Revolutionizing Consumer Goods And Retail: The Impact Of AI


Technology Stage — In the ever-evolving landscape of consumer goods and retail, the integration of AI has become a game changer, reshaping the industry’s dynamics and strategies.

“The only thing to fear about AI is that your competitors are using it, and you aren’t,” Chad Lusk, partner and managing
director at Alvarez & Marsal Consumer & Retail Group, told show attendees at an education session titled The AI Journey For CPG & Retail. “It’s going to disrupt the market, but you want to be on the right side of that disruption.”

By definition, AI is the process of leveraging data to replicate the problem- solving and decision-making capabilities of the human mind. From optimizing supply chains to enhancing customer experiences, AI applications have infiltrated various facets of retail, revolutionizing operations and driving unprecedented growth.

AI outcomes can generally be classified into two distinct categories: predictive and generative. Predictive AI analyzes historical data to make predictions about future events or trends while generative AI learns from existing data to generate new and diverse content via prompts.

“AI is fast becoming a game changer in consumer-facing business,” Lusk explained to attendees. “But implementing AI properly requires understanding its current strengths.”

He went on to explain that present-day AI works best by pattern-matching based on rich datasets with many reference points. It thrives on “business-as- usual” scenarios with few variables to adjust or modify and tends to accept all non-outlier inputs as relevant inputs to use as a model.

The sheer amount of data that AI is able to process far surpasses what the human mind is capable of. By analyzing these vast amounts of consumer data, AI can enable retailers to understand individual preferences, purchase histories, and browsing behaviors, allowing for tailored recommendations and targeted marketing campaigns, Lusk said.

According to Lusk, there is an uptick in digital commerce investments specifically driven by investments in AI with ecommerce revenue expected to rise by 1.5 percent by 2027. He went on to report that 87 percent of consumers begin their shopping online, with 77 percent buying from brands that they also follow on social media. Additionally, 56 percent of consumers have been noted to switch brands for personalized recommendations. Personalization, which is one of the key pillars of enhancing customer experience, has been significantly amplified through AI algorithms.

Lusk also recognized that there’s a long road ahead when it comes to understanding and manipulating AI and its capabilities and encouraged showgoers to recognize how they can utilize AI to target specific problem areas within their businesses. Whether it’s in operational efficiency, customer experience, or top-line growth, implementing AI is not a solution until a problem can be identified.

“AI isn’t static, it’s constantly evolving,” he said. “You shouldn’t be implementing AI just for AI’s sake. You should be using it to predict, and therefore prevent, future points of failure. This can be the great accelerator to seeing growth.”