make matters worse, retailers are looking for new, innovative products to excite customers. The standard razors and toothbrushes that have stocked shelves for years are being replaced by new brands. P&G faces two threats: direct-to-consumer competition in key consumer goods, and traditional retailers moving to competing brands to try to stoke growth.

The last few years have seen a number of innovations in consumer staples with new products going directly to customers. Dollar Shave Club razors, quip toothbrushes, and The Honest Company cleaning products are just a few of the start-ups that are building brands with direct-to-consumer distribution. They're adding customers through brick-and-mortar channels as well, but they are e-commerce companies first. 

P&G has far more momentum in the old world of product sales with distribution to brick-and-mortar retailers and brands that aren't e-commerce giants. But that's going to have to change in the next decade. With its products, P&G could offer compelling subscriptions to many types of consumers. For example, parents need products like diapers regularly, and those could be bundled with detergent and toilet paper. I think P&G will need to find ways to build a direct-to-consumer business or risk having someone else do it first. 

Acquisitions may be a big part of the next decade

One common strategy in consumer products for legacy companies of late has been acquiring upstarts that are innovating in the market. Dollar Shave Club's sale to Unilever for $1 billion is the best example of acquiring growth and a disruptive business mode. Unilever has only increased its subscription offering since adding Dollar Shave Club, so there are benefits to a new company showing how to disrupt a business. 

In 10 years, it's tough to know what acquisitions P&G will make, but a company like quip or a Grove, which delivers cleaning products straight to the home, would be natural fits. Their most important impact on the company would be a new distribution model, replacing the traditional retailers that Procter & Gamble has relied on for decades. 

Is P&G worth betting on? 

P&G isn't a cheap stock by most standards, with a forward P/E just over 25 and a dividend yield of just 2.4% -- not an easy value stock. But I think the company should get a lot of credit for its market-defining brands in consumer staples and a more than 100-year history of paying a dividend. I'm cautiously optimistic the company can adapt its products and distribution to be a market beater over the next decade, but it could be a rocky road to get there.