Understanding The Perception Vs. Reality Gap For AI Maturity
52% of executives rate their company a 4 out of 5 in terms of AI maturity yet an equal number note that the rapid introduction of new and emerging technology keeps them up at night.
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Enterprises have been adopting emerging technologies like AI to keep up with the competition. A number of businesses have taken part in the race of declaring AI maturity and the AI adoption curve in the past six years is a straight upward line. However, new technologies continue to permeate the business landscape at an exponential rate. In this fast-paced evolution, how are leaders keeping up?
Ernst & Young 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 modernisation and innovation investment and identifying new levers for growth.
Consumers goods and retail are two of the fastest growing industries where staying even a single step behind others can cause loss of business. As per the study by EY, 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. 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.
Many companies are still testing use cases for analysing AI’s good fits in their business. However, it is essential to be realistic in mapping the goal with the progress and designing an AI agenda that works well in the long run.
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 personalisation 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, cites the study.
Other key ways that business leaders across CPG and retail are rethinking their processes as the study revealed;
Supply Chains as a Source of Value
Supply chain continue to be the central point of significance for most businesses owing to the value it brings to their organisation. As per the study, 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. While the supply chain can help drive and improve cost optimisation 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, suggested the Pulse.
Companies Pivot From Cost To Growth
While cost optimisation has been a priority for businesses, there is now being seen a shift in focus from cost to growth. In responding to the current economic environment, 57% of CPG leaders and 43% of retailers are investing in revenue growth opportunities. Additionally, 66% of CPG and retail leaders plan to make significant investments in alternative revenue streams in the next two to three years.
With AI Comes Data
Recent years have witnessed a humongous shift from traditional to online shopping, which brings more customer data into brands’ hands. Data-backed decisions link directly to customer loyalty. However, when dealing with data, it is crucial to ensure its safety. In fact, 25% of leaders are increasing investments in cybersecurity and 31% agree that data security matters most for consumer experience in 2024.
