Retail AI spending to rise 52% as companies embrace enterprise-wide integration, says IBM Study

Artificial intelligence (AI) is becoming a cornerstone of retail and consumer product strategies, with spending on AI initiatives expected to grow 52% outside traditional IT budgets in 2025, according to a comprehensive study from the IBM Institute for Business Value (IBV). The report, Embedding AI in Your Brand’s DNA, reveals that brands are adopting AI beyond its traditional functions to drive innovation across customer service, marketing, supply chains, and talent management.

AI Investments Transforming Retail Operations

The report underscores a fundamental shift in how retail and consumer product companies are allocating resources to AI. By 2025, these organizations are expected to dedicate an average of 3.32% of their revenue to AI-related projects. For a $1 billion business, this represents a $33.2 million annual investment, highlighting the critical role AI is playing in reshaping operational and customer-facing processes.

IBM’s research indicates that 81% of executives and 96% of their teams are already deploying AI in their operations. While initial use cases have focused on efficiency and automation, there is a growing interest in more advanced applications, such as integrated business planning. Usage in this area is projected to increase by 82% in the next year, reflecting the technology’s potential to support enterprise-wide decision-making.

Workforce Upskilling and Collaboration

AI adoption is not only transforming systems but also reshaping workforce dynamics. Executives anticipate that 31% of employees will need new skills to work effectively with AI in the coming year, with this figure rising to 45% within three years. The report highlights a particular focus on customer service, where AI-powered tools for personalized interactions and follow-ups are expected to grow by 236%.

However, these advancements will not fully replace human roles. Around 55% of new AI-driven enhancements are anticipated to involve collaboration between employees and AI systems, with only 30% being fully automated. This underscores the importance of training programs to ensure employees can work seamlessly alongside AI.

The Growing Role of AI Ecosystems

The adoption of AI is driving investments in ecosystem platforms that facilitate data sharing and collaboration. The report reveals that the use of these platforms, which enable companies to exchange AI models and integrate them into broader business networks, is expected to rise from 52% today to 89% by 2028. These platforms will play a vital role in enabling partnerships between retailers, technology providers, and startups, accelerating innovation and operational efficiencies.

Governance Challenges Persist

Despite the rapid adoption of AI, governance remains a significant challenge. While 87% of executives claim to have governance frameworks in place, fewer than 25% have implemented tools to manage risks such as algorithmic bias, transparency, and cybersecurity. This gap highlights the need for more robust systems to ensure ethical and effective AI deployment.

Dee Waddell, Global Industry Leader for Consumer, Travel, and Transportation Industries at IBM, emphasized that AI is becoming a strategic imperative for businesses. According to Waddell, companies must evolve their approach to AI from merely improving productivity to positioning it as a driver of brand relevance, engagement, and trust.

A Roadmap for Enterprise-Wide AI Adoption

The report offers guidance for companies aiming to maximize the impact of their AI investments. It recommends tailoring AI initiatives to align with brand priorities and fostering cross-functional collaboration among finance, technology, and business teams. By building cohesive strategies and breaking down operational silos, organizations can create compelling business cases that demonstrate AI’s potential to deliver long-term competitive advantages.

The IBM study makes it clear that AI is no longer confined to IT departments—it is reshaping the entire business landscape for retail and consumer product companies. By strategically expanding AI investments and addressing governance and workforce challenges, brands can position themselves for sustained success in an increasingly AI-driven marketplace.