Artificial Intelligence in Retail Market Highlights

• Global artificial intelligence in retail market revenue is poised to garner USD 119.9 billion by 2032 with a CAGR of 36.7% from 2023 to 2032
• North America artificial intelligence in retail market value occupied around USD 2.2 billion in 2022
• Asia-Pacific artificial intelligence in retail market growth will record a CAGR of more than 40% from 2023 to 2032
• Among component, the solution sub-segment generated around USD 4 billion revenue in 2022
• Based on technology, the machine learning sub-segment generated around 31% share in 2022
• The escalating importance of sustainability Initiatives in response to environmental consciousness is a popular artificial intelligence in retail market trend that fuels the industry demand

Artificial Intelligence (AI) in retail systems enhances collaboration to optimize customer experiences, forecasting, inventory management, and other aspects. AI technologies, such as computer vision, provide near-real-time intelligence and data, which can be analyzed in the cloud to offer additional business insights and platforms. Artificial Intelligence (AI) has become a disruptive force in the ever-changing retail industry, revolutionizing conventional procedures and launching companies into a new age of efficiency and creativity. Artificial intelligence (AI) technologies, especially computer vision, are essential for improving inventory management, forecasting efficiency, and consumer experiences. In addition to providing near-real-time intelligence, this technology makes cloud-based analysis possible, which produces priceless business insights and strong platforms for long-term success and growth.

Global Artificial Intelligence in Retail Market Dynamics

Market Drivers

• Rising demand for data-driven personalization in retail experiences
• Increasing operational efficiency through AI adoption
• Growing reliance on advanced analytics for informed decision-making
• The continuous rise in streamlined supply chain management practices

Market Restraints

• Growing high implementation costs associated with AI integration
• Increasing data security concerns amid expanding AI applications
• Growing concerns over workforce displacement due to automation

Market Opportunities

• The rising trend of omnichannel integration in retail strategies
• Increasing need for enhanced fraud detection in a digitally expanding market
• Growing adoption of AI-powered virtual assistants for improved customer engagement

Artificial Intelligence in Retail Market Report Coverage

Artificial Intelligence in Retail Market Insights

The integration of AI into inventory management results in the elimination of inefficiencies within current processes, offering a predictive approach and reducing errors through automation. AI-powered robots, equipped with advanced technologies such as smart sensors and computer vision, navigate warehouses efficiently by identifying the shortest path, detecting obstacles, and accurately labeling items. This integration not only enhances operational efficiency but also enables faster product deliveries to the consumer base by balancing demand and supply. Moreover, AI finds application in logistics through autonomous vehicles for delivery and in handling backend repetitive tasks like data entry and robotic process automation (RPA) tools. Consequently, AI provides a comprehensive end-to-end automation solution, particularly beneficial for e-commerce players.

In the realm of customer service, artificial intelligence contributes significantly by introducing interactive chat programs. AI-driven chatbots, designed to self-learn from past data, continuously refine and personalize their interactions with customers. The accuracy with which AI-powered chatbots handle data and customer queries mimics human intelligence, all achieved without engaging human resources. The quick, personalized, and on-demand support and suggestions provided by these AI-driven chatbots enhance the overall customer experience, contributing to the growth of the AI-driven retail industry.

COVID-19 Impact on AI in Retail Market

The COVID-19 pandemic has accelerated the demand for AI-based retail analytics. As the world grappled with the effects of COVID-19, technological innovations were harnessed to combat the crisis. Artificial intelligence and machine learning played a pivotal role in better understanding the challenges posed by the pandemic. According to the World Economic Forum, disruptions in the food supply chain, affecting food processors and governments, were highly pronounced during the pandemic. To address such situations, agri-tech startup Mantle Labs, an Amazon Web Services (AWS) customer, offered a cutting-edge AI-driven crop monitoring solution to retailers free of charge for duration of three months. This initiative provided additional resilience and certainty to supply chains in the UK. Furthermore, there are lucrative opportunities in AI applications for inventory and warehouse management in the supply chain.

AI is also applied in other areas of the supply chain, such as procurement. By leveraging AI along with exponential technologies like blockchain and IoT, companies in the manufacturing industries are expected to gain robust momentum in the artificial intelligence in retail market forecast period through the adoption of new supply chain models. Decentralizing the supply chain using technologies like blockchain can significantly improve the visibility of end-to-end supply chains and resist contingencies, as seen during the novel corona virus pandemic.

The COVID-19 outbreak enforced strict lockdowns globally, leading to the temporary shutdown of many retailers across the globe. E-commerce became the more popular platform for shopping during the pandemic. Retail companies integrated AI technology into their shopping models to enhance the customer experience during the COVID-19 outbreak.

Merchandizing with Artificial Intelligence (AI) in Retail

Global retail spending on IT has experienced massive growth, marking a significant shift toward modernizing technology. The impetus behind this robust growth includes factors such as a paradigm shift among retailers, with increased investments in hardware and software across operations, leading to innovative business approaches. These rapid changes and industry pressures have, in turn, created lucrative opportunities for entering new markets.

Cross-Channel Fulfillment with AI

By combining data from multiple channels and leveraging a robust foundation of machine learning, merchants can gain a deeper understanding of the intricate relationship between customers and products. This approach provides a platform to optimize inventory situations, eliminating stock-outs, and reducing lead times for product delivery. For example, a leading German sportswear manufacturer and retailer heavily reliant on AI has integrated machine learning algorithms to optimize inventory levels and facilitate Omni-channel fulfillment, spanning online platforms, third-party retailers, and private in-store businesses.

Artificial Intelligence in Retail Market Segmentation

The worldwide artificial intelligence in retail market is split based on component, technology, sales channel, application, and geography.

AI in Retail Market By Component

• Solution
• Service

According to artificial intelligence in retail industry analysis, leader in the market is solution category, which provides complete AI-based solutions that are specifically designed to address the changing demands of the retail sector. Numerous applications, including as demand forecasting, inventory management, automated customer care, and consumer personalisation, are covered by these technologies. Retailers are looking for new and creative methods to improve customer experiences and operational efficiency, and artificial intelligence (AI) solutions are becoming essential tools for growing the market, solving problems, and creating a technologically sophisticated retail environment.

AI in Retail Market By Technology

• Machine Learning
• Natural Language Processing
• Chatbots
• Image and Video Analytics
• Swarm Intelligence

The machine learning category establishes its dominance and gains the most market share in the artificial intelligence in retail market. This technology is very good at figuring out intricate patterns, forecasting customer behaviour, and improving decision-making. Retailers may gain meaningful insights from large datasets with Machine Learning, which can be applied to everything from demand forecasts to personalised suggestions. This allows for improved customer experiences and operational optimisation. Machine Learning is positioned as a cornerstone technology that drives efficiency and creativity across a variety of retail applications thanks to its versatility and continuous learning capabilities.

AI in Retail Market By Sales Channel

• Omnichannel
• Brick and Mortar
• Pure-play Online Retailers

The omnichannel category holds the highest share in the artificial intelligence (AI) in retail market, demonstrating its crucial role in changing the retail environment. Online and offline sales channels are seamlessly integrated by omnichannel tactics, giving customers a consistent and tailored buying experience. This strategy makes use of AI to streamline customer data, improve inventory control, and provide unified brand experiences across multiple touchpoints. The omnichannel sales channel emerges as the front-runner, driving industry growth through improved customer satisfaction and operational efficiency, as retailers prioritise a comprehensive approach to engage tech-savvy consumers.

AI in Retail Market By Application

• Customer Relationship Management (CRM)
• Supply Chain and Logistics
• Inventory Management
• Product Optimization
• In-Store Navigation
• Payment and Pricing Analytics
• Virtual Assistant

The customer relationship management (CRM) segment is the leading use of artificial intelligence (AI) in the retail market, altering retail dynamics. Customer engagement is revolutionised by AI-powered CRM systems, which use data-driven insights to personalise interactions and raise customer happiness. By forecasting customer preferences, maximising marketing tactics, and cultivating long-term relationships, this area increases sales. AI in CRM becomes a vital tool as merchants emphasise customer-centric strategies, improving the overall shopping experience and giving them a competitive advantage in the marketplace.

AI in Retail Market Regional Outlook

North America

• U.S.
• Canada

Europe

• U.K.
• Germany
• France
• Spain
• Rest of Europe

Asia-Pacific

• India
• Japan
• China
• Australia
• South Korea
• Rest of Asia-Pacific

Latin America

• Brazil
• Mexico
• Rest of Latin America

The Middle East & Africa

• South Africa
• GCC Countries
• Rest of the Middle East & Africa (ME&A)

AI in Retail Market Regional Analysis

North America is anticipated to dominate the overall regional market by recording the largest market share. This dominance is supported by the presence of several developed economies, including the US and Canada, which are actively focusing on enhancing existing solutions in the retail space. Additionally, North America hosts the primary AI solution providers and is an early adopter of AI technology. The region also benefits from the presence of a large pool of US-based companies such as NVIDIA Corporation, Intel Corporation, Salesforce, Sentient Technologies, Microsoft Corporation, Google Inc., IBM Corporation, Amazon Web Services, and others, extensively involving themselves in product innovation and optimization. This serves as a stimulating factor for the growth of AI in retail markets.

On the other hand, Asia-Pacific is expected to be the fastest-growing regional over the artificial intelligence in retail industry forecast period. Factors such as the development of internet and connectivity infrastructure, the rising adoption of AI-based solutions and services among retailers, and surging digitization positively influence the regional market's full-fledged growth in the AI in the retail market in the APAC region.

Artificial Intelligence in Retail Market Players

Some of the top artificial intelligence in retail companies offered in our report includes International Business Machines Corporation (IBM), Microsoft Corporation, Amazon Web Services, Oracle Corporation, SAP SE, Intel Corporation, NVIDIA Corporation, Google LLC, Sentient Technologies, and Salesforce, Inc.