How retailers, brands are investing in AI

A new global study showed that retail and consumer product executives are significantly increasing their investment in artificial intelligence, aiming to transform their operations and enhance customer experiences.

The study from the IBM Institute for Business Value found that retail and consumer product executives are dramatically shifting their focus toward artificial intelligence (AI). The report, Embedding AI in Your Brand’s DNA, found that participants project spending in the area could surge by 52 per cent in the next year.

By 2025, surveyed companies plan to allocate an average of 3.32 per cent of their revenue to AI. This investment will include functions such as customer service, supply chain operations, talent acquisition and marketing innovation — showing that AI has expanded beyond traditional IT applications.

The report found that 81 per cent of surveyed executives and 96 per cent of their teams are already using AI to a moderate or significant extent. Executives indicated they want to expand AI usage to more sophisticated use cases, such as integrated business planning, where they plan to increase usage by 82 per cent in 2025.

Workforce transformation is also a key focus, with executives expecting that 31 per cent of employees will need to learn new skills to work with AI in the next year, increasing to 45 per cent within three years.

AI use in customer service, particularly for personalized responses and follow-ups, could grow by 236 per cent in the next 12 months compared to the prior year. Notably, 55 per cent of these improvements are expected to involve human-AI collaboration, while only 30 per cent would be fully automated, highlighting the need to equip employees for seamless AI integration.

Investment in ecosystem platforms, which facilitate the exchange of data and AI models, is expected to jump. Respondents indicated they expect growth from 52 per cent today to 89 per cent within three years as their companies look to blend AI capabilities with business and technology partners to accelerate innovation and drive efficiencies.

Despite 87 per cent of surveyed executives claiming to have clear AI governance frameworks, fewer than 25 per cent have fully implemented and continuously review tools to manage risks like bias, transparency, and security, revealing a critical gap in operational oversight.

“AI is no longer just a tool; it’s a strategic imperative,” said Dee Waddell, global industry leader of consumer, travel and transportation industries at IBM. “Retail and consumer product companies are at a tipping point where embedding AI across their operations can help define not just productivity gains, but the future of brand relevance, engagement and trust.”

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