According to a recent study titled "Embedding AI in Your Brand's DNA" released by the IBM Institute for Business Value, executives in the retail and consumer goods sectors are increasingly focusing their strategic priorities on artificial intelligence. The report, published on Wednesday, surveyed 1,500 executives from 15 countries worldwide.

The findings indicate robust growth in AI-related spending, outpacing traditional IT budget increases, with an expected 52% rise next year. Companies are ramping up investments in AI, planning to allocate an average of 3.32% of their revenue towards AI initiatives by 2025. For a company with annual revenues of $1 billion, this translates to approximately $33.2 million annually dedicated to AI development.

These investments extend beyond IT departments, encompassing customer service, supply chain operations, talent acquisition, and marketing innovations. As companies deepen their adoption of AI, the proportion utilizing AI is forecasted to surge from the current 49% to 89% within three years.

This integration aims to enhance innovation capabilities and operational efficiency. However, governance issues remain a significant challenge. While 87% of executives claim to have clear AI governance frameworks, less than 25% say they fully implement and regularly review tools to address potential risks such as bias, transparency, and security. This highlights a notable gap in operational oversight.

Dee Waddell, IBM's global industry leader for consumer, travel, and transportation industries, noted, "Retail and consumer goods companies are at a pivotal juncture. Their ability to effectively embed AI into their operations will not only determine productivity gains but also shape future brand relevance, engagement, and trust."

Furthermore, the report underscores that successful brands should view AI as a core driver of business innovation rather than merely a tool for enhancing productivity. To achieve this transition, companies must reassess their governance and retraining strategies.

The report advises retailers to align AI initiatives closely with brand priorities and actively seek collaboration opportunities with startups and technology firms. This requires breaking down barriers between finance, technology, and business leaders to foster cross-functional cooperation. By building strong business cases, stakeholders can showcase the potential of AI in providing long-term competitive advantages.

Notably, this study was conducted in collaboration with Oxford Economics. Among the surveyed executives, half were from the retail sector and the other half from the consumer goods industry. They answered a series of questions through various formats, including multiple-choice and Likert scales, focusing on expectations, outcomes, concerns, and obstacles related to promoting AI within their organizations and among ecosystem partners.