Retail, CPG and Logistics

How will artificial intelligence disrupt the FMCG industry?

Sustaining profitability in highly competitive sectors is a major challenge for businesses. This is felt more in the FMCG sector where customers are becoming choosier and fickler, despite personalised offers and services. The need of the hour for FMCG businesses is better decision-making driven by highly accurate predictions of user behaviour. Increasing operational efficiency while keeping in mind customer choices, changes in demand patterns, etc., helps businesses sustain profitability. The overall goal should be improved customer experiences, which can be achieved through key insights. However, the exercise needs to be cost-effective too. Hence, the insights need to be derived from data gathered across all aspects of the supply chain.

This is where artificial intelligence (AI) plays an important part and enables a direct connection between businesses and their customers. This point is very significant as a great part of the FMCG business is conducted through third parties like retailers. From using virtual assistants to offering innovative shopping experiences, AI is disrupting the FMCG industry. Many global FMCG giants use AI to power intelligent experiences for their consumers. From understanding social media behaviour to incorporating technology, they are constantly innovating.

AI can disrupt the FMCG industry in the following ways:

  • Improving workflows
  • Understanding customer behaviour
  • Improving product designs
  • Making the best of marketing and ad spends
  • Ensuring better customer experiences 

Improving workflows: Today, there is no better technology than AI to improve workflows and gain operational efficiency. Automating inventory and logistics management and other complex processes, tracking employee performances, managing the load of customer support agents, etc., are some AI application scenarios that can help businesses achieve operational efficiency. They gain by way of reduced cost and time, and improved speed and accuracy in all workflows.

Reduced human errors is a significant gain achieved through automated workflows or robotic process automation services. More importantly, AI can help FMCG businesses ensure regulations. Once regulatory requirements are fed into the AI-powered systems, they can be monitored for any violations. By having an impact on processes such as identifying defective products not meeting the standards and safety lapses in food items, AI can improve the quality of workflows by leaps and bounds.

Understanding customer behaviour: Real-time access to customer data provides insights into customer preferences. Predictive analytics using historical data of customer buying patterns can help make accurate demand predictions in an agile* manner and enable various ways of personalisation.  It also helps in making more accurate, significant decisions related to optimising pricing strategies. Such customer-centric approaches result in delighted customers, which in turn translates to customer loyalty.

Improving product designs: A major challenge for FMCG businesses today is to ensure that their products stand out in a crowd. Even for an everyday usage item like a bath soap or toothpaste, or niche products like baby foods, the choices are plenty. Machine learning algorithms help businesses collect data about all products in the market. These inputs help them design unique and optimised products - such as voice-assistant enabled home appliances for smart homes - that appeal to the customer. Analysis of historical product-related data can provide insights into design patterns that haven’t worked in the past for the company or for competitors. Planning powered by such data helps reduce product failures in the market.

Making the best of marketing and ad spending: FMCG businesses constantly innovate and experiment to stay ahead of the competition. Though they do have good marketing budgets, it is essential to optimise marketing spend. Online advertising has been the most popular option for most FMCG companies to reach out to customers.

AI-based marketing tools take marketing and advertising to the next level. They combine the best of technologies and insights for better personalisation. Targeted ads, push notifications, predictive marketing solutions, etc., are some ways in which AI can ensure more mileage out of the marketing budgets for businesses.

Ensuring better customer experiences: Apart from personalised ads, improved shopping experiences using chat or voice bots are a big hit. Using these to ensure 24*7 customer support automation results in reduced time and cost. Virtual assistants can also help make product suggestions while shopping. AI-based applications can also monitor all channels and systems for better security to avoid hacking.  AI-based apps can also suggest product placing and shelf-placing to ensure that customers can see and find products instantly.

The possibilities for AI-led disruptions in the FMCG sector are endless. Businesses are constantly learning and developing strategies to see how else the power of AI can be leveraged to gain an edge. Better branding experiences and improved revenues are two key aspects driving these changes.

* For organizations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed on organizational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like a living organism, will be imperative for business excellence going forward. A comprehensive, yet modular suite of services is doing exactly that. Equipping organizations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organizations that are innovating collaboratively for the future.


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