The apparel industry has come under the spotlight in recent years because of sustainability and transparency concerns due to rising external pressure from consumers and governments. Two-thirds (66 percent) of apparel industry insiders see supply chain transparency as an “extremely important” issue, the number is even higher for Indian companies (at 83 percent).
Experts believe the most prevalent barrier holding back the industry from achieving transparency is the high initial investment. Difficulties in obtaining and managing data from other companies in the supply chain is another major obstacle, according to a report by online B2B platform Serai in collaboration with consulting firm KPMG.
“Greater transparency means that brands will be held accountable, however, it also opens up opportunities to better manage inventories, introduce more agility, and achieve greater collaboration across the entire supply chain,” said Anson Bailey, Head of Consumer and Retail, ASPAC, KPMG China.
Companies in India stand out in this regard, with 66 percent of the Indian respondents already disclosing their supply chain traceability policy.
Two-thirds of industry respondents (65 percent) were willing to disclose their supply chain traceability policy, as per the report. This proportion is much higher for suppliers in North America (80 percent) and Europe (81 percent). Suppliers in these regions are at a cost disadvantage to suppliers in the Asia Pacific and may use their sustainability credentials to differentiate themselves from the lower-cost competition, the report further stated.
Corporate reputation, business opportunities, and profitability are three main reasons driving the need to uphold transparency by apparel companies.
Moreover, experts believe that investment in transparency tools will be crucial for the companies if they do not want to risk losing a competitive advantage, the report found. To move forward, the industry will need to overcome challenges associated with the consistency and quality of data.
“Over 80 percent of the industry plans to have a transparency solution in place by 2027. However, businesses need to act with a greater sense of urgency. COP26 has reinforced the need for companies to find ways to reduce the environmental impact of their manufacturing. This can only be done through full visibility into their extended supply chains. Thankfully, the technology to help already exists. We’ve built a plug-and-play platform that integrates with existing solutions,” Vivek Ramachandran, Chief Executive Officer, Serai.
New technological advancements and the growth of the digital space have led various sectors to embrace innovation and adaptation. The fast-moving consumer goods (FMCG) sector, in particular, has rapidly shifted in that direction by joining hands with the e-commerce industry. McKinsey reveals that e-commerce sales in the consumer goods industry are projected to reach $1.8 trillion by 2025, a fourfold increase from the last decade. In the face of intense competition and a high turnover volume in the sector, Artificial Intelligence emerges as a crucial differentiator in helping brands stay ahead of the curve.
Artificial Intelligence plays a vital role in bringing consumers closer to the brand. An ongoing challenge within the FMCG industry is for accurate consumer insights to enhance data-backed decision-making. Insights AI combines advanced AI technologies like Emotion AI, Behavior AI, and Generative AI, to ensure brands get in-depth consumer behavior data. These technologies help brands understand the expectations and preferences of target audiences and provide accurate data for efficient decision-making.
As with any other industry, consumer needs and expectations in the FMCG sector are ever-evolving. AI's ability to access and process vast data sets allows brands to tailor their marketing strategies quickly and effectively in line with the requirements of the target audience. With the inclusion of Insights AI, the Indian FMCG industry could witness a significant improvement in the cost and quality of products and services.
One of the most crucial aspects of any FMCG product lies in its ability to resonate with the consumer. Here is where understanding the emotions and behaviors of the consumer towards the product becomes important. Insights AI plays a vital role in bringing these insights closer to the brand in several ways.
Insights AI can create exceptional value for the FMCG brands thriving in e-commerce. 29.1 percent of consumers believe that AI can be better utilized in providing personalized product recommendations, while 33 percent agree on its function to provide optimized search results. It can decode an individual’s purchase history and demographic information to create personalized shopping experiences for its consumers.
As one of the industries undergoing a major change due to Insights AI technologies, let us look at some of the ways it is creating a difference today.
1) Consumer Research: Insights AI can gather data and feedback on the path to consumers' purchase journeys- from looking at a product ad to completing a purchase on a website. It helps provide deep, unbiased insights, which ultimately provide a seamless shopping experience.
2) Marketing Communications: FMCG can benefit immensely in creating targeted and personalized campaigns that truly resonate with their target audience by understanding what consumers like and dislike.
3) Content and Media Testing: Brands can optimize the visual appeal and engagement across various content formats, such as ads, videos, social media posts, etc., by testing content and media pre and post-launch.
4) Pack Design and Shelf Placement Testing: FMCG brands can test their pack designs and shelf placements using Insights AI, which analyzes the shopper’s purchase intent, stopping, holding, and closing powers to make products stand out.
5) New Product Development: Validate your concepts, opinions, and ideas before a new product is developed to ensure that you are not completely relying on your gut instinct and guesswork.
While AI has a huge potential for FMCG brands to scale and improve, its widespread adoption also raises concerns about data privacy and ethical considerations. The heavy reliance on consumer data for insights also means transparency is a key priority in AI.
AI-led disruption in the FMCG sector is not just a possibility- it is already happening. From optimizing strategies to personalized recommendations, AI is leading the way for the FMCG sector to thrive- in the e-commerce space and beyond. With the continuous evolution of technology and fierce competition in the market, the need for products and brands to stand out is imperative, especially among FMCG players. As such, brands must remain agile, adaptive, and customer-centric in their approach toward AI to deliver meaningful experiences for the end consumers.
Ranjan Kumar is the Founder and CEO of Entropik – research integrated platform powered by AI. He is an engineer from IIT Kharagpur, has invested most of his time working with soft computing, neural computing, and deep learning. Ranjan has worked with distinctive firms like ONGC Ltd and ITC Ltd, after which he turned an entrepreneur with Oyeparty.com in 2012. He has also headed business at Citrus Payments, a fintech company, giving the division exponential growth under his leadership.
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