Artificial Intelligence

Agility, Generative AI, Investments: Shoptalk 2023 Tech Trends for CPGs

Lisa Johnston
a person smiling for the camera
Diana Haussling of Colgate-PalmoliveDiana Haussling of Colgate-Palmolive

What a difference a year makes. 

At last year’s Shoptalk retail event, it was the metaverse that found itself inserted into nearly every conversation, often accompanied by either rabid excitement or tiresome eye rolls. This year, generative AI was the star, supported by a collective sentiment that it will change the consumer goods and retail industry — though how exactly that takes shape is TBD. 

CGT sat down with Elizabeth Lafontaine, chief retail analyst at Retail Leader Pro, during Shoptalk to dig into this and other tech trends that will impact consumer goods manufacturers and retailers. (See more of Lafontaine's Shoptalk insights here and some insights from the floor.)

Evolving Face of Agility

Whereas retail agility once primarily addressed the need to get products to market faster or deliver seamless consumer experiences, it’s now on the hook for keeping up with a fickle and constantly changing consumer — one who has more choices than ever. And after spending a hefty amount of time streamlining SKUs during the pandemic to manage supply chain disruptions, some consumer goods companies find themself unprepared for this much more demanding shopper, and it’s having ramifications throughout the entire value chain.   

“Brands are really finding it challenging to keep up with the customer right now, [including] how they're communicating to them, working with retailers to get products into the stores, and working with product development,” said Lafontaine. “There really needs to be much more agility across the industry, both from retailers and from brands, for the industry to keep pace with consumers. Consumers are really leading the charge right now in innovation, and retailers and brands are continuing to kind of play on the back foot.”

For PepsiCo, this has meant leaning into scenario-based planning in order to pivot more quickly when assumptions change. “Process is one piece, and structure is another,” Parth Raval, chief growth officer at PepsiCo Foods North America, explained during a Shoptalk session. “That enables us to operationalize agility … [to] really bring the system together across functions, so you’re not just thinking across silos and thinking on how we're going to plan for next year, but really driving the connective tissue.” 

Complicating matters is consumer apprehension with an uncertain economic environment, which has subsequently diminished their desire to shop. They’re not going to stores as frequently, converting as frequently online, or viewing retail quite as the source of comfort as before, said Lafontaine. 

“There really — much more than over the past three years — needs to be a reason to buy,” she noted. For brands, this means not only enhancing features and remaining relevant, but investing in social listening to keep abreast of consumer trends. 

Parth Raval, Chief Growth Officer, PepsiCo Foods North America, PepsiCo Sarah Engel, President, January Digital (Parth Raval of PepsiCo (left) and Sarah Engel of January Digital

Shifting Investment Priorities 

While few companies would acknowledge a pullback in investments, the fact is they’re likely taking harder looks at newer technologies and consumer spaces like the metaverse, said Lafontaine, pointing to Disney’s recent decision to shut down their metaverse division and membership program. 

While it may be financially prudent to put the brakes on ambitious forward-looking tech investments, companies must find a balance that doesn’t take them out of the innovation running, she cautioned.  

“When we emerge from the economic uncertainty that we're in right now, you’re going to be behind,” she noted, “and the consumer has no patience and very little tolerance for retailers who aren't meeting their demands today.” 

Indeed, Target CFO Michael Fiddelke shared during a keynote that the company is eyeing the long term when it comes to its tech investments, including continuing to build and remodel stores, which serve as a focal point in its fulfillment success. 

Generative AI Topples Metaverse Buzz

Whether you were a doubter or a devotee, the metaverse had a huge presence at last year’s Shoptalk, but this year saw a much more tempered sentiment. The last 12 months have changed how retailers and brands view the metaverse, said Lafontaine, in part because consumer adoption has been lower than expected. 

“It's really those early tech adopters who are utilizing it and finding value out of it,” she explained. “For your average consumer, it’s just not something that's on their radar. They're not purchasing headsets; they're not interested in the technology.”

That’s not to say the metaverse is RIP. “From a retail activation perspective, it's something that's working really well in the higher-end market, [such as] luxury goods, super experiential in-store retail offerings.”

Generative AI, meanwhile, is easily accessible and has been more successful to quickly prove a business case. While concerns abound, many executives CGT has spoken with over the last few months said their teams are experimenting with tools like ChatGPT and DALL-E to see how they can work for their business. 

Elizabeth LafontaineElizabeth Lafontaine of Retail Leader Pro

This carried over to Shoptalk, where executives like Diana Haussling, VP, GM consumer experience and growth at Colgate-Palmolive, shared examples of where they see potential. 

“We are creating better content, better creative that's relevant to consumers,” she said. “We're also leveraging it to understand trends, so we can adjust and react quickly. And then we’re leveraging it to inform our innovation.” 

See also: How Colgate-Palmolive Built a Framework for Supply Chain Analytics

With benefits extending across functions, the most practical use cases are currently within creating operational efficiencies, noted Lafontaine, particularly within retail data and product development. “As we think about retail data becoming much more complex — and the need for better integration of data resources, and collaborating around first-party data — AI can improve a lot of ways that those programs come to market and also how they're built on the back end.” 

“From a retailer efficiency perspective, and also being able to be more agile to keep up with consumer demands and changes in consumer behavior, AI is the perfect tool to help them to do that,” she added. 

AI’s use is saddled with privacy concerns, and generative AI has only amplified the need for organizations to prioritize ethical AI. Companies must be especially mindful about how they’re leveraging AI within historical consumer data, stressed Lafontaine, who may not have had consumers opt into historical data for certain use cases.  

For Mars Wrigley, responsible AI remains a top priority, according to Deepak Jose, global head of one demand data and analytics solutions. He noted that they consistently looking at how to remove unconscious bias from models and better understand the decision making behind artificial intelligence. 

"As a purpose-led organization at Mars, we believe responsible AI is non-negotiable," he emphasized during a workshop. "It all starts with the AI code of conduct."

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