AI in Retail Market Size
| Study Period | 2019 - 2029 |
| Market Size (2024) | USD 9.85 Billion |
| Market Size (2029) | USD 40.49 Billion |
| CAGR (2024 - 2029) | 32.68 % |
| Fastest Growing Market | North America |
| Largest Market | North America |
Major Players
*Disclaimer: Major Players sorted in no particular order |
Need a report that reflects how COVID-19 has impacted this market and its growth?
AI in Retail Market Analysis
The AI In Retail Market size is estimated at USD 9.85 billion in 2024, and is expected to reach USD 40.49 billion by 2029, growing at a CAGR of 32.68% during the forecast period (2024-2029).
Artificial intelligence, a collection of algorithms harnessing vast and reliable data, is increasingly adopted in retail to personalize the shopping experience. By leveraging customer preferences, retailers can offer tailored product recommendations, elevating the customer experience and driving sales.
- Retail has witnessed a profound digital transformation, propelled by the integration of advanced data analytics and forecasting systems. This, bolstered by the convergence of artificial intelligence and the Internet of Things, has empowered retailers with sophisticated insights to optimize operations and identify lucrative business opportunities. Retailers are turning to AI-powered solutions to tackle challenges like evolving consumer behavior, labor constraints, supply chain disruptions, and escalating costs.
- Recognizing the potential of AI to reduce costs and enhance operational efficiency, retailers are increasingly integrating it into their processes. This shift is reshaping customer service, with AI-powered chatbots revolutionizing interactions. During online purchases, chatbots can suggest products based on customers' preferences, including price range, features, and user reviews. By incorporating recommendation algorithms, retailers can boost sales while customers find products tailored to their preferences.
- Moreover, retailers are forging deeper customer relationships, infusing digital elements into sales, support, merchandising, and finance operations. Beyond AI, technologies like IoT, automation, blockchain, and virtual reality are digitally disrupting the retail landscape. AI-equipped retailers leverage sharp forecasting tools for smarter decision-making while enhanced visual recognition and augmented reality redefine online shopping, enabling customers to experience products virtually.
- The global retail sector is witnessing a surge in AI applications, with both tech giants and SMBs ramping up their efforts. Consequently, the demand for AI engineers has soared, but more experienced professionals are still needed in this field.
- The COVID-19 pandemic has accelerated these trends, leaving retailers grappling to adapt. As consumer behavior tilts toward online, traditional retailers are grappling to bolster their technological capabilities. The pandemic has ushered in a customer-centric paradigm, and companies embracing digital transformation principles are fortifying their operations and reaping significant profits.
AI in Retail Market Trends
Software Segment to Witness Major Growth
- Leading retailers are adopting AI software to offer personalized shopping experiences. By analyzing customer data and behavior, these retailers leverage AI algorithms to power advanced recommendation engines. These engines suggest products tailored to individual preferences, driving sales and boosting customer engagement.
- As omnichannel retailing gains prominence, retailers are increasingly investing in AI software. This software helps integrate data from multiple channels, ensuring a seamless shopping experience across online, mobile, and brick-and-mortar stores. With AI-driven solutions, retailers can unify customer data, personalize marketing messages, and optimize inventory management across all channels.
- AI software equips retailers with the ability to craft targeted marketing campaigns and personalized advertisements. By analyzing vast amounts of customer data, AI algorithms identify trends, preferences, and buying patterns. This enables retailers to tailor marketing messages and promotions, resulting in higher engagement and sales. Consequently, an increasing number of retailers are embracing AI-based software.
- Asia-Pacific is witnessing a surge in demand for AI software, driven by rising e-commerce adoption and factors such as increasing internet penetration and smartphone usage. According to GSMA, Mobile Economy 2023, Asia-Pacific is expected to see its smartphone adoption rate increase to 94% by 2030, and digital payment options are fueling this growth. Retailers in the region are leveraging AI software to enhance the online shopping experience. This includes offering personalized product recommendations, optimizing pricing strategies, and streamlining order fulfillment processes.
North America to Hold Significant Market Share
- The demand for artificial intelligence (AI) in the retail sector in North America is experiencing significant growth driven by various factors such as personalized shopping experiences, inventory management and optimization, supply chain optimization, and others.
- Many retailers in this region have deployed AI-based solutions to optimize their supply chain operations and inventory. AI helps retailers manage and maintain customers and understand consumers' buying patterns. Also, AI technologies are being adopted by offline and online retail businesses to engage customers and improve sales turnover.
- Many retailers in the United States and Canada are also adopting AI technologies, such as predictive analytics and machine learning, helping retailers optimize their supply chains. AI can identify inefficiencies, reduce lead times, and improve overall supply chain performance by analyzing data from suppliers, logistics providers, and other sources. Due to this, retailers are focusing on the adoption of such technologies.
- Furthermore, many retail companies in the US leverage AI to analyze customer data and behavior to offer personalized shopping experiences. AI-powered recommendation engines may suggest products based on past purchases, browsing history, and demographic information, enhancing customer satisfaction and loyalty.
AI in Retail Industry Overview
Artificial intelligence in the retail market is fragmented. The growing adoption of IoT, e-commerce marketing, and big data analytics provides lucrative opportunities for artificial intelligence in the retail market. The competitive rivalry among existing competitors is high. Moreover, large companies such as SAP SE, Microsoft Corporation, IBM Corporation, Salesforce Inc., and Google LLC are expected to make acquisitions and collaborate with startups focused on innovation.
- In March 2024, IBM announced the expansion of its technical expert laboratory capacity in India to ensure that businesses remain strong in a highly competitive environment. It focuses on helping clients take full advantage of artificial intelligence, hybrid cloud, and cyber security technologies.
- In January 2024, Oracle announced the general availability of the Oracle Cloud Infrastructure (OCI) Generative AI service and innovations that make it easier for enterprises to take advantage of the latest advancements in generative AI. OCI Generative AI service is a fully managed service that seamlessly integrates large language models (LLMs) from Cohere and Meta Llama 2 to address various business use cases.
AI in Retail Market Leaders
-
SAP SE
-
IBM Corporation
-
Microsoft Corporation
-
Google LLC
-
Salesforce Inc.
*Disclaimer: Major Players sorted in no particular order
AI in Retail Market News
- January 2024: Through Google's cloud business, it introduced new tools to use generative AI in retail. The tools that retailers will use Google Cloud to improve customer experience on the Internet are based on emerging technology. One of the tools is a generative AI-powered chatbot that can be embedded in retail websites and apps. Google introduced a new large language model, LLM, that it says improves the ability to search for retailers' websites.
- November 2023: Amazon Web Services Inc. announced a new type of generative AI-powered assistant specifically designed for work that could be tailored to the customer's business: Amazon Q. Amazon Q provides information and advice for employees to simplify their tasks, speed up decision-making and problem-solving, which helps ignite creativity and innovation in the workplace.
AI in Retail Market Report - Table of Contents
1. INTRODUCTION
- 1.1 Study Assumptions and Market Definition
- 1.2 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS
- 4.1 Market Overview
- 4.2 Industry Stakeholder Analysis
-
4.3 Industry Attractiveness - Porter's Five Forces Analysis
- 4.3.1 Bargaining Power of Consumers
- 4.3.2 Bargaining Power of Suppliers
- 4.3.3 Threat of New Entrants
- 4.3.4 Threat of Substitute Products
- 4.3.5 Intensity of Competitive Rivalry
5. MARKET DYNAMICS
-
5.1 Market Drivers
- 5.1.1 Rapid Adoption of Advances in Technology Across Retail Chain
- 5.1.2 Emerging Trend of Startups in the Retail Space
-
5.2 Market Restraints
- 5.2.1 Lack of Professionals as well as In-house Knowledge for Cultural Readiness
- 5.3 Impact of COVID-19 on the Market
6. KEY TECHNOLOGY INVESTMENTS
- 6.1 Cloud Technology
- 6.2 Artificial Intelligence
- 6.3 Cyber Security
- 6.4 Digital Services
7. MARKET SEGMENTATION
-
7.1 By Channel
- 7.1.1 Omnichannel
- 7.1.2 Brick and Mortar
- 7.1.3 Pure-play Online Retailers
-
7.2 By Component
- 7.2.1 Software
- 7.2.2 Service (Managed and Professional)
-
7.3 By Deployment
- 7.3.1 Cloud
- 7.3.2 On-premise
-
7.4 By Application
- 7.4.1 Supply Chain and Logistics
- 7.4.2 Product Optimization
- 7.4.3 In-Store Navigation
- 7.4.4 Payment and Pricing Analytics
- 7.4.5 Inventory Management
- 7.4.6 Customer Relationship Management (CRM)
-
7.5 By Technology
- 7.5.1 Machine Learning
- 7.5.2 Natural Language Processing
- 7.5.3 Chatbots
- 7.5.4 Image and Video Analytics
- 7.5.5 Swarm Intelligence
-
7.6 By Geography***
- 7.6.1 North America
- 7.6.2 Europe
- 7.6.3 Asia
- 7.6.4 Australia and New Zealand
- 7.6.5 Latin America
- 7.6.6 Middle East and Africa
8. COMPETITIVE LANDSCAPE
-
8.1 Company Profiles
- 8.1.1 SAP SE
- 8.1.2 IBM Corporation
- 8.1.3 Microsoft Corporation
- 8.1.4 Google LLC
- 8.1.5 Salesforce Inc.
- 8.1.6 Oracle Corporation
- 8.1.7 ViSenze Pte Ltd
- 8.1.8 Amazon Web Services Inc.
- 8.1.9 BloomReach Inc.
- 8.1.10 Symphony AI
- 8.1.11 Daisy Intelligence Corporation
- 8.1.12 Conversica Inc.
- *List Not Exhaustive
9. INVESTMENT ANALYSIS
10. MARKET OPPORTUNITIES AND FUTURE TRENDS
** Subject To AvailablityAI in the Retail Industry Segmentation
Artificial intelligence is an approach for teaching a computer, a robot operated by a computer, or software to think critically and creatively like a human mind. AI is achieved by examining the cognitive processes and researching the patterns of the human brain. These research projects produce intelligent systems and software.
The artificial intelligence in the retail market is segmented by channel (omnichannel, brick and mortar, and pure-play online retailers), component (software, service [(managed and professional)]), deployment (cloud and on-premise), application (supply chain and logistics, product optimization, in-store navigation, payment and pricing analytics, inventory management, and customer relationship management((CRM))), technology (machine learning, natural language processing, chatbots, image and video analytics, and swarm intelligence) and geography (North America, Europe, Asia-Pacific, and the Rest of World). The report offers the market size in value terms in USD for all the abovementioned segments.
| By Channel | Omnichannel |
| Brick and Mortar | |
| Pure-play Online Retailers | |
| By Component | Software |
| Service (Managed and Professional) | |
| By Deployment | Cloud |
| On-premise | |
| By Application | Supply Chain and Logistics |
| Product Optimization | |
| In-Store Navigation | |
| Payment and Pricing Analytics | |
| Inventory Management | |
| Customer Relationship Management (CRM) | |
| By Technology | Machine Learning |
| Natural Language Processing | |
| Chatbots | |
| Image and Video Analytics | |
| Swarm Intelligence | |
| By Geography*** | North America |
| Europe | |
| Asia | |
| Australia and New Zealand | |
| Latin America | |
| Middle East and Africa |
AI in Retail Market Research FAQs
How big is the AI In Retail Market?
The AI In Retail Market size is expected to reach USD 9.85 billion in 2024 and grow at a CAGR of 32.68% to reach USD 40.49 billion by 2029.
What is the current AI In Retail Market size?
In 2024, the AI In Retail Market size is expected to reach USD 9.85 billion.
Who are the key players in AI In Retail Market?
SAP SE, IBM Corporation, Microsoft Corporation, Google LLC and Salesforce Inc. are the major companies operating in the AI In Retail Market.
Which is the fastest growing region in AI In Retail Market?
North America is estimated to grow at the highest CAGR over the forecast period (2024-2029).
Which region has the biggest share in AI In Retail Market?
In 2024, the North America accounts for the largest market share in AI In Retail Market.
What years does this AI In Retail Market cover, and what was the market size in 2023?
In 2023, the AI In Retail Market size was estimated at USD 6.63 billion. The report covers the AI In Retail Market historical market size for years: 2019, 2020, 2021, 2022 and 2023. The report also forecasts the AI In Retail Market size for years: 2024, 2025, 2026, 2027, 2028 and 2029.
AI in Retail Industry Report
The AI in Retail Business is experiencing substantial transformations due to the incorporation of Retail AI. Companies are utilizing Artificial Intelligence in Retail to bolster corporate strategies, yield superior outcomes, and amplify online customer engagement. The most frequently employed AI Retail Solutions are machine learning and deep learning, offering a more tailored experience to end-users and fostering an interactive ambiance. Retailers are also embracing computer vision, a component of AI for Retail, to enhance customer experience, demand forecasting, inventory management, and more. Retail Industry AI is also being employed to refine inventory management by integrating more facets of their operations. The uptake of AI Retail Technology is projected to escalate significantly, with investments in AI-Powered Retail predictive and prescriptive analytics also on the rise. For a more comprehensive examination, a complimentary PDF download of the report is accessible.
