Retail and consumer packaged goods (CPG) companies are increasingly embracing generative artificial intelligence (AI) technologies, according to a study conducted by Ernst & Young LLP (EY). The inaugural Consumer Products and Retail Executive Pulse survey reveals that almost all respondents (99.6%) are experimenting with generative AI in some capacity. Of those using generative AI, 29% are doing so to stay at the forefront of innovation, while 41% are implementing AI into the consumer experience through virtual assistants. Additionally, 32% are using generative AI for product purchase reminders.
In light of the current economic environment, over half of the respondents (51%) are turning to AI and machine learning (ML) to automate processes that will drive efficiencies. The survey also found that 90% of participants have plans to increase their investment in IT or emerging technologies over the next year. The highest priority areas for investment are AI/ML or generative AI (31%), followed by digital supply chain (21%) and cybersecurity (20%).
Isaac Krakovsky, EY Americas retail leader, emphasized the need for retailers to prioritize the most valuable AI and emerging tech use cases for their businesses. He also highlighted the importance of fortifying foundations in the face of ever-changing dynamics fueled by new channels and technologies.
The study also revealed that the current economic situation has had a significant impact on business strategies, with almost half of the respondents (48%) indicating a change in their approach. Economic and inflationary pressures, as well as keeping up with evolving consumer preferences, were cited as top concerns by 53% of respondents. Meanwhile, profitability and margin pressures were noted by 51% as a key anxiety.
Furthermore, the survey found that 65% of respondents plan to make significant investments in industry convergence or alternative revenue streams, with 91% planning investments in the latter. In terms of supply chain, creating a more efficient supply chain was considered a core part of business strategy by 40% of participants, ranking second after direct-to-consumer/omnichannel (42%). Digital supply chain was identified by 21% as an area where they plan to increase investment.
The study was conducted online by Atomik Research and involved 255 executives from Fortune 1000+ CPG and retail companies in the US. All executives surveyed held a title of VP or higher at their organizations. The fieldwork took place between November 22 and December 6, 2023.
Overall, the study highlights the universal interest in generative AI among retail and CPG companies, with a focus on leveraging emerging technologies to drive innovation, efficiencies, and improved consumer experiences.
