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How Enterprise Modernization and Artificial Intelligence are Charting a New Course for the Consumer Industry

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The latest Consumer Price Index (CPI) data highlights a significant deceleration in inflation, now standing at half of last year’s peak. This moderating trend in inflation is an encouraging development, but it is not without its caveats, particularly within the dynamic and complex terrain of the retail and consumer goods industries.

In response to this unpredictable economic landscape, consumers have recalibrated their shopping habits, demanding businesses to exhibit a newfound agility and innovation. Whether it’s the food and beverage sector, apparel and footwear or automobiles, direct-to-consumer businesses are grappling with the consequences of shifting consumer behaviors against the backdrop of an unpredictable global supply chain.

These businesses find themselves at a demanding intersection. They strive to create seamless, personalized customer experiences to continue to attract discerning consumers and build efficient supply chains, yet they often encounter barriers presented by fragmented technology infrastructure, which hinders scalability without disruption. The path to surviving and thriving in this evolving landscape is paved with the need for robust, integrated and flexible technology systems.

The rise of artificial intelligence and cloud computing offer promising solutions to fostering flexible growth, minimizing downtime risks and maximizing the impact of customer-centric innovations. A new IBM CEO study reveals a significant 42% of retail CEOs, and 59% of consumer products CEOs, are banking on AI technologies such as generative AI, deep learning and machine learning to drive results over the next three years. This ranking is only surpassed by cloud computing, which is favored by 72% of retail CEOs and 64% of consumer products CEOs.

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Today, hybrid cloud technology is regarded as an essential component for direct-to-consumer businesses. This technology blends public and private cloud services to deliver the perfect environment for processing, storing and scaling data. It allows businesses to handle large volumes of customer data in a secure and efficient way, providing them with the flexibility they need to adapt to changing demands while ensuring data privacy and security.

The infusion of artificial intelligence, which is predicted to unlock more than $13 trillion in the global economy, into this hybrid cloud framework accelerates innovation. AI-powered solutions specifically created for enterprises, such as watsonx, can aid businesses in creating personalized customer journeys, deliver seamless experiences across platforms and ensure ethical AI application through robust governance and security measures for safeguarding sensitive data.

And businesses are taking notice. In fact, 71% of consumer products CEOs and 64% of retail CEOs believe they have a clear plan for the role advanced AI will play in decision-making five years from now. Three in four CEOs across industries believe that competitive advantage will depend on who has the most advanced generative AI.

The applications of this technology in the retail and consumer products industries span various facets:

  1. Customer experience: According to IBM’s 2023 CEO Study, enhancing customer experience was the number one priority for 51% of consumer products CEOs and 53% of retail CEOs. AI can optimize store layouts based on shopper behavior, enhance customer service with AI-powered chatbots and equip businesses with real-time analytics for informed decision-making.
  2. Enhanced supply chain management: Harnessing the power of diverse datasets, AI serves as a catalyst for supply chain transformation, streamlining order fulfillment, enhancing logistics efficiency, fine-tuning demand forecasting and automating routine tasks. Simultaneously, it can enhance fraud detection and sustainability, providing businesses with the competitive edge to navigate market shifts and unlock opportunities for growth and customer satisfaction.
  3. Smart pricing: AI can help monitor inflation rates, implement dynamic pricing strategies and analyze the effectiveness of promotions to suggest optimal prices for products. By leveraging AI in pricing decisions, businesses can navigate inflation and pricing challenges more effectively and maximize profitability.
  4. Fraud detection and prevention: AI has the capacity to analyze large volumes of transaction data, enabling the detection and prevention of fraudulent activities, creating a more secure shopping environment for customers.

As we look ahead, AI and hybrid cloud technologies offer robust solutions to the challenges within the retail and consumer goods landscape. These technologies are not only facilitating survival but also shaping the future of the consumer goods and retail industries by driving innovation, optimizing customer experiences, enhancing supply chain efficiency and delivering powerful data-driven insights.


Sevgi Koklu is a high-caliber executive and revenue generator with a notable career focusing on customer relationship management, business development and transformational programs that dominate global markets, impede competition and deliver solid business outcomes. She is the VP and Managing Director at IBM, focusing on the consumer-packaged goods, retail and travel and transportation industries.

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