Companies Expand AI Use Beyond IT to Reshape Internal Functions and Customer Interactions

A global report by the IBM Institute for Business Value, highlighted by Retail Asia, has revealed a major shift in the way retail and consumer product companies are planning their artificial intelligence (AI) investments for 2025. AI spending is projected to rise by 52%, extending beyond traditional IT budgets and marking a major change in both business operations and customer engagement strategies.

AI is no longer confined to the IT department; it has become a key catalyst for growth and operational efficiency. According to the study, retail and consumer product companies are expected to allocate an average of 3.32% of their revenue to AI by 2025, amounting to approximately $33.2 million for every $1 billion in revenue. This is a notable shift, with AI now being applied to critical business functions, including marketing, customer service, supply chain management, and talent acquisition.

Currently, 81% of executives and 96% of their teams are utilising AI to varying degrees, and plans are in place to increase this by 82% by 2025, particularly in areas like integrated business planning. The report forecasts that AI’s role in providing personalised customer service will see a dramatic surge, with AI-driven personalised responses predicted to grow by 236% in the next year. This development will largely be driven by collaborative efforts between AI systems and human workers, transforming the way businesses engage with customers and improving overall satisfaction.

With this accelerated adoption of AI, businesses will face the challenge of equipping their workforce with the necessary skills. The study indicates that 31% of employees will need to acquire AI-related expertise in the next year, a number that is expected to rise to 45% within three years. To address this need, companies are making substantial investments in AI ecosystem platforms, which allow for seamless data and AI model sharing across different sectors. These platforms are expected to grow in prominence, with investment anticipated to rise from 52% today to 89% over the next three years.

However, the report also raises a critical concern: fewer than 25% of executives have implemented comprehensive AI governance frameworks to tackle risks such as bias, transparency, and security. As AI’s influence in business operations continues to expand, it is vital that companies establish robust governance to mitigate potential risks and ensure sustainable success.

Dee Waddell, IBM’s global industry leader for the Consumer, Travel, and Transportation industries, emphasised the strategic significance of AI. “AI is no longer just a tool; it’s a strategic imperative,” he said, highlighting its crucial role in reshaping industries across the globe.

For retail and consumer product businesses, adopting AI effectively offers a transformative opportunity. With successful implementation, AI has the potential to redefine productivity, strengthen brand loyalty, and build greater consumer trust, marking a pivotal shift for the sector.