Portrait of author Chris Billingham
Chris Billingham

Senior Product Marketing Manager

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AI predictions for 2023: How will AI impact retail, consumer goods and manufacturing?

By Chris Billingham on December 15, 2022 - 5 Minute Read

I learned early in my career in business that it’s never wise to predict the future with too much confidence. Since there are so many externalities, overly confident predictions can be a recipe for disappointment.

But on the other hand, we’d never get anything done if we didn’t make assumptions about what might happen. And of couse so many AI use cases are about prediction it’s hard not to get caught up in the concept! So here goes my first public foray into end-of-year predictions: my musings about what will happen in 2023 across retail, consumer goods, manufacturing and the technology landscape that enables these industries. 

The rise of social shopping

Social shopping isn’t new but 2023 will see it grow to 20% of e-commerce sales with disproportionate growth in apparel. All of the social platforms launched new and improved commerce features in 2022; both brands and consumers will finally start to use them en masse next year. Rather than hunting multiple sites for that top you saw on Instagram, social shopping enables transactions directly inside the walls of a social media platform. 

This change has several implications for brands and retailers looking to connect with consumers:

  1. Brands and retailers need to ensure their products are discoverable and searchable across all social platforms and in different contexts, For example in the brand’s feed, influencer feeds, in both organic and paid content, etc.
  2.  As their e-commerce sites decrease in importance because transactions are happening in social, retailers must divert investment to social and use data they have on existing customers to target and reach new customers in social channels. Artificial intelligence provides new avenues for optimising customer acquisition, engagement and retention.
  3. Being able to buy things where influencers operate will only augment the importance of influencer marketing. But as brands build partnerships with influencers they need to be mindful of the risks associated, ones that are fundamentally different to those they are familiar with in traditional marketing. For example influencers can make inappropriate public comments or have associations with other brands. Adidas’ decision to sever ties with Kanye West and Nike’s decision to pause its partnership with Kyrie Irving are recent examples of where influencer relationships have soured.

The move to social shopping is only the latest example of the traditional retail model being intermediated by new channels and players. It’s not dissimilar to how marketplaces like Amazon and Zalando have created new sales avenues and brought their own challenges.

A woman opening a cardboard box on the sofa

Data transforms manufacturing and fulfilment

In 2023 manufacturers of all stripes will move at pace to put the days of pencil and paper tracking behind them by adopting cloud-based data-centric approaches for designing and building products. Manufacturers will unify supply chain and demand data, and thanks to AI, will use that to transform and optimise production lines in real time. The end result will be reduced waste, higher quality products and faster production times, all with a lower environmental footprint.

Improving the efficiency of supply chains will be precipitated by a double imperative: environmental as well as economic pressures.

Although mitigating climate change through reduced energy use has been at the top of the charts for several years, 2023 will see manufacturers start to back up their strategies with concrete action.

Ira Dubinsky

GTM Director, Peak

Against a backdrop of reduced consumer demand, manufacturers will start to make choices that they might not have as quickly otherwise, such as using technology to reduce the time to process orders, reduce minimum order quantities, or offer their customers greater flexibility on customisation of items.

And as more of us choose to shop online and a consequently greater share of global retail trade is conducted via e-commerce, innovation in the last mile of the supply chain will be top of mind in 2023. Micro fulfilment will become the dominant investment choice for any business looking to improve distribution to their end consumers. A micro fulfilment centre is a small storage facility to help get inventory closer to the consumer, thereby reducing transportation costs and times. Since they are small, it’s critical to make the right decisions about what stock to store and in what quantity. Using data, there is the potential to make this allocation challenge highly automated, as well as automate the fulfilment centre itself.


Supply chain uncertainty and other headwinds make composable commonplace

The headwinds felt throughout 2022 will spill over into 2023 exacerbating the need for all businesses to be more flexible and resilient. A trend introduced in the last few years – composable – will become the dominant approach both to enterprise software and to building enterprises themselves. A composable approach involves combining individual building blocks together to make a whole. With the near-constant volatility and uncertainty in the world, it’s a sensible approach that provides greater flexibility and resilience.

For example a composable business can be thought of as having many parts, each with their own expertise (e.g. paying invoices, procuring materials, manufacturing widgets, answering customer calls). The emphasis is on re-imagining the business model and then assembly and re-assembly of pieces to get a positive outcome. In a composable business, teams are empowered to compose as they need to in order to meet demand, seize opportunities or overcome obstacles. When it comes to technology, composable means assets, applications or tools each having discrete functionality. 

In 2023, technology buyers such as those with the title CTO, CIO or CDO will increasingly seek to build the infrastructure in their businesses with interoperable component parts: individual discrete tools and applications (including AI applications) that rapidly add value to the business and connect together through cloud-based open APIs, shared data models, and other cooperative frameworks. This approach will supplant the dominance of monolithic legacy systems and usher in a new era of enterprise software that is packaged, sold and implemented in an explicitly cooperative manner.

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