EY: Retail and CPG execs have mixed feelings on AI
A new survey reveals retail and CPG executives are confident about some aspects of their artificial intelligence programs but nervous about others.
According to the second Consumer Products and Retail Executive Pulse from Ernst & Young LLP (EY US), which surveyed more than 250 U.S. executives in the retail and CPG industries, 52% of respondents rate their company a four out of five in terms of AI maturity (with five being considered "most mature"), and another 22% rate their company a five, meaning roughly three-quarters think their organization has a high degree of AI maturity.
However, profitability and margin pressures persist from the first study as the top source of respondent anxiety (53%), and 52% of respondents said that the rapid introduction of new and emerging technology keeps them up at night.
Strategic AI investments appear to be ramping up, as close to half (47%) of respondents plan to increase investment in generative AI or machine learning in 2024, up from 31% in the inaugural study released in January 2024.
[READ MORE: EY: Nearly all retail, CPG companies experimenting with generative AI]
Four-in-10 (41%) respondents saying AI and enhanced predictive analytics are the most effective solution for shrink, more than any other prevention method. Another one-in-three (33%) respondents are using AI to drive more personalization in the customer experience, improve decision support across forecasting and scenario planning and for customer service chatbots.
Interestingly, 47% of surveyed CPG executives think supply chain transformation will create the most value in their organizations in the next six-to-12 months, compared to only 27% of retail executives.
Other findings
- Forty-two percent of respondent believe the shift to online shopping has impacted their business strategy by adding more rigor and investment in consumer data.
- Three-in-10 (31%) respondents that data security matters most for consumer experience in 2024.
- One-in-four respondents are increasing investments in cybersecurity.
"Retailers understand the immense value and potential of consumer data to drive customer lifetime value," said Mark Chambers, EY Americas retail sector leader. "However, an ongoing paradox remains. Consumers are still hesitant, in some cases, when it comes to the safety of data sharing. 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."
