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In brief
India’s consumer goods and retail market is undergoing a structural shift that goes well beyond cyclical demand patterns.
For nearly two decades, the growth strategy for most consumer goods companies was straightforward: expand distribution, extend the Stock Keeping Unit (SKU) range, invest in brands and let volume growth follow. Today, the market is more complex as trade channels rapidly fragment, with companies distributing across general trade and a growing mix of modern trade, regional stores, pharmacies, e-commerce and quick commerce.
This fast-moving consumer goods (FMCG) and retail digital evolution requires far tighter alignment across teams to maintain consistency across channels, uphold stock availability and enhance pricing and promotions for each channel effectively.
Agentic commerce can become a permanent feature in operating models at this stage. The advantages of integrating technology and AI into multiple layers of large firms can help lower costs, boost productivity, improve volumes and accelerate go-to-market speed.
The leaders who will define the next decade of India’s consumer goods sector will be those that build integrated commercial systems capable of operating seamlessly across multiple channels.
Most retail and packaged consumer product companies face a fundamental constraint: as revenue grows, operational costs tend to rise almost proportionally. For instance, scaling from X to 5X revenue typically requires three to four times more marketing resources to reach new customers; a similar increase is required for expanded pricing and promotion management as SKUs increase. A three- to fourfold increase in fulfillment and logistics infrastructure is expected as revenue grows, along with additional customer service capacity to handle higher volumes.
As a result, operating margins often remain flat or even decline — despite faster growth, profitability does not improve. In essence, growth becomes increasingly expensive, creating a ceiling that limits the performance across an organization.
In today’s scenario, human-AI collaboration, not replacement, is the competitive advantage: humans focus on strategy, judgment and exception handling; AI-powered growth operating systems manage complexity with accuracy.
Amid rising channel complexity, SKU diversification and competition, companies will need agentic systems to simplify processes and manage scale, speed and consistency.
Marketing and campaigns: Instead of marketers planning quarterly campaigns, an AI agent continuously monitors customer behavior, market conditions and competitive moves. It recommends campaigns, tests variations and enhances spending in real-time. A team of five marketers now orchestrates multiple campaigns with better return-on-investment and quicker iteration.
Dynamic pricing and promotions: An AI agent sees inventory, demand signals, competitor pricing and margin targets. It continuously adjusts prices and determines which products should be promoted to which segments. A pricing team of three now manages multiple SKU-market combinations in real-time.
Fulfillment and logistics: An AI agent monitors orders, inventory levels, fulfillment capacity and delivery networks. It automatically routes orders to optimal fulfillment centers and flags stockouts before they happen. A logistics team of eight manages 10 times more volume with fewer stockouts and lower fulfillment costs.
Customer service: An AI agent handles routine inquiries, tracks order status, identifies at-risk customers and recommends proactive measures. Meanwhile, sales staff focus on complex issues on the ground and building relationships. A team of 20 people now handles 10 times higher inquiry volumes while improving the quality of resolution.
India’s consumer goods and retail sector is shifting from a simple growth model to a complex, multi-channel ecosystem, with increasing operational complexity. Agentic commerce offers a solution by using AI to augment human teams across marketing, pricing, logistics, and customer service, enabling real-time decisions, efficiency, and scalability. This model creates operating leverage, allowing revenue to grow multi-fold while costs increase more slowly, improving margins. Built on human-AI collaboration, it combines speed and scale with strategic judgment, helping early adopters achieve faster growth, higher profitability, and enhanced customer experience.
How EY can help
EY Commercial Transformation offerings help businesses reignite growth by optimizing sales, marketing ROI, & deploying strategy, analytics, & capabilities.
Read moreEY-Parthenon teams can help your business identify and implement consumer strategies relevant now as well as in the future. Find out more.
Read moreEY’s Direct to Consumer for Consumer Products, can help your business meet the changing needs of consumers. Find out how.
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