The AI decisions that will define retail for the next two years

The IBM Institute for Business Value (IBV) study, "Retail and Consumer Products in the AI Era," identifies 2026 and 2027 as crucial years for AI's influence on the retail industry. The report signifies a notable shift, with AI becoming a business decision rather than solely an IT concern, as evidenced by a projected 35% of total AI expenses moving outside traditional IT budgets by 2027. This expanded investment reflects AI's growing impact across merchandising, marketing, and supply chain management, driving advancements in product discovery, personalized offers, and demand forecasting. The study underscores a move towards "agentic AI," where AI systems are empowered to not only provide insights but also execute proactive, complex tasks like coordinating inventory and guiding customer decisions. This evolution is vital for addressing rising consumer expectations for personalized, seamless, and intelligent shopping experiences, with many consumers already using AI for product research, reviews, and deal discovery. To effectively harness AI's potential, retailers are advised to integrate business systems, modernize commerce platforms, re-engineer processes for dynamic customer journeys, and strengthen data governance. The report stresses the importance of developing integrated ecosystems where diverse tools, partners, platforms, and AI agents collaborate seamlessly to achieve transformative impact and generate new revenue streams. Ultimately, retailers who establish robust foundations for agentic AI in 2026 are expected to gain a significant competitive advantage by elevating customer experiences and capturing greater value by 2027.