Retailers to Pour Billions Into AI and Cybersecurity as Threats and Competition Mount

Quick Facts

52% of retailers surveyed spend $50 million or more annually on digital technology, per KPMG’s Global Tech Report 2026.
52% of retailers plan to increase cybersecurity spending this year, making it the top investment priority ahead of data and analytics at 49% and AI at 42%.
74% of retail executives expect their companies to be deploying AI at scale within 12 months, up from 42% today.

More than half of retailers are already spending $50 million or more each year on digital technology, and they plan to spend more. A new KPMG survey of 250 retail executives shows AI and cybersecurity are the two areas driving that growth in 2026.

The KPMG Global Tech Report 2026 draws on responses from 2,500 technology executives across 27 countries and eight industries. For retail, the findings reveal a sector under pressure to modernize fast while defending against a rising wave of attacks.

AI Spending Is About to Accelerate

Only 42% of surveyed executives say their companies are currently deploying AI use cases at scale. That number is expected to jump to 74% within 12 months.

Right now, 77% of retailers put 5% or less of their technology budget toward AI. Within three years, 39% expect AI to account for more than 10% of their tech spend. Forty-two percent of respondents said they plan to increase AI and automation investment this year, including spending on generative and agentic AI tools.

The business case is clear. NVIDIA’s retail survey found that 69% of retailers report increased annual revenue tied to AI adoption, while 72% saw lower operating costs. Those results have pushed 97% of retailers to plan AI spending increases in the next fiscal year.

The AI-in-retail market was valued at $13.07 billion in 2025 and is projected to reach $53.74 billion by 2030.

Puneet Mansukhani, head of global retail digital technology and transformation at KPMG International, said the shift in client conversations is unmistakable. “The conversations we’re having with clients are very much ‘AI first’ as businesses look to embed smart tech across their operations to become a lever for growth,” he said.

Cybersecurity Leads All Investment Categories

Despite AI’s momentum, cybersecurity ranked as the top investment priority. Fifty-two percent of retailers plan to increase spending on cybersecurity this year, compared to 49% for data and analytics and 42% for AI.

The urgency is data-driven. Eighty-three percent of organizations reported an increase in cyberattacks over the past 12 months. Ransomware appeared in 44% of all confirmed breaches analyzed in the Verizon 2025 Data Breach Investigations Report, up from 32% the year before.

For retailers specifically, the numbers are severe. The average cost of a cyberattack against a retail business reached $3.54 million, with breach costs rising 17% year over year. Between 70% and 80% of retail businesses reported facing a cyberattack in 2025. Every confirmed retail breach analyzed in Verizon’s report was financially motivated.

Credential abuse drove 22% of all 2025 breaches. Stolen credentials were behind 88% of basic web application attacks, a common entry point for retail systems.

High-profile attacks in the United Kingdom on Marks and Spencer, Co-op, and Harrods carry a combined estimated financial impact of 270 million to 440 million British pounds, a signal of what is at stake for large retailers globally.

Governance and Budget Controls Are Tightening

As AI spending grows, so does oversight. Eighty-six percent of retailers already have AI governance policies in place. Ninety-three percent plan to develop or expand those policies within the next 12 months. Among companies with governance frameworks, 68% of CEOs are involved in AI oversight and 55% of boards play an active role.

The 28% of retailers spending between $100 million and $250 million annually on technology represent the segment where both AI deployment and governance pressure are most acute. For operators at every size, the message from the data is consistent: standing still on technology investment is no longer a viable strategy.