FMCG consumers are less engaged and predictable than they have ever been, less loyal than previous generations and more interested in personalised experiences, Andrew Appel, president and chief executive officer, IRI, writes.
The challenge this presents to manufacturers and retailers now and for the future is huge.
Change Of Approach
The old adage of ‘the big eat the small’ is now being replaced by ‘the fast eat the slow’. Look around and everywhere there are examples of smaller, disruptive companies winning hearts and minds through fast thinking and innovation.
For global brands and retailers, the question is whether they can be both big and fast?
To move faster and predict more accurately, businesses need to embrace new innovations in data analytics, such as AI, which have the potential to revolutionise the industry.
By automating standard processes, AI makes it possible for retailers and manufacturers to make smarter decisions faster and more effectively.
But in order to do this, AI needs to work on a data integration and management system – such as IRI’s Liquid Data platform – which makes it possible to integrate complex, multi-source data.
The Realities Of AI
As I consider in my latest book AI for Marketing and Product Innovation, it’s important to get beyond the hype and promise of AI to understand: 1) What the possibilities are and 2) How it will help the FMCG industry to evolve.
There is real opportunity ready to be captured. Leveraging AI technology throughout an organisation has the potential to unlock opportunities not normally identified and solve for specific business problems.
By making data and AI a core part of employees’ workflow, organisations will net value across many areas, such as pricing and promotions, product innovation, supply chain and media buying.
Pricing and promotions are one of the most powerful levers to generate sales. By exploiting the full capabilities of AI, retailers and brands can identify and activate the correct strategy at speed. The algorithms help to identify not only the timing and type of promotion that will be most effective to a specific audience, but also the language to use.
Product innovation is another area that can be totally transformed by the application of AI and Machine Learning processes.
Smaller companies who are closer to the consumer can react quickly to the trends as they observe them. This has been a significant challenge to leading brands, as their organisations are simply not built to move and change quickly. The benefits of AI are such that product innovation processes will almost innovate themselves to keep up a continuous cycle of development and improvement.
Combining The Conscious And Unconscious
AI has the capacity to process the volume of conscious and non-conscious data that already exists.
Every time someone blogs, tweets or searches, they are revealing important data that combined with their non-conscious data, for example music and film preferences and other elements can help to predict future trends.
This means that the innovation process can be completely reimagined and will take place considerably faster than it can without the use of AI.
No Silver Bullet
However, AI and machine learning technologies are not a silver bullet solution – they should be viewed as an investment with real return that requires an internal change.
Organisations must make the commitment to create a data-driven culture, making these tools accessible in every department and enabling decision making across the organisation.
Research published by Accenture in 2016 predicted that the impact of AI technologies would be to increase productivity by 40%.
Fundamentally, the technology would be able to take over a lot of the repetitive and predictable elements of people’s roles, allowing them to work more efficiently or creatively.
With the assistance of AI-enabled tools, insights professionals can save time discovering insights and shift their role to offer their organisations a true competitive advantage.
There will also be a need for those who work as a change agent within their organisation, focused on working cross-functionally to quickly implement strategic and operational changes informed by data.
One of the key barriers to the success of adopting AI more comprehensively is the culture of the organisation and people’s willingness to embrace change.
It offers the opportunity for people’s jobs to evolve, but for many organisations this in itself could be a barrier.
The ability of FMCG businesses to adopt these necessary changes will in a large part come down to not just in their investment in technology, but their investment in people-change.
Embracing the developments is essential to ensure that they are embedded and delivered as effectively as possible.
The Growth Opportunity
FMCG retailers and manufacturers are on track to invest over $20 billion in big data over the next three to five years.
For example, last year, Walmart was third in IT spending, behind only Amazon and Alphabet, the parent company of Google.
These disruptors have shown us that risk-taking is a driver of growth – and now is the time to take risks.
AI-enabled tools can touch all elements of the FMCG cycle to reap the benefits of big data.
From providing real-time pricing recommendations to implementing analytics-enabled assortments that minimise waste and recommending changes to an ad’s messaging mid-campaign to drive greater sales with a target segment.
This makes it possible to capture the greatest value from each customer. Now is the time for those in the FMCG industry to embrace the opportunities that are opening up to them.
Andrew Appel is the president and chief executive officer of big data and analytics specialist IRI.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine