This report provides an overview of retailers' AI strategies, investments, challenges and where they see the greatest potential in the years ahead. Read the report.
Artificial intelligence is reshaping the retail industry at an unprecedented pace. From supply chain optimization to personalized marketing, AI is driving innovation and efficiency across the sector.
To better understand how retailers are approaching AI, the National Retail Federation’s Center for Digital Risk & Innovation surveyed 56 AI leaders at U.S.-based retailers in summer 2025. The findings offer a snapshot of an industry in transition, with leaders making significant investments while grappling with strategic and operational challenges.
Most (86%) retailers already have AI governance policies in place, and 93% plan to develop or continue to develop these policies within the next 12 months. Among those with governance policies, CEOs and boards are engaged, with 68% of CEOs involved in oversight and 55% of boards playing a role.
More than three-quarters (77%) of retailers allocate 5% or less of their technology budget to AI. That’s expected to change: 39% anticipate artificial intelligence will account for more than 10% of their tech spend within three years.
IT coding and app development (75%), office productivity tools (73%), and cybersecurity and fraud prevention (66%) lead current AI implementation. Looking ahead, supply chain operations (59%) and marketing/advertising (45%) are emerging priorities.
Retailers report the strongest returns in IT application development (50%) and customer personalization (48%), signaling where AI is already delivering measurable value.
Cost (57%), model accuracy (57%) and workforce expertise gaps (55%) top the list of internal concerns. Externally, potential lawsuits and regulatory uncertainty are major risk factors, with nearly three-quarters (71%) worried about consumer class actions and another 71% about IP litigation.
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The findings point to an industry moving quickly to adopt artificial intelligence while remaining cautious about risk, accuracy, cost and regulatory complexity. As AI capabilities expand, retailers will continue refining their governance programs, investment strategies and workforce skill sets.
With all that is on the horizon when it comes to the deployment of AI in the retail sector, NRF will continue to monitor these changes closely over time and provide members with updated insights, research and policy analysis as the AI landscape evolves.
We are also looking forward to an active dialogue on how AI is changing the retail sector during sessions and meetings at NRF 2026: Retail’s Big Show in New York City next month.
