IBM Report Reveals Retail and Consumer Brands on the Brink of an AI Boom

We know AI is no longer a distant vision. Not only has it arrived, but it has become an integral part of our everyday life. As we continue to engage with AI tools, consumer brands are under pressure to adapt quickly and stay relevant in an increasingly competitive digital world.

Consumers are ready for AI, but will brands keep up?

A global study by the IBM Institute for Business Value shows that retail and consumer product executives are well aware of the importance of AI. The survey respondents expect spending outside of traditional IT operations to surge by 52% in the next year.

The report, titled “Embedding AI in Your Brand’s DNA,” is based on a survey of 1,500 global retail and consumer product executives. It explores how brands are making AI a key part of everything they do. This includes everything from innovation to customer connections and business strategy.

It’s no surprise that the report found that 81% of surveyed executives and 96% of their teams are already using AI. However, looking ahead to 2025, the executives want to expand into more sophisticated AI use cases. They are ready to allocate an average of 3.32% of their revenue to AI. That is equivalent to $33.2 million for a $1 billion company.

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The executives want AI to be part of their integrated business planning, increasing usage by 82% by 2025. The top focus areas for using AI in the next 12 months include marketing and customer experience, supply chain operations, IT, and security. Only 5% of the respondents plan to reduce their AI budgets, showing strong confidence in AI’s benefits.

“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 AI skills gap has remained a key challenge to AI adoption, with many organizations struggling to find the necessary expertise for development and implementation. The IBM report echoes this challenge, revealing that executives expect 31% of their workforce will need to reskill or acquire new skills to work with AI in the next year, with that number rising to 45% within three years.

The respondent shared that 55% of improvements in customer service involve human-AI collaboration, with only 30% would be fully automated. This underscores that the human element remains crucial, as employees continue to play a central role in working alongside AI to deliver better business outcomes.

The findings highlight that many key aspects of brand development require human intuition, such as creativity, emotional intelligence, and specialized expertise. These intrinsically human traits can be further enhanced by AI. According to IBM, workers who possess the skills to work with AI will have a significant advantage over those who do not.

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Another important finding of the study suggests that investment in AI ecosystem platforms, which enable the sharing of data and AI models, is expected to surge. IBM predicts that companies will increasingly integrate AI capabilities with their business and technology partnerships to accelerate innovation and improve efficiency.

“As organizations progress with their initiatives, they are investing in platforms to integrate AI tools and models,” the report states. “Today, as they establish their AI foundation, they are primarily focused on data and analytics platforms (65%), innovation platforms (64%), and skills/learning platforms (62%).”

“Building on these existing platforms and expanding to others will enable federation and orchestration of AI across functions, facilitating cross-functional learning to support scaling AI across the enterprise.”

IBM’s study reveals that nearly 60% of businesses already use open-source platforms for their AI projects. This pattern is expected to continue in 2025, with 41% of companies planning to use more open-source platforms.

IBM also highlights other key risks including misuse of AI that can erode consumer confidence and biased or unfair AI outcomes that could alienate customers. Cybersecurity and lack of AI explainability also pose potential vulnerabilities.

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Although 87% of executives report having established clear AI governance frameworks, less than a quarter have fully implemented and consistently updated tools to address risks such as bias, transparency, and security. This highlights a critical gap in operational oversight.

To bridge this gap, IBM recommends building confidence in responsible internal AI use cases before expanding to customer-facing use cases. It also suggests that businesses communicate openly with customers about data collection and AI use to further strengthen governance and protect brand integrity.

Businesses that are able to adapt and leverage the power of AI could gain a significant edge over competitors. IBM suggests that retailers should align AI with brand goals and collaborate across functions to build business cases that highlight AI’s long-term value.

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