Analyzing the Consumer Products Industry Trends and Their Impacts

Consumer Products companies are facing challenging conditions outside of their control.

• Climate change: Governments are increasing regulations and taxes related to climate change, adding stress to Consumer Products companies.
• Record inflation: Most companies expect a global inflation rate of around 6.5%.
• Economic slowdown: Consumers, particularly young consumers, are showing changes in brand loyalty and adoption rates amid the economic slowdown.
• Changing consumers: Consumers are changing their buying behavior due to inflation and other macro trends.
• Private label competition: Consumers are more willing to switch to private labels to adjust to rising inflation.
• Supply chain issues: Consumer Products companies are facing supply chain management issues.

In this video, you learn how Consumer Products companies are adapting to these challenges.

Like all other industries and businesses, the rapid advancement of AI marks a pivotal shift in the Consumer Products industry, both strategically and operationally.

Early studies show efficiency gains between 20% and 60%. This help to reduce marginal costs, improve outcomes, reduce the cost of managing complexity, and help Consumer Products companies shift from mass production to hyperpersonalization.

Consumer Products companies should see AI as a growth accelerator that can accelerate the innovation of new business models. For example, a McKinsey report stated that AI could generate up to USD1.4 trillion annually for the Consumer Products industry.

However, despite AI’s potential value and efficiency gains on the industry, a 2023 BCG report found that compared to other industries, there is low generative AI maturity in the Consumer Products sector globally.

But many companies are making it a priority.

A 2024 BCG study revealed that AI has become a top priority.

• 89% of executives rank it among their top three tech initiatives.
• 85% of executives plan to increase AI spending.
• 54% of executives expect AI to deliver cost savings.

However, despite increased AI investment plans in 2024, many Consumer Products companies are still slow to fully adopt AI and realize its benefits.

We proactively engaged with our strategic Consumer Products Advisory Council members to understand the barriers to AI adoption and their investment priorities. Our goal was to assess AI adoption among our key customers. We asked our Consumer Products customers which industry challenges AI can impact the most and over 90% identified these top areas.

• Continuous Product Innovation and Development – staying relevant requires continuous product innovation, aligning with consumer needs.
• Supply Chain Disruptions – optimize inventory levels, reduce stockouts, and ensure on-time, in-full deliveries.
• Rise of E-commerce and Digital Transformation – enable data-driven hyperpersonalization and merchandising across channels.
• Changing Consumer Demands – exceptional customer experiences and personalized services.

More challenges that AI can positively impact include sustainability, data security, labor shortages, rising raw material costs, and global economic uncertainty.

In this video, you learn about the specific use cases where our customers integrated AI into their business processes.

We believe that AI drives digital transformation in Consumer Products, helping companies exceed consumer expectations and achieve sustainable, profitable growth in an uncertain world.

These are the top three benefits Consumer Products companies can achieve through AI integration:

1. Drive Profitable Growth: AI can analyze market dynamics, competitor pricing, and changing consumer demands, enabling real-time price and promotion optimization, product innovation, and enhanced customer service through personalized marketing.
2. Supply Chain Resilience: AI-powered predictive analytics can forecast demand fluctuations, supply chain disruptions, and inventory shortages. This allows Consumer Products companies to adjust production schedules, optimize inventory, and secure alternative suppliers in advance.
3. Maximize Cross-Functional Operational Efficiencies: AI enables continuous monitoring of performance metrics, identifying areas for improvement, and driving innovation across various functions.