6 minute read
How Generative AI Is Revolutionising The Consumer Products And Retail Industry
Tapping into opportunities of GenAI to reimagine consumer experiences, innovation and productivity must go together with a focus on adoption risks.
By Olivier Gergele, Asia-Pacific EY-Parthenon Consumer Leader; EY ASEAN Consumer Products & Retail Leader
The generative AI (GenAI) market is estimated to grow at a compound annual growth rate of 30% between 2023 and 2032 to reach more than US$110 billion by 2032.1 The EY Future Consumer Index2, which has been tracking consumer sentiment and behaviours over the last few years, has shown that artificial intelligence (AI) — especially GenAI — is increasingly finding acceptance among Asia-Pacific consumers.
How can this technology transform the way consumer products and retail (CPR) companies serve consumers?
GenAI applications in the CPR industry
GenAI is reshaping how CPR businesses operate and enhancing the overall consumer journey. It paves the way for a seamless omnichannel experience while laying the building blocks for the interactive frontiers of Web 3.0 and the metaverse.
This leading technology is transforming the way companiesserve consumers, as shown in the diagram below.
From Mass Marketing to Personalisation at Scale
GenAI allows consumer players to transition to a future of true personalisation, with its ability to analyse vast volumes of structured and unstructured data from various sources, such as consumer behaviour, preferences and social media interactions.
By leveraging such data, companies can create targeted experiences and tailored content in line with consumer profiles — such as personalised product recommendations, marketing messages, order suggestions and promotions — to strengthen consumer engagement. GenAI allows professionals — particularly marketers — to better understand consumers at an individual level, enabling the creation of hyper-targeted campaigns to boost conversion rates. Regional AI-centric MarTech startups are offering comprehensive digital media workflow integration, resulting in highly precise audience targeting and optimised campaigns.
GenAI is also the backbone of shopping tools that integrates virtual try-on capabilities into digital platforms, allowing shoppers to visualise clothing on a spectrum of representative fashion models for diverse sizes, skin tones, body shapes and hair types.
Revolutionise Innovation
By processing large amounts of data in different forms, GenAI can uncover hidden insights and empower companies to generate novel ideas, explore new areas and analyse concept feasibility at speed. Some companies are already using GenAI to help identify gaps in flavours and taste profiles, which serve as reliable inputs to boost new product development.
As GenAI gets integrated across the innovation process, it is expected to become a true enabler of accelerated and insight-based innovation. Leading players are using GenAI to support R&D in product design by generating and visualising design prototypes, conducting simulations and exploring various configurations for faster innovation. More advanced ideas can be quickly tested with consumers online and the feedback can be integrated into the GenAI engine for more targeted innovations.
Uplift Productivity
By analysing large data sets to provide insights quickly, GenAI can help employees make more informed and timely decisions, leading to increased productivity and better outcomes. This is an enhanced opportunity to automate repetitive tasks and free up time for more strategic work.
GenAI also puts true conversational commerce within the grasp of CPR companies. Leading e-commerce platforms have introduced AI chatbots to act as a personal shopper, simplifying consumer engagement and improving productivity. Such integration not only streamlines operations but also strengthens consumer relationships, ultimately boosting efficiency and market competitiveness.
The technology can also support employees’ everyday tasks. Some GenAI chatbots have been trained on company-specific data to act as interfaces for service personnel to diagnose and resolve operational issues. For example, they can identify, highlight and provide step-by-step solutions for stock replenishment, repairs and troubleshooting.
Put Humans at the Centre
While GenAI unlocks a new era of innovation, human input remains integral. Leading organisations are pioneering structural changes by integrating GenAI into core functions and redefining the role of humans within these processes. Employees can now reprioritise their cognitive capacity for higher-value tasks, such as data interpretation and oversight of AI-generated output.
The outputs of GenAI are ultimately dependent on human interpretation and actions to unlock their value. Beyond overseeing GenAI outputs, people need to continuously provide feedback to train the algorithm and therefore further nurture the power of the technology.
When navigating the rapid advancement of GenAI, CPR companies must integrate the necessary human oversight to address potential risks relating to data security, copyright, regulations, ethical concerns and misinformation. Effective adoption necessitates a comprehensive governance strategy that manages such risks and establishes clear boundaries for the applications of GenAI.
As advancements in AI capture the attention of governments worldwide, company leaders need a nuanced understanding of the evolving regulatory landscape. Companies still need to comply with applicable national laws and regulations — including industry-specific ones — when dealing with AI technologies.
In February, the Association of Southeast Asian Nations (ASEAN) unveiled the ASEAN Guide on AI Governance and Ethics to foster interoperability of AI frameworks across jurisdictions. CPR companies and other organisations in the region can leverage it to help build trust among stakeholders through the responsible design, development and deployment of AI in line with international standards.
The transformative impact of GenAI heralds a new era where creativity converges with data-driven precision, and will dramatically redefine the CPR landscape and adjacent industries. Seizing the opportunities now with a clear roadmap that spans key areas from strategy to governance will help give companies a competitive advantage.
References
EY-Parthenon analysis
EY Future Consumer Index, available at: www.ey.com/en_sg/future-consumer-index
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