This is the second article in a series of three where we zoom in on the Healthcare, Retail & Consumer Goods, and Transportation sector and share insights on the sectors growing the most and which companies are leading in terms of investments in AI.
You can read the first article in the series here, where we deep dive into the healthcare sector.
This article will explore the growth the retail & consumer goods sector is currently going through.
Retail and consumer goods have undergone a reckoning amidst Amazon’s ever-increasing dominance, and AI Is often cited as one of the few tools that these companies can use to survive the behemoth. From demand forecasting and merchandising, to customer experience and chatbots, to inventory management, it’s become imperative for retail and consumer goods companies to use AI and data science to (re)capture market share from Amazon.
So how are investment in AI teams reflecting their efforts to realize AI’s promise fully - and which companies are investing the most?
We have conducted first-of-its-kind research studying 515 retail and consumer goods companies with a turnover higher than $1B per annum, accounting for 16,500 AI professionals in the industry.
Key numbers globally in the Retail & consumer goods sector
- Retail & consumer goods companies, on average, have a team size of 32. The sector has grown from 23 team members at the beginning of the year to an average team size of 32.
- In terms of %-growth, on how the sector has developed as a whole, the sector has grown by 39%. Compared to other sectors, retail & consumer goods AI teams are relatively small but have realized the promising value AI can deliver by increasing consistently over the past six months.
- Of the 515 companies studied, 171 have an initial AI team size of more than 20. At the beginning of the year, that number was 141.
Walmart, Nike, and PepsiCo are leading the pack in staffing their AI teams, hiring an average of 221 people to their AI teams over the past three months. The companies in the top 10 have, in general, large (+250) AI teams with a few exceptions of medium-sized (50-250) teams.
Across the whole sector, each company is seeing an average growth of 60% over three months, indicating that retail companies see the value in AI and are investing in technology.
So, how exactly do top retail businesses utilize the benefits of AI?
Supply chain management and logistics:
With the largest team of more than 900 AI professionals, Walmart utilizes AI in its supply chain. Poor execution in this area has proven to lead to losses for retailers worldwide of about $1.1 trillion annually. Two years ago, Walmart enabled two-hour Express Delivery using AI. After a successful pilot in more than 100 stores, the company rolled out the AI system nationwide. The AI system includes resource optimization and vehicle routing and assigns delivery trips for vehicles to ensure customers receive their orders in time.
Customer Behavior Prediction:
In our latest release of the top 100 fastest-growing AI teams, Ulta ranks #10 in fastest growth.
AI-Powered Beauty Advisor - Ulta Beauty’s AI capabilities are trained to understand and continuously learn the typical customer’s buying decision process. This includes how guests navigate our vast assortment, make a purchasing decision, and consider factors; it also informs product recommendations and helps suggest order add-on products.
According to recent research, AI in the Retail Market exceeded USD 2 billion in 2020 and is expected to grow at more than 30% CAGR between 2021 and 2027. Increasing investments in AI technology are used to develop innovative applications for improving retail customer experience and continue driving the industry growth.
In retrospect, since our first release of the Top 100 Fastest-Growing AI Teams, we have seen companies from diverse industries making it to the top 100 list. More than 2,500 companies are part of the study and come from a variety of industries/sectors, including:
- Finance, Insurance, Services
- Retail & CPG
- Resources, Agriculture, Utilities
You can see the companies that made it to the list in the latest version of the Top 100 Fastest-Growing AI Teams.
Our first study, released in April 2022, was featured in Forbes Magazine and Datanami. You can read the exclusive insights here:
Forbes: Top 100 Fastest-Growing AI Teams: Key Players, Exclusive Insights
Datanami: And the 100 Fastest-Growing AI Teams Are….