Consumer, Retail CEOs Balance Economic Fears With AI Investment: KPMG Report

Despite global economic uncertainties, CEOs in the consumer and retail (C&R) sector remain confident about their companies’ growth prospects but are increasingly cautious about the broader economic outlook, according to KPMG's 2024 CEO Outlook report. The survey, based on inputs from 120 global leaders in the consumer and retail industry, highlights economic instability, geopolitical complexities, and the adoption of generative AI (Gen AI) as their top challenges for 2024.

 While 82 per cent of consumer and retail CEOs express confidence in their company’s growth trajectory, only 59 per cent share optimism about overall economic growth—the lowest of all industries surveyed. Yet, the sector’s essential role in providing everyday goods and services lends its resilience, with CEO confidence in sector growth rising to 81 per cent in 2024 from 76 per cent in 2023, surpassing the cross-industry average of 74 per cent.

 AI Investments At Forefront

The integration of Gen AI is a clear priority for the consumer and retail sector, particularly in sales and marketing, with 81 per cent of CEOs identifying it as a key investment area. Many leaders are transitioning from exploratory pilots to a focus on delivering tangible returns. Notably, 67 per cent of C&R CEOs are confident in achieving measurable returns on Gen AI investments within the next three to five years. 

However, with rapid AI adoption come challenges. Ethical concerns have grown, with 61 per cent of CEOs recognising ethical implementation as a major issue. Reflecting this, 84 per cent—the highest among all sectors surveyed—believe Gen AI regulation should mirror climate commitments, underscoring the need for responsible and balanced AI adoption.

Nikhil Sethi, Partner and Head of Consumer Goods at KPMG in India, remarked, “CEOs in the consumer and retail sector are navigating a complex landscape, balancing muted consumer spending, inflationary pressures, and rising regulations. Gen AI and data-driven solutions are critical for overcoming these challenges, providing the granularity needed for strategic implementation and growth.”

ESG Confidence Outpaces Other Industries

Environmental, Social, and Governance (ESG) principles are now central to the sector’s operations, with 74 per cent of CEOs confirming ESG integration into their businesses. Additionally, 63 per cent express confidence in achieving net-zero goals by 2030—a significant leap from the cross-industry average of 51 per cent.

This optimism comes despite acknowledged gaps in net-zero roadmaps. It highlights CEOs’ faith in their sustainability teams and the progress made over the years. CEOs also emphasised the role of sustainability in strengthening customer relationships and brand reputation, with 44 per cent stating ESG strategies have the greatest impact in these areas.

However, 51 per cent of leaders believe progress on Diversity & Inclusion (D&I) remains slow, signalling a need for improvement. Given the industry’s reliance on diverse talent to drive creativity and consumer connection, this is an area that requires urgent attention to unlock its full potential.

Navigating Growth Amid Economic Uncertainty

Economic challenges remain the foremost concern for C&R CEOs, with 58 per cent identifying economic uncertainty and 53 per cent citing geopolitical complexities as key hurdles. Despite these challenges, CEOs remain steadfast in their growth ambitions, supported by the resilience of the sector and technological advancements. 

Puneet Mansukhani, Partner - Digital Advisory and Retail Sector Head, KPMG in India, emphasised the transformative role of technology, stating, “Consumer and retail companies are evolving rapidly through digitalisation and AI-driven customer experience enhancements. Investments in Gen AI will empower retailers to better understand their customers and manage inventories more efficiently. Strategic alignment of these investments will be critical in driving sustainable growth and improving the overall customer journey.”

Mansukhani also noted the resilience of ecommerce, especially in India’s tier-2 and tier-3 cities, where strong digital adoption continues to fuel growth. With global brands increasingly entering the Indian market, the sector’s outlook remains optimistic despite economic headwinds.

As consumer and retail CEOs navigate economic uncertainties, their confidence in innovation and AI adoption positions the sector for future growth. The KPMG 2024 CEO Outlook report underscores the importance of balancing economic challenges with bold investments in Gen AI, ESG commitments, and customer-centric strategies to sustain long-term value and resilience.