Retail and CPG executives recognize the importance of AI.
A new study confirms the ubiquitous presence of generative AI in retail and CPG companies’ technology plans.
The inaugural Consumer Products and Retail Executive Pulse survey of retail and CPG executives from Ernst & Young LLP (EY) reveals that virtually all (99.6%) respondents are experimenting with generative AI technologies in some capacity.
Of respondents experimenting with generative AI, 29% are doing so to remain on the cutting edge of innovation. Four-in-10 (41%) say their company is implementing AI into the consumer experience through employee virtual assistants, with 32% implementing it for product purchase reminders.
Overall, slightly more than half (51%) are turning to AI and machine learning (ML) to automate processes that will drive efficiencies due to the current economic environment.
[Read more: Google: Retailers see promise for generative AI]
Looking at technology holistically, 90% of respondents say their company has plans to increase its investment in IT or emerging technologies over the next year, with AI and ML or generative AI (31%), digital supply chain (21%) and cybersecurity (20%) of the highest priority.
“New channels and technologies — such as AI, Web3 and the yet to be coined — will continue to emerge, diverge and redefine the retail landscape,” said Isaac Krakovsky, EY Americas retail leader. “Retailers need to fortify their foundations in the face of these ever-changing dynamics, and a significant part of that is prioritizing the AI and emerging tech use cases most valuable to the business.”
Economy has impact
Almost half of respondents (48%) say the current economic environment has changed their business strategy, with 53% saying that economic and inflationary pressures as well as keeping pace with constantly changing consumer preferences are among their top three pressures keeping them up at night. Another 51% say profitability and margin pressures are a key source of anxiety.
About two-in-three (65%) respondents plan to make significant investments in industry convergence or alternative revenue streams, with 91% planning investments in alternative revenue streams.
Supply chain draws attention
Forty percent of respondents say creating a more efficient supply chain is a core part of their business strategy, only second behind direct-to consumer/omnichannel (42%). Another 35% rank supply chain resilience in their top three areas to invest most in the next year. Finally, where technology is concerned, 21% say digital supply chain is where they plan to increase investment, ranking only behind AI/ML (31%). Three-in-10 (29%) respondents say that transforming the supply chain is going to create the most value in the next 12–18 months.”
Ernst & Young LLP commissioned Atomik Research to conduct an online survey of 255 executives from Fortune 1000+ CPG and retail companies throughout the U.S. All executives surveyed hold a title of VP or higher at their organization. Fieldwork took place between Nov. 22 and Dec. 6, 2023.
