-
Fifty-two percent of executives rate their organization's artificial intelligence (AI) maturity at four out of five (with five considered most mature), yet the same number say the rapid adoption of new and emerging technologies is keeping them up at night.
-
47% of Leaders plan to increase their investments in generative AI (GenAI) or AI machine learning (ML) in 2024 (up from 31% in 2023).
-
Nearly half of consumer packaged goods (CPG) executives say supply chain and sourcing transformation will create the most value in the next year.
Ernst & Young LLP (EY US) today announced the release of its second Consumer Goods & Retail Executive Pulse, highlighting that CPG and retail industry leaders are under pressure to showcase their AI proficiency and continue to focus on investing in technology modernization and innovation to identify new avenues for growth.
Surveying more than 250 U.S. executives across the retail and CPG industries, The Pulse found that 74% of executives rate their company's AI maturity at 4 or 5 on a 5-point scale. But fears around the pace of AI adoption, combined with where companies stand from an investment standpoint, may call that view into question: 52% note that the rapid adoption of new and emerging technologies still keeps them up at night. Additionally, 47% of executives plan to increase their investment in GenAI or ML over the next year, up from 31% in Pulse at the end of 2023, as strategic investments finally begin to ramp up.
Read also: AMD Acquires Silo AI, Expanding Enterprise AI Solutions Globally
“AI's incredible opportunity offers CPG and retail executives the ability to mine data, create new efficiencies and streamline operations in ways never before imagined, while opening up new avenues for growth and innovation. However, AI and GenAI technologies are still in their infancy, and while investments in this space can create differentiating value, progress won't happen overnight,” he said. Rob HalstonEY Americas Consumer Goods Sector Leader.
“Many brands and retailers are still in the testing phase of use cases and must balance the pressures of progress with the realities of the journey towards a responsible, strategic and long-term AI agenda,” he continued. Mark ChambersEY Americas Retail Leader.
The use cases for AI are compelling: 41% of retailers and brands grappling with shrink challenges say AI and enhanced predictive analytics are the most effective solution over any other prevention method. Additionally, one in three (33%) executives are using AI to drive personalization of customer experiences, improve decision support for forecasting and scenario planning, and customer service chatbots. But the opportunity to incorporate AI to accelerate strategic imperatives could be even greater.
Read also: Security Compass Expands Industry-Leading AI Security Content and Introduces AI-Powered Navigator Beta
Additional findings from Pulse include:
With profitability and margin pressures remaining the top concern (53%), leaders are looking to the supply chain as a source of value.
Supply chain continues to take center stage as leaders, especially those at CPG companies, understand the value it can bring to their organizations. In fact, 47% of CPG leaders believe supply chain transformation will bring the most value to their organizations in the next 6-12 months, compared to only 27% of retail executives. At the same time, when asked the top three areas in which they plan to invest the most, supply chain operations (21%) dropped off the list for CPG leaders, falling behind inventory loss (43%), talent (40%), technology (36%) and direct-to-consumer (34%). While supply chain can help drive and improve cost optimization in the short term, it’s also important to think long term, with 45% of CPG leaders saying they are working to build a more efficient supply chain. Supply chain can be leveraged as an essential growth driver.
“Historically, supply chain has been viewed by many CPG leaders as a way to cut costs from their business,” says Holston, “but as companies look to increase sales volume, innovate and develop new revenue streams, supply chain transformation represents a significant growth opportunity.”
Cost optimization has been a key focus for the retail and CPG industry for years, but companies are shifting focus from cost to growth.
Further investing in revenue growth opportunities tops CPG companies' (57%) and retailers' (43%) approaches in response to the current economic environment. In fact, 66% of CPG and retail leaders plan to invest significantly in alternative revenue streams over the next two to three years.
You can't talk about AI without data.
Leaders are turning to data to drive profits and generate customer loyalty. 42% of executives believe the shift to online shopping has influenced their business strategy by forcing greater rigor and investment in consumer data. However, when it comes to data, security must remain a top priority: 25% of leaders will increase investments in cybersecurity, and 31% agree that data security is paramount to the consumer experience in 2024.
“Retailers understand the immense value and potential of consumer data to increase customer lifetime value, but contradictions remain: consumers are still hesitant, in some cases, when it comes to the safety of sharing their data,” says Chambers. “Everything from inventory and product management to in-store and e-commerce experiences is powered by data, along with the technology and AI applications that enable it, so companies that can leverage data without jeopardizing consumer trust will have an advantage.”
Read also: Survey finds only 20% of senior IT leaders are using generative AI in production
[To share your insights with us as part of editorial or sponsored content, please write to psen@itechseries.com]
