Consumer and retail CEOs are pivoting decisively towards artificial intelligence (AI), customer experience and cautious deal-making as they navigate a complex global environment marked by cost pressures, talent gaps and evolving sustainability expectations, according to the latest outlook by KPMG.
The KPMG 2025 Consumer & Retail CEO Outlook highlights that AI has emerged as the single most important investment priority, with 64 per cent of CEOs identifying it as a key focus area, up from 57 per cent a year ago. Nearly three-quarters of leaders expect to allocate 10–20 per cent of their budgets to AI in the coming year, reflecting growing confidence in its ability to deliver measurable productivity gains, cost efficiencies and revenue growth.
Executives are increasingly viewing AI as a transformative force across the value chain—from personalised shopping experiences and predictive analytics to optimised supply chains and automated operations. Around 68 per cent of CEOs expect a return on investment from AI within one to three years, signalling accelerated adoption timelines.
Beyond technology, improving customer experience remains the top operational priority for growth, followed by digitisation and inorganic expansion strategies. However, M&A sentiment has turned more cautious, with only 35 per cent of CEOs expecting high-impact acquisitions, reflecting a broader “cash, core and caution” approach amid macroeconomic uncertainty.
The report notes that while deal activity may rebound in 2026, companies are increasingly favouring targeted acquisitions, portfolio optimisation and private equity partnerships over large-scale transformational deals. Businesses are also diversifying sourcing strategies to mitigate supply chain risks linked to geopolitical tensions, climate events and trade disruptions.
AI adoption, however, is not without challenges. More than half of CEOs cite ethical concerns as the biggest barrier, alongside high implementation costs, data readiness issues and technical skill gaps. At the same time, cybersecurity risks remain elevated, with 68 per cent of leaders expressing strong concern over fraud detection and prevention.
Workforce transformation is emerging as a parallel priority, with 73 per cent of organisations redesigning roles and career paths to align with AI integration. While 77 per cent of CEOs say they understand AI’s disruptive potential, companies face a persistent challenge in bridging the gap between existing workforce skills and future requirements.
Sustainability continues to gain strategic importance, although execution remains uneven. Just over half of CEOs report aligning sustainability with core business strategy, even as 63 per cent acknowledge that ESG expectations are evolving faster than their organisations can adapt. Supply chain decarbonisation, in particular, has emerged as the biggest barrier to achieving net-zero goals.
Looking ahead, the report underscores that consumer and retail companies are entering a phase of structural transformation, where digital innovation, operational resilience and sustainable practices will define competitive advantage. CEOs are increasingly balancing growth ambitions with risk mitigation, as they prepare for a future shaped by AI, shifting consumer behaviour and global uncertainty. |
