SG&A Costs Hit Five-Year Highs in North America and Europe — The Hackett Group, Inc.

Event summary

Median SG&A costs rose to 16.2% of revenue in North America and 13.4% in Europe, the highest levels in five years.
Revenue growth accelerated to 4.4% in North America and 6.5% in Europe during 2025, but many companies struggled to translate this into sustainable operating leverage.
The gap between first-quartile companies and median performers widened, with first-quartile companies operating at 7.8% of revenue in North America and 6.1% in Europe.
AI-enabled operating models are identified as key drivers for the next generation of profitable growth.

The big picture

The Hackett Group's findings highlight a critical shift in how organizations approach profitable growth, moving away from traditional cost-management approaches to AI-enabled operating models. The data underscores the growing importance of AI in improving productivity and scalability, particularly as economic recovery alone does not fundamentally alter operational inefficiencies. This trend is reshaping SG&A economics, with leading companies investing heavily in AI to create structural cost advantages.

What we're watching

AI Adoption: How the pace of AI integration into core business processes will affect long-term operating leverage.
Operational Leverage: Whether companies can sustain productivity gains through AI-enabled models amid market volatility.
Performance Gap: The widening gap between leading and median performers and its implications for competitive advantage.