Walmart Is Most AI-Ready FMCG Retailer — By Far: IHL
Walmart is leading fast-moving consumer goods (FMCG) retailers in a big way when it comes to artificial intelligence readiness, according to a new report from IHL Research.
While its competitors are no slouches, the retailer’s dominance is undeniable, per IHL president Greg Buzek.
“All of these are giant retailers with their own advantages over the others, but by our analysis Walmart is over 30 points more already on our 100-point score than Sprouts Farmers Market," Buzek told CGT.
Although it may be head and shoulders above Sprouts, which scored a 47, Sprouts is improving quickly, according to Buzek. “This is [Sprouts'] advantage [as] the seventh-largest player in the segment.”
FMCG AI Readiness
IHL’s AI Readiness Index ranks public retailers and restaurants on their artificial intelligence, machine learning, and generative AI capability maturity, as well as the potential financial impact. IHL pegged the total financial impact from AI on the top 207 publicly owned retailers and restaurants in North America at $1.6 trillion through 2029.
Regarding the readiness gap within the FMCG segment specifically, Buzek also highlighted the breadth of retailers selling FMCG. “While the total sales will grow, how many will be left as these larger retailers maximize the benefits of AI?”
The size of the retailer contributes to a significant multiplier effect on the potential impact of AI, he says. For example, Costco, which ranked 17th in readiness, is propelled to second place in potential impact ($104.4 billion) thanks to its size.
This impact also assumes retailers maximize their impact potential and in turn use the savings for profits, Buzek notes.
“Our history in this segment specifically [shows] previous savings were used to drive down prices and gain market share. There is no other segment where we will see as dramatic a market impact due to AI on the competitive landscape.”
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Implications for CPGs
Walmart has indeed been very public with the gains they’re seeing from investments in AI, reporting demonstrable resource savings and impact on e-commerce sales. Manufacturers in turn are wondering what the impacts may mean for them.
As with most things when it comes to working with Walmart, it will likely be a mixed bag, per Buzek. He expects AI-related pressures will be specifically related to supply chain visibility, load factors, and supplier negotiations.
However, he also notes that Walmart has reported high marks from their suppliers for use of generative AI within the negotiations, as AI never takes a sick day and is always looking for a solution.
“I do not view this as a bad thing for suppliers that Walmart is in the lead in AI among FMCG retailers companies,” says Buzek. “That pressure on costs would be there as it has always been. There is so much low-hanging fruit regarding optimizing routes, trucks, [and] insights that I think ultimately it could be a good thing for suppliers as well.”
How the Rankings Work
IHL’s research ranks companies across several segments on a score of 0-100. Rankings are composed of a nine-part algorithm based on data maturity, analytics maturity, alignment with key vendors, scale (revenues), and free cash flow. It also includes other measures from public and private research.
The info is combined with the companies’ latest annual financial results to project potential financial impact from 2022-2029, which looks at potential sales growth, gross margin improvement, and sales/general administration (SGA) cost improvement.
IHL excluded convenience stores from its analysis due to ambiguity of fuel on total revenues by company.
For Your Radar
Analytics Unite 2025 — held April 28-30 in Chicago — will gather top retail and consumer goods technology leaders to explore how to integrate generative AI across the enterprise. To learn more about this event, catch up on last year’s happenings.
