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Artificial Intelligence: The Next Frontier for Retail and Consumer Industries
New York, January 7, 2025 / PRNewswire/ – The IBM Institute for Business Value has unveiled a significant global study indicating a substantial shift among retail and consumer product executives towards leveraging artificial intelligence (AI). This evolution in focus is projected to result in a 52% increase in spending outside traditional IT operations in the coming year. The study, presented in the report titled "Embedding AI in Your Brand’s DNA," highlights how brands are gearing up for the next wave of AI-driven transformation across various sectors of their enterprises.
By 2025, surveyed retail and consumer products companies plan to dedicate an average of 3.32% of their revenue to AI investments. This translates to $33.2 million annually for a company with $1 billion in revenue. This financial commitment underscores AI’s growing role beyond conventional IT applications, extending into areas such as customer service, supply chain management, talent acquisition, and marketing innovation. Here are some key findings from the report:
Rapid Adoption Across Enterprises
The report reveals that a staggering 81% of surveyed executives and 96% of their teams are already utilizing AI to a moderate or significant degree. Furthermore, executives express a desire to extend AI usage into more advanced applications, such as integrated business planning, with plans to increase usage by 82% by 2025.
Workforce Transformation
With the increasing adoption of AI, executives anticipate that around 31% of employees will need to learn new skills to work effectively with AI within the next year, with this figure rising to 45% over three years. In customer service, AI usage for personalized responses and follow-ups could see a 236% increase in the next year compared to the previous year. Notably, 55% of these enhancements are expected to involve human-AI collaboration, while only 30% might be fully automated, highlighting the necessity of equipping employees for seamless AI integration.
AI Ecosystem Platforms
There is a noticeable investment shift towards ecosystem platforms, which facilitate the exchange of data and AI models. Respondents anticipate growth from 52% today to 89% within three years as companies aim to blend AI capabilities with business and technology partners to accelerate innovation and drive efficiencies.
AI Governance Gap
While 87% of surveyed executives claim to have clear AI governance frameworks, fewer than 25% have fully implemented and continuously reviewed tools to manage risks such as bias, transparency, and security. This indicates a significant gap in operational oversight.
"AI is no longer just a tool; it’s a strategic imperative," stated Dee Waddell, Global Industry Leader for Consumer, Travel & 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."
The report accentuates that successful brands are transitioning from viewing AI merely as a productivity enhancer to positioning it as a central driver of enterprise innovation. Achieving this transformation necessitates rethinking traditional governance and reskilling strategies. Retailers are encouraged to align AI initiatives with their brand priorities and collaborate with strategic partners, including start-ups and technology firms. Equally important is breaking down silos between finance, technology, and business leaders. By fostering cross-functional collaboration, these stakeholders can jointly build compelling business cases that demonstrate how AI can deliver a long-term competitive advantage.
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Methodology
The IBM Institute for Business Value (IBM IBV), in collaboration with Oxford Economics, surveyed 1,500 global retail and consumer products executives across 15 countries in the third quarter of 2024. The sample was evenly split, with 50% representing the retail industry and 50% representing consumer products in nine countries during the same period.
Participants were asked a range of questions in various formats, including multiple choice, numerical, and Likert scale queries. The survey explored their organization’s expectations, results, concerns, and barriers for scaling or planning to scale AI/Gen AI within the enterprise and across their ecosystem partners.
To achieve this, IBM IBV conducted a series of contrast analyses, including pairwise comparisons and data classification using hierarchical clustering, highlighting result differences as shown in this report. The significance level for all analyses was set at (p < 0.05).
About IBM
IBM is a leading provider of global hybrid cloud and AI, along with consulting expertise. We assist clients in over 175 countries in capitalizing on insights from their data, streamlining business processes, reducing costs, and gaining a competitive edge in their industries. Over 4,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications, and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to effectuate
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