Retail and consumer product executives are moving their focus towards artificial intelligence, according to a new study from the IBM (NYSE: IBM) Institute for Business Value called “Embedding AI in Your Brand’s DNA.”
Released on Friday, the study surveyed 1,500 executives from 15 countries, and showed an increase in AI-related spending beyond traditional IT budgets, with projections suggesting a 52 per cent surge in the next year.
Businesses are increasing their investment in artificial intelligence, with respondents planning to allocate an average of 3.32 per cent of their revenue to AI by 2025. For a company with USD$1 billion in revenue, this translates to approximately USD$33.2 million annually.
These investments extend beyond IT departments to functions such as customer service, supply chain operations, talent acquisition, and marketing innovation. The adoption of AI across enterprises is also expected to expand significantly, with the proportion of companies using AI projected to rise from 49 per cent today to 89 per cent within three years.
This integration aims to enhance innovation and operational efficiency. However, governance remains a challenge. While 87 per cent of executives report having clear AI governance frameworks, fewer than 25 per cent have fully implemented and regularly review tools to address risks like bias, transparency, and security, revealing a gap in operational oversight.
“Retail and consumer product companies are at a tipping point where embedding AI across their operations can define not just productivity gains, but the future of brand relevance, engagement, and trust,” said Dee Waddell, IBM’s Global Industry Leader for Consumer, Travel & Transportation Industries said.
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Study performed with Oxford Economics
The report highlights that successful brands evolve by positioning AI as a core driver of enterprise innovation rather than just means of boosting productivity. Furthermore, companies must rethink governance and reskilling strategies to achieve this transformation.
Retailers should align AI initiatives with their brand priorities and collaborate with strategic partners, such as start-ups and technology companies, according to the report. This involves dissolving the silos between finance, technology, and business leaders. By fostering cross-functional collaboration, stakeholders actively build strong business cases that demonstrate AI’s potential to deliver a long-term competitive advantage.
Oxford Economics helped perform the study. It came about as an equal split between retail and consumer product executives. Participants responded to a range of questions through various formats, including multiple-choice and Likert scale, focusing on their expectations, results, concerns, and barriers related to scaling AI within their organizations and across their ecosystem partners.
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