IBM Study: AI Spending Expected to Surge 52% Beyond IT Budgets as Retail Brands Embrace Enterprise-Wide Innovation

Rhea-AI Summary

IBM released a global study revealing significant AI investment trends in retail and consumer products companies. The report shows that 81% of executives and 96% of their teams are already using AI substantially, with companies projecting to allocate 3.32% of revenue to AI by 2025 - equivalent to $33.2M annually for a $1B company.

Key findings indicate AI spending outside traditional IT could surge by 52% in the next year. Companies plan to expand AI usage in sophisticated areas like integrated business planning, expecting an 82% increase by 2025. Customer service AI applications could grow by 236% in the next 12 months, with 55% involving human-AI collaboration.

The study also highlights a significant governance gap: while 87% of executives claim to have AI governance frameworks, less than 25% have fully implemented risk management tools. Companies expect 31% of employees will need AI-related reskilling within a year, rising to 45% within three years.

Positive

• Projected 52% increase in AI spending outside IT operations
• Expected allocation of 3.32% of revenue to AI by 2025
• 236% growth projected in AI customer service applications
• 82% increase planned in integrated business planning AI usage
• AI ecosystem platform adoption expected to grow from 52% to 89% in three years

Negative

• Less than 25% have implemented AI risk management tools
• 31% of workforce requires immediate AI skill development
• Significant investment needed for employee reskilling (45% within three years)

Insights

Technology Investment Analyst

This comprehensive IBM study reveals a transformative shift in retail AI investment patterns. The projected $33.2 million annual AI investment for billion-dollar companies represents a substantial 3.32% of revenue allocation, marking an aggressive expansion beyond traditional IT boundaries. The 52% surge in non-IT AI spending signals a strategic pivot toward enterprise-wide AI integration. Most striking is the 236% projected growth in customer service AI applications, with a noteworthy 55% focused on human-AI collaboration rather than full automation. The ecosystem platform adoption trajectory, expanding from 52% to 89% within three years, indicates a broader industry transformation toward collaborative AI infrastructure. These metrics suggest a fundamental restructuring of retail operations and technology investment priorities.

Business Strategy Consultant

The governance gap identified in the study - where 87% of executives claim to have AI frameworks but only 25% have implemented comprehensive risk management tools - exposes critical operational vulnerabilities. The anticipated workforce transformation, requiring 31% of employees to develop new AI skills within a year and 45% within three years, presents both a significant organizational challenge and opportunity. The 81% current executive AI adoption rate, coupled with plans for 82% increased usage in integrated business planning, indicates a rapid shift toward AI-centric business models. However, the disparity between governance claims and actual implementation suggests many organizations are underprepared for the scale and complexity of this transformation.

Market Research Analyst

This research highlights a pivotal moment in retail technology adoption. The 96% team-level AI utilization rate, significantly higher than executive-level adoption, suggests strong bottom-up momentum for AI integration. The emphasis on human-AI collaboration over full automation (55% vs 30%) indicates a more nuanced approach to AI implementation than previously assumed. The projected investment patterns suggest retailers are moving beyond experimental AI applications toward comprehensive, enterprise-wide deployment. This shift, combined with the focus on ecosystem platforms, points to an emerging trend where AI capabilities become a fundamental differentiator in retail competitiveness rather than just an operational enhancement tool.

• The report found that 81% of surveyed executives and 96% of their teams are already using AI to a moderate or significant extent 
• Executives indicate they want to expand into more sophisticated AI use cases, such as integrated business planning where they plan to increase usage by 82% in 2025

NEW YORK, Jan. 7, 2025 /PRNewswire/ -- A new global study from the IBM (NYSE: IBM) Institute for Business Value found that surveyed retail and consumer product executives are dramatically shifting their focus toward artificial intelligence (AI), with responses indicating that participants project spending outside of traditional IT operations could surge by 52% in the next year. The report, titled "Embedding AI in Your Brand's DNA," reveals how brands are preparing for the next phase of AI-driven transformation across the enterprise.

By 2025, retail and consumer products companies surveyed say they plan to allocate an average of 3.32% of their revenue to AI—equivalent to $33.2 million annually for a $1 billion company. This investment is set to span functions such as customer service, supply chain operations, talent acquisition, and marketing innovation, highlighting AI's expansion beyond traditional IT applications. Key findings include:

• Rapid Adoption Across the Enterprise: The report found that 81% of surveyed executives and 96% of their team are already using AI to a moderate or significant extent. Executives indicate they want to expand AI usage to more sophisticated use cases, such as integrated business planning where they plan to increase usage by 82% in 2025.
• Workforce Transformation:  Executives surveyed expect that 31% of employees will need to learn new skills to work with AI in the next year, increasing to 45% within three years. AI use in customer service, particularly for personalized responses and follow-ups, could  grow by 236% in the next 12 months when compared to the prior year based on survey responses. Notably, responses indicate that 55% of these improvements are expected to involve human-AI collaboration, while only 30% would be fully automated—highlighting the need to equip employees for seamless AI integration.
• AI Ecosystem Platforms: Investment in ecosystem platforms—tools that facilitate exchange of data and AI models—could skyrocket. Respondants indicated they expect growth from 52% today to 89% within three years as their companies look to blend AI capabilities with business and technology partners to accelerate innovation and drive efficiencies.
• AI Governance Gap: Despite 87% of surveyed executives claiming to have clear AI governance frameworks, fewer than 25% have fully implemented and continuously review tools to manage risks like bias, transparency, and security. This reveals a critical gap in operational oversight.

"AI is no longer just a tool; it's a strategic imperative," said Dee Waddell, Global Industry Leader, 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 emphasizes that successful brands can evolve from viewing AI as merely a productivity booster to positioning it as a core driver of enterprise innovation. Achieving this transformation will require rethinking traditional governance and reskilling strategies. Retailers should tailor AI initiatives to align with their brand priorities and collaborate with strategic partners, including start-ups and technology companies. Equally important is breaking down silos between finance, technology, and business leaders. By fostering cross-functional collaboration, these stakeholders can jointly build strong business cases that demonstrate how AI can help deliver a long-term competitive advantage.

Connect with IBM at NRF 2025: AI is taking center stage for IBM at NRF'25. Join us as we delve into how the technology is enhancing everything from customer engagement and personalization to operational efficiency. We'll share innovative examples in marketing, supply chain management, and sustainability. IBM industry experts will be at Booth #4639. Stay updated via our NRF webpage. #NRF2025

For more information and to access the full report, visit here.

Methodology

The IBM Institute for Business Value (IBM IBV), in cooperation with Oxford Economics, surveyed 1,500 global retail and consumer products executives in 15 countries in Q3 2024. 50% of the sample represented retail industry and 50% represented consumer products in nine countries in Q3 2024.

Participants were asked a range of questions in various formats (such as multiple choice numerical and Likert scale). They were asked about their organization's expectations, results, concerns, and barriers for scaling or planning to scaleAI/Gen AI within the enterprise and across their ecosystem partners.

To accomplish this, the IBM IBV ran a series of contrast analyses, including pairwise comparisons and data classification using hierarchical clustering highlighting results differences as shown in this report. Significance level for all analyses was set
at (p < 0.05) level.

About IBM

IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. More than 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 affect their digital transformations quickly, efficiently and securely. IBM's breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM's long-standing commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information.

Media Contact:
Kelsey Lazio
Global External Relations Lead, Consumer and Retail, IBM
Kelsey.lazio@ibm.com 

 

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SOURCE IBM

FAQ

What is IBM's projected AI spending increase for retail companies in 2025?

According to IBM's study, retail and consumer products companies project AI spending outside traditional IT operations to surge by 52% in the next year, with companies planning to allocate 3.32% of their revenue to AI by 2025.

How much will AI implementation cost retail companies according to IBM's study?

For a $1 billion company, the AI implementation cost is projected to be $33.2 million annually by 2025, representing 3.32% of revenue.

What percentage of retail executives are currently using AI according to IBM's study?

The study found that 81% of surveyed executives and 96% of their teams are already using AI to a moderate or significant extent.

How much will AI usage in customer service grow according to IBM's report?

According to IBM's study, AI use in customer service could grow by 236% in the next 12 months compared to the prior year.

What percentage of retail employees will need AI training by 2028?

According to IBM's study, 45% of employees will need to learn new AI-related skills within three years.