How AI is Changing the Face of India's Consumer and Retail Industry In 2024, 74% of C&R companies reported seeing solid returns from their tech investments — a big jump from just 50% in 2023

India's consumer and retail (C&R) industry is going through a major digital shift, and artificial intelligence (AI) is leading the way. Faced with rising living costs and changing customer behaviour, many Indian retail companies are turning to AI and data-driven tools to stay ahead. According to KPMG global tech report: Consumer and retail insights, 80 per cent of industry leaders expect the cost-of-living crisis to hurt their businesses in the next three years. To survive and grow, companies are now focusing on understanding their customers better and creating more personalised experiences.

The good news is, these efforts are beginning to pay off. In 2024, 74 per cent of C&R companies reported seeing solid returns from their tech investments — a big jump from just 50 per cent in 2023. This shows that companies are moving away from simply copying competitors and are now focusing on what truly adds value. AI is at the centre of this change. Around 73 per cent of Indian consumer and retail businesses are already getting real business value from using AI in areas like operations, product development, and customer service.

In the short term, businesses are using AI mainly to make operations smoother. This includes automating routine tasks, improving how employees work, and speeding up customer support. They are also using AI to develop new products and services, detect issues faster, manage energy use, support environmental goals, and even reduce fraud and security risks.

Companies are also getting better at using data. In 2023, only 38 per cent of businesses said they could get useful insights from their data. In 2024, that number rose to 52 per cent. More companies now have easy access to data, are using data science effectively, and are finding ways to make money from their data. These improvements are helping retailers make smarter decisions and respond quickly to market changes.

AI is also improving the shopping experience. Retailers are using it to send personalised offers, answer customer questions, and even help customers "try on" products virtually. AI helps in designing new products, planning inventory, predicting demand, training staff, and setting smart prices. It also plays a role in sustainability by suggesting eco-friendly designs and helps optimise delivery routes, saving time and money.

To make the most of AI, many companies are encouraging teamwork across different departments. Around 46 per cent of businesses are setting up special AI teams or working groups to find new ways to use the technology. As AI becomes more common, companies are also thinking about how to manage it responsibly. A large number of business leaders — 84 per cent — believe AI should be governed like climate rules, and 39 per cent of companies plan to centralise AI experiments after gathering employee feedback.

Puneet Mansukhani, Head of Global Retail Digital Technology and Transformation at KPMG in India, says that a clear, long-term strategy is key. "As GenAI becomes a key investment area, organisations must prioritise a holistic strategy that aligns with immediate business goals and delivers sustainable value," he explains. In simple terms, companies need to look beyond quick wins and think about how AI can create lasting business success.