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Tag: Boston Consulting Group

  • Only 45% of Retailers Scale AI Despite Threefold Earnings Advantage

    Only 45% of Retailers Scale AI Despite Threefold Earnings Advantage

    Only 45 percent of retailers are scaling artificial intelligence across their operations, even as businesses committing heavily to the technology generate three times higher revenue and earnings growth.

    According to research highlighted this week by Boston Consulting Group managing director and partner Charlie Reid, operators treating artificial intelligence as a core discipline outpace rivals by triple on top-line sales and EBITDAR. Yet widespread experimentation across scattered pilots leaves the majority of commercial operators unable to convert software trials into balance sheet gains.

    Fragmented initiatives and inadequate organisational changes continue to limit companies from translating investments into measurable financial returns, Boston Consulting Group noted in November 2026 findings.

    Where Merchandising Delivers Fast Payback

    Capital is flowing primarily into core store and supply chain operations rather than back-office corporate support. Retailers are largely bypassing enterprise applications across human resources, procurement, and finance because those departments offer lower immediate financial return.

    Merchandising operations are providing the quickest path to measurable payback. Adjusting product assortment, pricing, promotion schedules, and vendor negotiations through artificial intelligence tools generates cash flow that operators use to fund broader technology rollouts. Getting shelf assortment right yields up to a 5 percent increase in like-for-like sales.

    The Friction Behind Operating Models

    Fragmented rollouts and weak internal adoption explain why most deployments stall at the testing phase. Boston Consulting Group measures technology implementation through what it terms a 10-20-70 operating breakdown: algorithms account for 10 percent of the transformation, data and systems represent 20 percent, while people, operating processes, and institutional structure dictate the remaining 70 percent.

    Tools fail when buyers and floor staff lack clear authority or incentive to execute automated guidance. An algorithmic recommendation creates zero value if a category merchandiser overrides the system or if store staff fail to reset physical shelf space. Executive teams routinely hunt for novel software without identifying the exact financial metric they need to alter.

    “So, at BCG, we call it the 10 2070 rule. 10% of the AI transformation is driven by the algorithm. 20% by the data and technology and then 70% by the organization, the processes um and and and and the people in the organization.”

    Competing for Automated Buyers

    Consumer interaction is shifting toward agentic commerce, where automated systems handle product discovery, price comparisons, and digital checkout tasks. Shoppers currently manage friction across physical aisles and mobile applications, frequently abandoning journeys when items show out of stock at checkout.

    Software agents compress that multi-step search into direct prompts, assembling tailored baskets against specific household dietary rules and spending limits. Over extended periods, these systems track household consumption patterns and reorder domestic staples before pantries run empty.

    That shift alters digital distribution outside merchant properties. Consumers searching through external platforms like Google and ChatGPT rely on software agents that scrape product attributes, ingredient registries, and live inventory across competing web domains simultaneously. Retailers must structure open, accurate product catalogues for algorithmic inspection rather than relying solely on visual merchandising to win human attention.

    Pruning Unfocused Software Trials

    Commercial operators face pressure to demonstrate cash returns on software capital expenditures. Treating machine learning as an exploratory technical exercise without strict hurdle rates has tied up working capital across fragmented vendor contracts.

    Survival across competitive consumer markets requires pruning low-yield software trials to protect core operating margins. Retailers that narrow their engineering resources to inventory visibility, predictive replenishment, and machine-readable data feeds will command distribution as autonomous purchasing tools take over routine household spending.

  • China retail consumption to jump 50%

    China retail consumption to jump 50%

    China’s total retail consumption will jump 50 per cent to $6.5 trillion by 2020, with online transactions accounting for half of that growth, according to new research.

    Seventy per cent of those e-tail purchases will be conducted via mobile devices. Over that same five-year period, cross-border eCommerce will have grown so high – to $152.1 billion – that it will represent one-third of the country’s total foreign trade.

    So say think tanks and research firms watching the world’s second-largest economy as it transitions from its former manufacturing base to one driven by consumption. The predictions were issued by Alibaba Research Institute, the research arm of Chinese eCommerce giant Alibaba Group, as part of its inaugural “Think Tank Summit on the New Economy” held last weekend in Beijing.

    The new annual event brought together over 600 thought leaders to look at ahead at the next five years in Chinese commerce. A panel of judges surveyed research from the 40 participating organisations and picked “10 Forecasts for the New Economy,” which focused not only on the importance of eCommerce but also the impact the internet will have China’s manufacturing, logistics, rural economy and society.

    The use of data, culled from billions of transactions as Chinese consumers buy and sell goods and services online, will also play a key role.

    “China today is in the midst of transforming from an industrial-driven economy to a data-driven economy,” Gao Hongbing, dean of AliResearch and vice president of Alibaba Group, said in a statement.

    “These 10 forecasts are a small part of our observation and thinking, and we hope they can play a part in stimulating further deliberation on the society’s future development.”

    Bain & Company predicted that China’s online retail market would reach $1.52 trillion, accounting for 22 per cent of the country’s retail industry, with maternity and baby products being the strongest category and third-and fourth-tier cities driving a significant part of the growth. The Boston-based management consultancy also said that mobile Internet would make up 70 per cent of all online sales.

    Bain put the total figure for cross-border eCommerce in China at $152 billion, with AliResearch in a separate prediction saying it expects cross-border eCommerce to make up one-third of China’s foreign trade in five years. The China Center for International Economic Exchanges said “e-international trade” will change how trade overall is done and that it will account for account for 30 per cent to 40 per cent of total world trade by 2025.

    Boston Consulting Group estimated that China’s consumer market will climb $2.3 trillion, or 50 per cent, to $6.5 trillion by the close of the decade. Online will account for 42 per cent of that growth, the management consultancy said.

    The internet would also penetrate all rural areas of China, according to Zhejiang University’s China Academy for Rural Development. As a result, the Information Research Department of the State Information Center of China said the sharing economy will rise to full prominence given this full penetration of broadband coverage in China. The Institute of Information Society Studies said China would have a “soft law” system providing a framework for Internet governance by 2020 as well.

    The other predictions included one from the Information Society 50 Forum & Department of Sociology and Anthropology at Peking University, which said that data will digitise how consumers are assessed, say, in providing individual recommendations. The Information Society also noted that the vast reams of data collected as consumers buy and sell goods online will as a result erode some of their privacy.

    ZenCoo, meanwhile, predicted that social measurement and cognitive experiments will replace statistical sampling, revolutionising the fundamental theories of many disciplines including psychology, sociology, economics, and communications.

    And finally, according to the Data Center of China Internet, the 3D printing market will reach $15.2 billion, with households using them the most.