Retailers and consumer packaged goods (CPG) companies are increasingly deploying artificial intelligence (AI): computer systems that can sense their environment, think, learn and take action in response. And the vast majority of those who have invested report substantial benefits — now.
Expectations for this year are also strong: 83% of retailers and CPGs say that AI will become a “mainstream technology” in their companies in 2021. COVID-19 has accelerated AI initiatives in nearly half (49%) of retail and CPG respondents.
The reason for doubling down on AI? It’s delivering, especially for the business.
Half or more of retailers and CPGs with AI investments report current benefits in five key areas: creating better consumer experiences, growing revenue, enhancing employee upskilling, improving decision-making and reducing risks. When we combine those reporting current benefits and those that expect benefits within two years, positive responses hover around 90%.
Why such success? AI’s power to make sense of vast amounts of data — much of it unstructured — is often precisely what retailers and CPGs need to give consumers the experiences, products and services they desire. AI can also provide highly accurate forecasts for consumer demand and supply chain resilience. It can “game out” potential go-to-market strategies. And it is critical to powering remote work and upskilling programs, as well as supporting the cybersecurity that makes all such programs possible.
Yet retailers and CPGs are facing challenges in their AI initiatives — though all have solutions.
The top AI challenges that retailers and CPGs are prioritizing this year relate to operationalizing AI at scale: developing AI models and data sets that can be used across the company, moving AI initiatives from pilot to production and measuring ROI.
Company-wide AI models and data sets not only provide economies of scale, but they also increase the power of AI by giving the models more data and more opportunities to learn. Moving from pilot to production requires skills and technology as well as a cultural shift, new governance and new ways of working. Measuring ROI can be tricky, since benefits may be indirect: a better decision made or a key employee’s time saved.
As you operationalize, it’s important to address new risks. In our survey, about a third of retailers and CPGs (35%) report fully addressing risks and adding necessary controls related to AI data, while 29% report fully addressing possible gaps in AI governance.
Many retailers and CPGs are already AI leaders. With 20% already reporting widespread adoption of processes fully enabled by AI, AI’s time has come. COVID-19 accelerated AI initiatives, which more than 80% of retailers and CPGs say will be mainstream in their companies in 2021.
AI is for the business. At retailers and CPGs, the front office is reporting big benefits from AI, with some top initiatives centering on the consumer experience, dynamic scenario planning to forecast demand and supporting new tools for marketing in a post-cookie, post IDFA world.
Scaling up AI is challenging — but doable. Top AI challenges relate to scaling up AI and embedding it in everyday operations. Yet many retailers and CPGs are finding success in operalizationizing AI through a three-part reorganization.