The Artificial Intelligence in Retail Market to Reach $57.8 Billion by 2030, at a CAGR of 41% from 2023 to 2030. The growth of the AI in retail market is driven by factors such as the growing awareness about AI and big data & analytics, the adoption of multichannel or omnichannel retailing strategies, and the need to enhance end-user experience and improve productivity. However, the high cost of procurement, lack of infrastructure and impact of COVID-19 may hinder the growth of this market to a certain extent. The increased adoption of AI-powered voice-enabled devices and the growing number of smartphones are expected to create growth opportunities for the players operating in this market. However, concerns over privacy and identity of individuals and reluctance toward AI implementation among small vendors are major challenges for market growth. Rising focus on blockchain technology and the adoption of 5G technology are prominent trends in the AI in retail market.
The Impact of COVID-19 on the AI in Retail Market
The COVID-19 pandemic highlighted the significance of online shopping channels, with consumers considering online platforms as their primary shopping channel. This has given retailers and consumer goods organizations a great opportunity to undertake sustainability initiatives that integrate with their digital presence. Therefore, retailers are using e-commerce platforms and online marketplaces to capitalize on this changing trend.
Retail organizations are continuously reassessing consumer preferences and aligning categories and offers accordingly to improve customer engagement and product demand. This requires agile demand planning and a clear prioritization of focus resources, which contributes to the growing demand in the AI in retail market. Many leading retail players eyed this crisis as a new opportunity to revisit and restructure their existing strategies and develop advanced product portfolios. The situation has evolved unpredictably, and companies operating in this market are adapting to the changes, anticipating and planning for various scenarios. Although the overall AI in retail market has been affected by the pandemic, the market still holds considerable potential to bounce back. In addition, factors such as favorable government policies & initiatives, including financial packages, tax rebates & incentives, employment packages for employees, rent reduction for shops, and increasing investments in advanced technologies are further expected to contribute to the growth of the artificial intelligence in retail market.
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Increased Adoption of AI-powered Voice-enabled Devices Expected to Create Market Growth Opportunities
Technological advancements in AI are increasingly disrupting various functions across industries, including retail. The emergence of smart technologies for various applications in these industries is increasingly creating opportunities for the integration of AI-powered voice recognition tools as a part of smart solutions to further improve end-user experience. In addition, the widespread adoption of smart gadgets and smart devices among consumers is increasingly driving the demand for various AI-powered voice and speech-enabled tools in the retail industry. Leading retailers such as Walmart, Home Depot, and Target have partnered with Google to offer voice-based shopping experiences to consumers through Google Express, a shopping service. According to the Voice Shopping Consumer Adoption Report 2018 by voicebot.ai, voice commerce is poised to become the third-significant online shopping channel, succeeding web and mobile. According to the Conversational Commerce Report 2018 from Capgemini Digital Transformation Institute, almost 34% of consumers in the U.S., the U.K., France, and Germany currently order meals, and 49% of consumers check the delivery status of their orders using voice assistants.
Key Findings in the AI in Retail Market Study:
The Solutions Segment to Dominate the AI in Retail Market in 2023
Based on offering, the solutions segment is expected to account for the largest share of the AI in retail market in 2023. AI-powered solutions enable the use of machine learning in the retail industry to identify personalized customer needs and price points across various domains, allowing retailers to design their products and marketing strategies with a clear indication of customer demands. This, in turn, drives the growth of the solutions segment.
The Predictive Merchandising Segment Expected to Account for the Largest Market Share in 2023
Based on application, the predictive merchandising segment is expected to account for the largest share of the artificial intelligence in retail market in 2023. The segment’s large share is attributed to the growing demand for better inventory management, the need to enhance customer experience, improve customer engagement, and enable data-driven insights about customers. Also, predictive merchandising solutions can provide retailers with valuable customer insights; for instance, recognizing high-value customers, the motives behind their purchase, their buying patterns and behaviors, and the best channels and time to market to them. Such detailed insights increase the probability of customer acquisition and help drive customer loyalty.
The Machine Learning Segment to Dominate the AI in Retail Market in 2023
Based on learning technology, the machine learning segment is expected to account for the largest share of the artificial intelligence in retail market in 2023. The segment’s large share is attributed to the increasing use of machine learning technology in customer experience management, customer behavior tracking, and predictive merchandising to engage customers and increase productivity. It also enables users to optimize inventory planning and predictive supply chain management by predicting consumer demand in advance. It also helps design effective sales strategies through price optimization to boost sales through real-time and dynamic price adjustments.
The Online Retail Segment Expected to Dominate the AI in Retail Market in 2023
Based on type, the online retail segment is expected to account for the largest share of the artificial intelligence in retail market in 2023. In the online retail sector, AI helps enhance customers' purchase decisions, informs the availability of alternative or new products, optimizes buying processes, identifies new markets, and automates workflows. In addition, AI solutions enable retailers to overcome geographical limitations, gain new customers with search engine visibility, locate products quicker, and enable customers to compare products. These factors drive the growth of this segment.
The Food & Groceries Segment to Dominate the AI in Retail Market in 2023
Based on end user, the food & groceries segment is expected to account for the largest share of the artificial intelligence in retail market in 2023. Food and grocery are key segments of the retail industry and are rapidly incorporating technological tools in business operations. Increasing customer preference for private-label brands and increasing supermarket shopping culture are contributing to the growth of the food & groceries segment.
The Cloud-based Deployment Segment to Dominate the AI in Retail Market in 2023
Based on deployment mode, the cloud-based deployment segment is expected to account for the largest share of the artificial intelligence in retail market in 2023. The segment’s large share is attributed to the decrease in the cost of cloud-enabling technology, the growing use of learning analytics, and organizations’ increasing inclination toward cloud computing to enable cost-cutting. With the help of retail cloud environments, retailers can easily move their business applications and infrastructure resources to different service architectures.
North America to Be the Largest Regional Market; Asia-Pacific to Be the Fastest-growing Regional Market
Based on geography, the AI in retail market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. North America is expected to dominate the artificial intelligence in retail market in 2023. The region’s large share is attributed to increasing government initiatives and investments in AI technology and the presence of major tech players such as Microsoft, Google, and Intel in the region. In addition, technological advancements in big data & analytics, natural language processing (NLP), machine learning, and deep learning and their high adoption rate are expected to boost the AI in retail market in the coming years. Furthermore, growing demand by e-commerce enterprises for providing better shopping experiences to customers and digitization across the retail industry are projected to spur the growth of the AI in retail market in North America over the coming years.
Key Players
The report includes a competitive landscape based on an extensive assessment of the key strategic developments of leading market players in the AI in retail industry over the last four years. The key players profiled in the AI in retail market are Amazon.com, Inc. (U.S.), Google LLC (U.S.), Intel Corporation (U.S.), Microsoft Corporation (U.S.), IBM Corporation (U.S.), Nvidia Corporation (U.S.), Oracle Corporation (U.S.), SAP SE (Germany), Salesforce.com, Inc. (U.S.), and BloomReach, Inc. (U.S.).
Scope of the Report
Artificial Intelligence in Retail Market, by Offering
- Solutions
- Chatbots
- Recommendation Engines
- Customer Behavior Tracking
- Visual Search
- Customer Relationship Management
- Price Optimization
- Supply Chain Management
- Inventory Management
- Services
- Managed Services
- Professional Services
Artificial Intelligence in Retail Market, by Application
- Predictive Merchandising
- Programmatic Advertising
- Market Forecasting
- In-store Visual Monitoring and Surveillance
- Location-based Marketing
Artificial Intelligence in Retail Market, by Learning Technology
- Machine Learning
- Natural Language Processing (NLP)
- Computer Vision
Artificial Intelligence in Retail Market, by Type
- Online Retail
- Offline Retail
Artificial Intelligence in Retail Market, by End User
- Fashion & Clothing
- Food & Groceries
- Electronics & White Goods
- Health & Wellness
- Automotive
- Cosmetics & Personal Care Products
- General Utility Products
- Other End Users
Artificial Intelligence in Retail Market, by Deployment Mode
- Cloud-based Deployment
- On-premise Deployment
Artificial Intelligence in Retail Market, by Geography
- North America
- Europe
- Germany
- U.K.
- France
- Italy
- Spain
- Rest of Europe
- Asia-Pacific
- China
- Japan
- India
- Rest of Asia-Pacific
- Latin America
- Middle East & Africa
Key Questions Answered in the Report:
