- 52% of executives rate their company a 4 out of 5 in terms of
artificial intelligence (AI) maturity (with 5 being considered
"most mature") yet an equal number note that the rapid introduction
of new and emerging technology keeps them up at night.
- 47% of leaders plan to increase investment 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 procurement transformation will create the most
value in the coming year.
NEW
YORK, July 10, 2024 /PRNewswire/ -- Ernst &
Young LLP (EY US) today announced the release of its second
Consumer Products and Retail Executive Pulse, which highlights the
pressure that CPG and retail leaders are under to showcase AI
proficiency, with a continued focus on technology modernization and
innovation investment and identifying new levers for growth.
The Pulse, which surveyed over 250 US executives in the retail
and CPG industries, found that 74% of leaders consider their
companies to be AI mature (rating themselves a 4 or 5 out of 5).
But the anxiety surrounding the pace of AI coupled with where
companies are from an investment standpoint, may call that
perspective into question. Fifty-two percent still note that the
rapid introduction of new and emerging technology keeps them up at
night. Plus, strategic investments are just now starting to ramp up
as 47% of executives plan to increase investments in GenAI or ML in
the next year, which is up from 31% from the Pulse at the end of
2023.
"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, and at the same time
drive new paths to growth and innovation. But AI and GenAI
technologies are still emerging and although investment in this
area can create differential value, progress can't happen
overnight," said Rob Holston, EY
Americas Consumer Products Sector Leader.
"We're still seeing many brands and retailers in the use case
testing phase, and they have to balance the pressure for progress
with the reality of the journey to a responsible, strategic and
long-term AI agenda," continued Mark
Chambers, EY Americas Retail Sector Leader.
The use cases for AI are compelling, with 41% of the retailers
and brands navigating shrink challenges saying AI and enhanced
predictive analytics are the most effective solution, more than any
other prevention method. Further, one in three (33%) of
executives are using AI to drive more personalization in the
customer experience, improve decision support across forecasting
and scenario planning and for customer service chatbots. But the
opportunity to embed AI to accelerate the strategic agenda could be
even bigger.
Additional findings from the Pulse include:
As profitability and margin pressures persist as the top
source of anxiety (53%), leaders look to supply chains as a source
of value.
Supply chain continues to take center stage, as
leaders, especially at CPG companies, understand the value it will
bring to their organizations. In fact, 47% of CPG leaders think
supply chain transformation will create the most value at their
organizations in the next six to 12 months, compared to only 27% of
retail executives. At the same time, when asked the top three areas
they plan to invest most, supply chain operations (21%) fall out of
the running for CPG leaders, falling behind inventory loss (43%),
talent (40%), technology (36%), D2C (34%) and more. While the
supply chain can help drive and improve cost optimization in the
short term, with 45% of CPG leaders saying they are trying to
create a more efficient supply chain, it's also important to think
about the long-term, where supply chain can be leveraged as an
integral growth driver.
"Historically, the supply chain has been viewed as a lever to
take cost out of the business for many CPG leaders," says Holston.
"But supply chain transformation represents a considerable growth
opportunity as companies look to drive increased volumes, innovate
and open new revenue streams."
Cost optimization has been high on the retail and CPG agenda
for years, but we're seeing companies pivot from cost to
growth.
Investing more in revenue growth opportunities
bubbles to the top of CPG company (57%) and retailers (43%)
approaches to responding to the current economic environment. In
fact, 66% of CPG and retail leaders plan to make significant
investments in alternative revenue streams in the next two to three
years.
You can't talk AI without talking data.
Leaders are
doubling down on data to drive profit and create customer loyalty.
Forty-two percent of executives believe the shift to online
shopping has impacted their business strategy by adding more rigor
and investment in consumer data. However, when it comes to data,
security must remain top of mind, with 25% of leaders increasing
investments in cybersecurity and 31% agreeing that data security
matters most for consumer experience in 2024.
"Retailers understand the immense value and potential of
consumer data to drive customer lifetime value. However, an ongoing
paradox remains. Consumers are still hesitant, in some cases, when
it comes to the safety of data sharing," says Chambers. "With data
powering everything from inventory and merchandising to store and
e-commerce experiences as well as the technology and AI
applications that enable them, the companies coming out ahead are
those that are able to capitalize on data without risking consumer
trust."
For more information, visit
ey.com/en_us/consumer-products-retail.
Survey methodology
Ernst & Young LLP commissioned Atomik Research to conduct an
online survey of 254 executives from Fortune 1000+ CPG and Retail
companies throughout the United
States. The sample consists of executives within the
consumer-packaged goods and retail industries who hold a title of
vice president or higher at their organization.
Fieldwork took place between May 10 and
June 3, 2024. The margin of error is +/- 6 percentage points
with a confidence level of 95 percent.
About EY
EY exists to build a better working world, helping to create
long-term value for clients, people and society and build trust in
the capital markets.
Enabled by data and technology, diverse EY teams in over 150
countries provide trust through assurance and help clients grow,
transform and operate.
Working across assurance, consulting, law, strategy,
tax and transactions, EY teams ask better questions to find
new answers for the complex issues facing our world today.
EY refers to the global organization, and may refer to one or
more of the member firms of Ernst & Young Global Limited, each
of which is a separate legal entity. Ernst & Young Global
Limited, a UK company limited by guarantee, does not provide
services to clients. Information about how EY collects and uses
personal data and a description of the rights individuals have
under data protection legislation are available via
ey.com/privacy. EY member firms do not practice law where
prohibited by local laws. For more information about our
organization, please visit ey.com.
Ernst & Young LLP is a client-serving member firm of Ernst
& Young Global Limited operating in the US.
Media contact:
Julia Menefee, EY
julia.peters@ey.com
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