In brief
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 GenAI’s ability to generate new, original and realistic content — such as images, music and text — is transforming how companies serve consumers and driving a revolution in the consumer products and retail (CPR) industry.
The EY Future Consumer Index, which has been tracking consumer sentiment and behaviors over the last few years, has shown that artificial intelligence (AI) — especially GenAI — is increasingly finding acceptance among Asia-Pacific consumers. How can this translate to applications in the CPR industry?
GenAI has ushered in a new era in the CPR domain, reshaping how businesses operate and enhancing the overall consumer journey. It paves the way for a seamless omnichannel experience, blurring the lines between online and physical realities while laying the building blocks for the interactive frontiers of Web 3.0 and the metaverse.
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Read moreGenAI represents a paradigm shift for consumer players, allowing them to transition to a future of true personalization. It enables CPR companies to analyze vast volumes of structured and unstructured data from various sources, such as consumer behavior, preferences and social media interactions. By leveraging such data, companies can create targeted experiences and tailored content in line with consumer profiles — such as personalized 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, enabling highly precise audience targeting and optimized campaigns.
The transformative potential of GenAI extends beyond data analysis to revolutionize consumer engagement as seen by its use in virtual try-on technologies. GenAI is the backbone of shopping tools that integrates virtual try-on capabilities into digital platforms, allowing shoppers to visualize clothing on a spectrum of representative fashion models for diverse sizes, skin tones, body shapes and hair types.
It may not be long before GenAI becomes fully integrated with marketing capabilities, thereby freeing up budgets for other strategic investments to boost turnover and profitability.
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Read moreBy processing large amounts of data in different forms, GenAI can uncover hidden insights and empower companies to generate novel ideas, explore new areas and analyze concept feasibility at speed. Some companies are already using GenAI to help identify gaps in flavors 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 visualizing design prototypes, conducting simulations and exploring various configurations for faster innovation. More advanced ideas can be quickly tested with consumers online and consumer feedback can be integrated into the GenAI engine for more targeted innovations.
GenAI can boost employee productivity in multiple ways. By analyzing large data sets to provide insights quickly, it 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 grasp of CPR companies. By employing advanced chatbots and virtual assistants powered by GenAI, businesses can efficiently manage consumer interactions. 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.
Another application of GenAI is the creation of tools that 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.
While GenAI unlocks a new era of innovation, human input remains integral. Leading organizations are pioneering structural changes by integrating GenAI into core functions and redefining the role of humans within these processes. Employees can now reprioritize their cognitive capacity for higher-value tasks, such as data interpretation and oversight of AI-generated output. Some retailers are using AI-powered bots to automate routine customer inquiries, allowing them to redeploy call center employees to supervisory or advisory roles.
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.
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Read moreAs 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 organizations 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 on CPR companies transcends the current realms of innovation, personalization and efficiency. It 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 before GenAI becomes mainstream.
GenAI presents opportunities for the CPR industry to reshape operations and enhance the overall consumer journey. It can enable personalization of experiences and content for stronger consumer engagement, revolutionize innovation and boost employee productivity in various ways. However, human input remains integral to further nurture its capabilities and a comprehensive governance strategy that manages potential risks is needed for effective adoption.
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