EXCLUSIVE: Retailers look to AI for competitive advantage
A new survey reveals that artificial intelligence is increasingly becoming integrated into mainstream retail enterprise operations.
Results from a survey of retail IT decision-makers exclusively released to Chain Store Age by Rackspace Technology indicate three-in-four (74%) respondents no longer view AI as just a tool for internal automation, but a driver of competitive advantage and a strategic asset for business transformation.
Top reasons respondents are currently using AI include customer service (42%), productivity/knowledge (44%) and the development of products and apps (39%). More than one-third (36%) of respondents expect to realize full ROI from AI in a year or two.
During 2025, 30% of retailers plan to invest $1 million to $5 million with 31% planning to invest over $5 million on AI initiatives. More than eight-in-10 (83%) say they will have increased their AI spend by 2030.
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Top KPIs of AI
Respondents cited the following key performance indicators (KPIs) as most important for their AI investments:
- Customer service (56%).
- Revenue and profitability (45%).
- Operational cost reduction (42%).
- Process efficiency and automation (41%).
- ROI (41%).
Barriers/blockers to AI deployment
The biggest pitfalls for respondents in fully realizing AI deployment are:
- Quality of data (65%).
- Security and privacy concerns (59%).
- Resistance to change within their organization (49%).
- Security risk/vulnerabilities (46%).
- Limited expertise/talent gaps (43%).
- Poor data quality issues (41%).
- Accuracy/reliability (37%).
Top retail industry challenges
When asked about the top AI-related challenges specific to their industry in the next three-to-five years, respondents cited:
- Ensuring AI systems comply with increasingly strict data privacy regulations (54%).
- Navigating evolving industry-specific AI regulations and standards (50%).
- Difficulty finding talent with the necessary AI expertise (45%).
Seven-in-10 (71%) respondents think there are sufficient guardrails in place to avoid negative consequences from the use of AI. However, 35% say the accuracy of AI answers require much improvement before they can be trusted and 38% said AI answers always need human interpretation (i.e. a human has to be in the loop with AI as an assistant).
"While nearly every organization is exploring how to implement AI, these forward-thinking retailers are not waiting for the technology to mature, they have acted early, starting with achievable use cases to build momentum," said Srini Koushik, president of AI, technology and sustainability at Rackspace Technology. "By doing so, they have been able to test and refine their strategies, train their teams, and establish the governance and infrastructure needed for long-term success."
Commissioned by Rackspace Technology, the survey was conducted by Coleman Parkes Research in March and April 2025. Retail findings are extracted from the responses of 1,420 IT decision-makers across manufacturing/logistics, retail, hospitality/travel, energy, healthcare/pharma/biomedical, government, media/entertainment, and financial service sectors in the Americas, Europe, Asia and the Middle East.
