Retail AI Investments Set to Skyrocket: 52% Spending Surge Beyond Traditional IT Budgets

Retail AI Investments Set to Skyrocket: 52% Spending Surge Beyond Traditional IT Budgets

A groundbreaking IBM Institute for Business Value study reveals that retail and consumer product companies are dramatically expanding their AI investments, with spending outside traditional IT operations projected to surge 52% in the next year. This shift marks a fundamental transformation in how businesses view artificial intelligence—from a simple productivity tool to a strategic enterprise driver.

The Numbers Behind the AI Revolution

The study surveyed 1,500 global retail and consumer products executives across 15 countries, revealing compelling investment patterns. By 2025, companies plan to allocate an average of 3.32% of their revenue to AI initiatives—equivalent to $33.2 million annually for a $1 billion company.

Current adoption rates are already impressive:

• 81% of executives and 96% of their teams are using AI to a moderate or significant extent
• 82% increase planned for sophisticated use cases like integrated business planning in 2025
• 236% growth expected in AI-powered customer service applications

Workforce Transformation is Essential

The human element remains crucial in this AI expansion. Companies expect 31% of employees will need new AI-related skills within the next year, rising to 45% within three years. Importantly, 55% of AI improvements will involve human-AI collaboration rather than full automation, emphasizing the need for strategic workforce development.

The Governance Gap Challenge

Despite widespread adoption plans, a critical oversight gap exists. While 87% of surveyed executives claim to have clear AI governance frameworks, fewer than 25% have fully implemented tools to manage risks like bias, transparency, and security.

"AI is no longer just a tool; it's a strategic imperative," said Dee Waddell, Global Industry Leader 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."

Strategic Implementation Recommendations

Success requires breaking down silos between finance, technology, and business leaders. Companies should tailor AI initiatives to align with brand priorities while collaborating with strategic partners, including startups and technology companies. The focus should shift from viewing AI as merely a productivity booster to positioning it as a core driver of enterprise innovation.

🔗 Read the full study: Embedding AI in Your Brand's DNA