Embedding AI in your brand’s DNA

Consumers are tech-savvy trendsetters and brands need to keep up to stay relevant. Today, customers and shoppers are actively engaged with AI in their daily lives, from using AI-powered search engines to creating content with generative AI tools. In the 2024 IBM Institute for Business Value (IBM IBV) consumer research study, nearly two-thirds of consumers said they have used or want to try AI applications. This interest sets the stage for retail and consumer products companies to hasten integration of AI across their businesses while keeping an eye toward becoming AI-led brands—leveraging the technology to reimagine operations, inspire loyalty, and expand the size of customers’ wallets for long-term competitive advantage. 

Our latest survey of 1,500 global retail and consumer products executives finds organizations are accelerating their adoption. AI—both traditional and generative—has permeated all functions in the enterprise to some degree. From marketing and customer service, to supply chain and procurement, to finance and IT operations, AI use cases span brand-defining, business-enabling, and corporate operations. Looking ahead through 2025, most executives are thinking big, expecting AI to be used extensively across the business. Industry leaders also report AI spending is on the rise—both within and outside of the IT budget, and they project that AI’s contribution to revenue growth will increase 133% from 2023 to 2027. 

Retail and consumer products organizations are at a pivotal point in their AI journey. The question is: are they taking enough of the right steps to become AI-led brands, or are they just tacking on ad hoc AI solutions that deliver short-term gains? It’s time to move beyond just productivity and efficiency and extend AI’s power enterprise-wide to boost process effectiveness, spark new business models and ecosystems, and ignite engagement with innovative employee and customer experiences. 

Our research identified three factors that will help organizations make a fundamental change in their DNA, where AI emerges as the driving force behind every decision, innovation, and strategy. 

Recognizing the AI transformation is both a marathon and a sprint. Many organizations are in the early stages of AI adoption, integrating it within a single function. For example, 88% use AI to a moderate or significant extent in demand forecasting, 87% for HR help desks, 84% in creating and managing trade promotions, and 81% in inventory and order management. But over the next 12 months companies are keen on expanding to more sophisticated uses that require more complex system integrations and collaboration. For example, those leveraging AI to a significant extent for personalized responses and follow-up actions in customer service plan to increase their usage by 236% over the next 12 months.

Priming the augmented workforce. Nearly all (96%) executives say their teams are using AI and gen AI to a moderate or significant extent at work. And across 13 functional areas from marketing and commerce to supply chain, HR and IT, executives plan to augment more than automate activities over the next 12 months. But they project only 31% of their workforce will need to reskill or develop new skills over the next 12 months, with this number climbing to just 45% in the next three years. When virtually everyone is using a new and powerful technology such as AI, then virtually everyone needs training to optimize the value and prevent brand-damaging results.
 

Retail and consumer products executives know that automation has its place but see a future of augmentation.

Safeguarding brand trust with AI governance. Trust has always been paramount to the industry, but AI adds risks that can impact both customer and partner relationships. Nine in 10 executives say misuse, such as creating misleading information, is their top worry associated with AI models, followed by privacy (85%), fairness and bias (80%), explainability (76%), and transparency (73%). Despite these concerns, organizations are struggling to enable the tools that can help them manage the AI governance policies they have put in place. 

Download the report to explore these findings in more detail. Each topic includes a case study and an action guide of suggested steps to help companies accelerate their AI journey while building intelligent brands that will endure.