AI in Retail Market Size by Technology (Machine Learning, Natural Language Processing, Chatbot, Image and Video Analytics, Swarm Intelligence, and Others), Application (CRM, Product Optimization, Store Navigation, Inventory Management, Predictive Merchandising, and Others), and Region - Market Share, Trend Analysis, Competitive Intelligence, Historical Data, and Forecast 2023 -2032

Market Perspective

The AI in Retail Market size was worth around USD 6.37 billion in 2022 and is predicted to grow around USD 48.64 billion by 2032 with a compound annual growth rate of roughly 22.54% between 2023 and 2032.

Prominent factors causing this expansion include the demand for surveillance and monitoring at physical stores and government legislation that favor digitization. Technology improvements, rising applications, smart device penetration, use of cloud services, have all contributed to the growth of AI in the retail sector.

The global market for artificial intelligence in retail has been rapidly expanding in recent years. AI is being used by retailers to improve demand forecasting, optimize product placement, and make pricing decisions. By leveraging the power of machine learning and deep learning algorithms, retailers can improve their understanding of customer behavior, reduce costs, and enhance the overall shopping experience.

Artificial intelligence in retail automates and enhances the value of traditional retail stores. From in-store support to inventory tracking, supply chain management and logistics, price forecasting, and product classification, the role of AI in retail is remarkable. Retail is the second-fastest-growing sector, along with healthcare and manufacturing. This has changed a lot in the last two years. Using artificial intelligence (AI) and machine learning (ML) technology, retailers improve customer satisfaction.

Among the applications of AI technology are chatbots for customer service and engagement, personalized recommendation engines, visual search, and fraud detection. Some notable brands already utilizing AI in retail include Wayfair, Walmart, and Home Depot. As the technology develops, the market can expect to see even more advanced applications of AI in the retail market.

Key Insights

• Based on technology, the machine learning segment held the largest market share in 2022
• Based on Application, the predictive merchandising segment generated the highest revenue in 2022
• On the basis of region, North America accounted largest market share in 2022

AI Helps in Demand Prediction & Management which is Expected to Fuel the Market Growth

Determining demand for products and services is one of the key strategies in business development. AI applications help retailers in many ways. Demand forecasting is one of the best use cases for AI in retail. Forecasting product demand has several advantages. AI-powered demand forecasting strategies help inventory managers grow products to meet demand.

AI and ML methods help perform accurate demand forecasting. It also helps us understand seasonal trends. Therefore, retailers can avoid out-of-stocks by forecasting demand. These technologies provide real-time customer preferences. It also helps the chatbot understand customer emotions and behaviors, helping answer questions and build relationships.

Additionally, The Levis Virtual Stylist chatbot provides customer recommendations. The bot asks for quick recommendations on size, fit, materials, and preferred brands. Thus, AI-driven chatbots will drive the AI in retail market share.

AI-driven Visual and Voice Search to Propel Market Opportunities

E-commerce websites and virtual shops are growing swiftly. Today, consumers can search for new products using new technologies such as product images, video, and audio. Visual Search's artificial intelligence processes query and mines metadata to optimize its functionality. Visual search engines leverage AI capabilities to track and predict growing shopping trends to improve shoppers' shopping experience, analysis, and engagement.

According to Syte Visual Conception Ltd. by 2020, nearly 80% of shoppers started using visual search while shopping. Therefore, it has become imperative for retailers to implement this AI-based search engine to improve customer service and increase sales. In addition, AI-powered search capabilities give retailers valuable insights into consumer trends to help them make better business decisions. In the years to come, AI-driven search engines would provide retailers with a rich data pool with potential growth opportunities.

Recent Development

June 2022: Oracle has introduced a new product called the Retail Supplier Evaluation Cloud Service to improve procurement capabilities. A new cloud-based tool will enable merchants of all types to access and score supplier governance based on performance practices related to ethics, environment, safety, and quality.

Segmentation Analysis

Based on technology, the market is categorized into machine learning, natural language processing, chatbot, image and video analytics, swarm intelligence, and Others. AI adoption in the retail sector is on the rise with machine learning techniques gaining prominence in customer experience management, customer behavior tracking, and productivity enhancement. This trend is expected to drive market growth for artificial intelligence applications in retail. Machine learning analyses the collected data with speed and detail, and is well-suited to provide consumers with personalized experiences. This help retailer improves their supply chain system and demands forecasting to increase inventory efficiency.

Additionally, machine learning provides better predictions of sales and personalized product advice for promotions and advertising. This is expected to boost the growth of artificial intelligence in the retail market in the coming years.

On the basis of the application, the market is categorized into CRM, product optimization, store navigation, inventory management, predictive merchandising, and others. The predictive merchandising segment holds a large share due to the growing demand for advanced inventory management, and the need to improve customer experience, improve customer retention, and deliver data-driven insights about customers.

Additionally, predictive merchandising solutions can provide retailers with valuable customer insights. The retailer implements their AI-based predictive analytics to understand future market opportunities and customer behavior. AI is also implemented to perform analytics based on different locations, countries, cultures, ages, gender, and other demographics.

In addition, retail artificial intelligence will provide retailers with valuable customer insights such as recognizing high-quality customers, the reasons behind their purchases, and purchasing behavior in the retail industry that will drive the growth of the retail artificial intelligence market during the forecast period.

Regional Landscape

North America is Dominating the Market Share Due to Government Initiatives and Increasing Investment in the Market

North America has dominated the market in 2022. The region's large share is attributed to government initiatives and increasing investment in AI technology, as well as the presence of large technology companies such as Microsoft, Google, and Intel in the region. Additionally, technological advances in big data and analytics, natural language processing (NLP), machine learning, and deep learning, along with their high adoption rates, are expected to boost AI in the retail market in the coming years.

To improve the effectiveness of customer service, stores in the region are focusing on extracting currently available data on customer preferences. The United States has led the early adoption of AI technology and is currently investing heavily in the field. New start-ups and SMEs are also emerging as the country's need for technology grows. Due to all these factors, the market for artificial intelligence (AI) in retail will grow significantly during the forecasted period.

For Instance, IBM Corporation predicts the use of AI in retail and consumer goods will grow from 40% of businesses to over 80% during the forecasted period. Additionally, the amount retailers are investing in AI technology is increasing. In that time period, investments in AI-enabled predictive and prescriptive analytics will double.

Competitive Landscape

• Accenture
• Amazon Web Services Inc.
• Intel Corporation
• IBM Corporation
• Microsoft
• Numenta
• NVIDIA Corporation
• Oracle
• Salesforce, Inc.
• SAP

The global AI in retail market is segmented as follows:

Technology

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

By Application

• CRM
• Product Optimization
• Store Navigation
• Inventory management
• Predictive Merchandising
• Others

By Region

• North America
  • The U.S.
  • Canada
  • Mexico
• Europe
  • France
  • The UK
  • Spain
  • Germany
  • Italy
  • Nordic countries
    • Denmark
    • Finland
    • Iceland
    • Sweden
    • Norway
• Benelux Reunion
  • • Belgium
    • The Netherlands
    • Luxembourg
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • New Zealand
  • Australia
  • South Korea
  • Southeast Asia
    • Indonesia
    • Thailand
    • Malaysia
    • Singapore
    • Rest of Southeast Asia
  • Rest of Asia Pacific
• The Middle East & Africa
  • Saudi Arabia
  • UAE
  • Egypt
  • Kuwait
  • South Africa
  • Rest of the Middle East & Africa
• Latin America
  • Brazil
  • Argentina
  • Rest of Latin America