IBM Study Reveals AI Spending Will Surge by 52% as Retail Brands Innovate

IBM's New Insights on AI Investment in Retail

A recent study conducted by IBM's Institute for Business Value reveals that retail and consumer product companies are dramatically shifting their focus towards integrating artificial intelligence (AI) into their operations. The findings suggest that these businesses are planning to increase their spending on AI outside of traditional IT budgets by an astounding 52% over the next year.

Projected Spending on AI

The report, titled "Embedding AI in Your Brand's DNA," highlights that companies expect to allocate an average of 3.32% of their revenues towards AI initiatives by 2025. This translates to approximately $33.2 million annually for a company generating $1 billion in revenue. These investments will cover various functional areas, including customer service, supply chain management, marketing, and talent acquisition. This signifies a remarkable shift away from viewing AI merely as an IT tool to recognizing its potential as a transformative asset for the entire enterprise.

Rapid Adoption of AI Technology

According to the survey, an impressive 81% of executives and 96% of their teams are already applying AI technologies to a moderate or significant degree. Executives anticipate expanding their AI applications into more complex use cases, particularly integrated business planning, where they expect an 82% usage growth by 2025. Additionally, AI's role in customer service is projected to increase by 236% within the next year, predominantly through human-AI collaboration.

Reskilling and Workforce Transformation

The advent of AI is expected to necessitate a significant change in workforce skills. The surveyed executives predict that about 31% of employees will need updated skills to interact effectively with AI technologies in the coming year, with this figure rising to 45% within three years. This highlights the critical importance of not only implementing AI solutions but also equipping staff with the necessary skills to maximize their potential.

Investment in AI Ecosystem Platforms

The report also points towards a dramatic increase in investments in AI ecosystem platforms—tools designed to facilitate the exchange of data and AI models among partners. Respondents indicated an expected growth in this area from 52% today to 89% over the next three years, as companies seek to enhance innovation and efficiency through partnerships with technology firms and startups.

Addressing the AI Governance Gap

Despite 87% of executives claiming to have established AI governance frameworks, less than 25% have effectively integrated tools to manage risks related to bias, transparency, and security. This significant oversight points to a gap in the operational management of AI technologies, which companies need to address swiftly.

Strategic Imperative for Brands

Dee Waddell, IBM's Global Industry Leader for the Consumer and Travel Transportation Industries, articulated the necessity for companies in the retail sector to not only enhance productivity with AI but also leverage it as a core strategy for innovation and brand relevance. Successful brands are shifting their perception of AI from a mere tool to a fundamental aspect of their operational strategy, and they must undertake a reassessment of governance and professional development strategies.

Collaboration Across Functions

The report suggests that collaboration across finance, technology, and business functions is essential. By breaking down existing silos, these stakeholders can develop robust business cases to demonstrate how AI investment can deliver a sustained competitive advantage.

Looking Ahead: IBM at NRF 2025

IBM is set to showcase its innovations at NRF 2025, emphasizing how AI technologies can enhance customer engagement, operational effectiveness, and sustainable practices. Attendees will get a chance to explore case studies in marketing, supply chain management, and more at Booth #4639. For more insights and the full report, follow their NRF webpage.

This paradigm shift represents not just an operational upgrade but a redefinition of what it means to be relevant in today's fast-paced digital landscape. Building a future with AI at its core will require commitment, investment, and collaboration across all levels of an organization.