Global Artificial Intelligence In Retail Market Size By Offering, By Function, By Application, By Geographic Scope And Forecast

Artificial Intelligence In Retail Market Size And Forecast

Artificial Intelligence In Retail Market size was valued at USD 5.79 Billion in 2023 and is projected to reach USD 40.74 Billion by 2031, growing at a CAGR of 23.9% during the forecast period 2024-2031.

Artificial Intelligence empowers retailers to leverage vast amounts of data for informed decision-making, enhancing operational efficiency and customer engagement by analyzing consumer behavior, sales trends, and market

Artificial Intelligence enables retailers to implement dynamic pricing models that adjust prices based on demand fluctuations, competitor pricing, and customer behavior, maximizing profitability while remaining competitive.

AI-powered chatbots and virtual assistants improve customer service by providing instant responses to inquiries, assisting with product searches, and resolving issues, thereby enhancing the overall shopping experience.

Artificial Intelligence employs predictive analytics to forecast sales trends and consumer preferences, allowing retailers to make proactive decisions regarding marketing strategies and product offerings.

Global Artificial Intelligence In Retail Market Dynamics

The key market dynamics that are shaping the artificial intelligence in retail market include:

Key Market Drivers:

Rapid Growth of E-commerce: The surge in online shopping has accelerated the need for AI solutions to optimize inventory management and customer The U.S. Census Bureau reported that e-commerce sales accounted for over 14% of total retail sales in 2023, driving demand for AI applications.

Data-Driven Insights: Retailers leverage AI to analyze consumer data for better decision-making. The S. Department of Commerce emphasizes that data analytics can lead to a 20% increase in revenue for businesses that effectively utilize insights from AI technologies.

Integration of Smart Technologies: The rise of smart stores equipped with AI capabilities is transforming the retail According to the International Data Corporation (IDC), investments in smart retail technologies are expected to exceedUSD 100 Billion globally by 2025, highlighting the trend towards automation and enhanced customer experiences.

Increased Competition and Market Pressure: As competition intensifies, retailers are compelled to adopt advanced technologies like AI to remain competitive. A survey by KPMG indicated that 62% of retail executives believe that failing to adopt AI could result in losing market share.

Key Market Challenges:

Lack of AI Expertise: A substantial number of retailers face challenges due to a shortage of skilled personnel capable of implementing and managing AI IBM's cloud-data service insights indicate that 37% of respondents identified a lack of AI expertise as an obstacle to effective implementation.

Integration with Existing Systems: Integrating AI solutions with legacy systems can be complex and resource-intensive. Many retailers struggle to align new AI technologies with their existing infrastructure, which can hinder operational efficiency and data A report highlighted that 62% of retail participants were not supportive of AI adoption due to integration difficulties.

Consumer Trust and Acceptance: Many consumers are wary of AI technologies due to privacy concerns and fears about job displacement. According to a KPMG report, 62% of retail participants expressed concerns regarding job security related to AI adoption, which can impact customer acceptance and trust in AI-driven services.

Scalability Challenges: Retailers often find it difficult to scale AI solutions effectively across their operations. Ensuring that AI tools are adaptable to changing market trends and consumer behaviors is critical but can be challenging, particularly for businesses with diverse product lines.

Key Market Trends:

Hyper-Personalization: Retailers are increasingly leveraging AI to deliver highly personalized shopping According to a report by Verint, 80% of shoppers expect that AI will enhance their shopping experience, driving retailers to utilize data analytics for tailored recommendations and communications.

Automated Customer Service: The adoption of AI-powered chatbots and virtual assistants is on the rise, with 52.4% of customers believing that AI can improve customer This trend reflects a growing reliance on automation to provide 24/7 support and enhance customer interactions.

Supply Chain Optimization: AI technologies are being employed to streamline supply chain operations, enabling retailers to optimize inventory management and reduce The U.S. Department of Commerce reports that effective supply chain management can lead to a 10-15% reduction in operational costs, highlighting the financial benefits of AI integration.

Predictive Analytics: Retailers are increasingly using AI for predictive analytics to forecast trends and consumer behavior. This capability allows businesses to make informed decisions about inventory and marketing strategies, with studies showing that companies using predictive analytics can achieve a 20% increase in sales.

Global Artificial Intelligence In Retail Market Regional Analysis

Here is a more detailed regional analysis of the artificial intelligence in retail market:

North America:

North America is projected to reach an estimated value of USD 76 Billion by 2032 in the AI in retail sector, driven by the increasing adoption of AI technologies.

The region has seen a rapid implementation of AI solutions, with many retailers leveraging AI for personalized shopping experiences, inventory management, and customer engagement.

North America is home to leading technology companies that are at the forefront of AI innovation, facilitating advancements in machine learning, natural language processing, and computer vision tailored for retail applications.

The demand for AI-powered tools such as chatbots and predictive analytics is growing rapidly in North America, further solidifying its position as a leader in the

Asia Pacific:

Asia Pacific is projected to hold a significant share of approximately 23.4% in AI investments specifically within the commerce and retail industry, particularly driven by countries like China and India.

The region is expected to exhibit the highest compound annual growth rate (CAGR) of around 40.6% during the forecast period, reflecting strong demand for AI technologies in retail operations.

The Asian market is seeing substantial investments in AI, with projections indicating that investments in AI technologies for retail could reach USD 18.8 Billion by 2027.

The region is experiencing rapid advancements in AI technologies, with a focus on machine learning and natural language processing, which are essential for enhancing customer experiences and operational efficiencies.

Global Artificial Intelligence In Retail Market: Segmentation Analysis

The Global Artificial Intelligence In Retail Market is Segmented on the basis of Offering, Function, Application, and Geography.

Artificial Intelligence In Retail Market, By Offering

• Solutions
• Services

Based on Offering, the market is segmented into Solutions and Services. The solutions segment held over 74.1% of the total market share, reflecting its strong position in the industry. The dominance of the Solutions segment is attributed to the rising adoption of AI technologies aimed at enhancing retail operations, improving customer experiences, and optimizing inventory management.

Artificial Intelligence In Retail Market, By Function

• Operation-oriented AI
• Customer-facing AI

Based on Function, the market is segmented into Operation-oriented AI and Customer-facing AI. The operation-oriented AI segment holds the maximum market share, reflecting its critical role in enhancing operational efficiency within retail environments. Retailers are increasingly implementing operation-oriented AI solutions to streamline processes such as inventory management, logistics, and supply chain optimization. This focus on backend operations helps improve overall productivity and reduce costs.

Artificial Intelligence In Retail Market, By Application

• Predictive Analytics
• Customer Relationship Management (CRM)
• Market Forecasting
• Inventory Management

Based on Application, the market is segmented into Predictive Analytics, Customer Relationship Management (CRM), Market forecasting, and Inventory management. The predictive analytics segment holds the largest share among the applications, accounting for approximately 61% of the total market. This dominance is driven by its critical role in demand forecasting and inventory management.

Key Players

The "Global Artificial Intelligence In Retail Market" study report will provide valuable insight with an emphasis on the global market The major players in the market are Amazon Web Services, Google, IBM, Microsoft, Salesforce, Oracle, SAP, Intel, NVIDIA, Adobe.

Our market analysis also entails a section solely dedicated to such major players wherein our analysts provide an insight into the financial statements of all the major players, along with product benchmarking and SWOT analysis. The competitive landscape section also includes key development strategies, market share, and market ranking analysis of the above- mentioned players globally.

• In September 2023, AWS introduced Amazon Personalize, an AI service designed to help retailers deliver personalized shopping This service allows retailers to create tailored recommendations for customers based on their browsing and purchasing history.
• In February 2023, Google, in collaboration with Accenture, launched new tools aimed at helping retailers innovate their businesses through cloud technology. This partnership integrated the Accenture ai.RETAIL Platform with Google Cloud, enhancing capabilities for retailers to leverage AI for operational improvements.