Why AI may disrupt consumer staples retailers
While artificial intelligence could enhance efficiency across much of the consumer staples sector, retailers may face challenges as the technology reshapes how consumers discover and purchase products, says Fidelity’s Ben Shuleva.
- Fidelity Portfolio Manager Ben Shuleva believes many consumer staples companies are likely to benefit from artificial intelligence. However, he thinks retailers could be vulnerable to disruption if their control of the customer relationship weakens as consumers increasingly prefer to shop through AI assistants rather than retailer websites and apps.
- “Retailers derive much of their value from serving as intermediaries between brands and consumers, helping shoppers discover, evaluate and select products. But large language models and agentic AI tools are designed to streamline search, discovery and decision-making, potentially reducing retailers’ influence over the shopping journey,” says Shuleva, who co-manages Fidelity Advisor® Consumer Staples Fund with Landon Finter.
- In leading the sector-focused equity strategy, Shuleva adheres to a core philosophy that stock prices follow earnings over the long term. He emphasizes durable franchises with the potential to compound value and deliver above-average earnings growth, becoming particularly interested when he believes the market underestimates the magnitude or duration of that growth and when valuations are attractive.
- He sees such companies in other segments of the sector and is confident AI is likely to improve operational efficiency, lower costs and deliver more effective marketing. “As an example, Coca-Cola has already highlighted opportunities to use AI to improve its marketing efficiency and consumer engagement, and reduce cost-to-serve,” he says of the fund’s second-largest holding as of September 30, 2026.
- As AI’s impact on the sector evolves, Shuleva has become more cautious about what he calls retail advertising businesses. Retail media networks, he noted, have become a major profit driver for Amazon.com and a fast-growing revenue stream for Walmart, Target and other retailers. Brands pay retailers for advertising and product placement across digital and in-store channels, monetizing shopper traffic and engagement.
- “If product discovery and the shopping journey begin on an LLM rather than a retailer’s own platform, the economics of retail media become far less certain,” he says. “This poses a real threat to retail advertising businesses and, in my view, makes the long-term profitability of digital transactions more uncertain.”
- Shuleva does not expect full retailer disintermediation or a collapse in advertising spending but believes even a partial shift in consumer behavior could pressure the profitability of retail advertising businesses such as Amazon, Walmart and Target, all fund holdings at the end of September.
- While the most likely outcome is a middle-ground scenario, Shuleva believes that it still presents meaningful risk for retailers, as e-commerce growth increases dependence on advertising revenue.
Fidelity Advisor Consumer Staples Fund (FDIGX)
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