"Smart Strategies, Giving Speed to your Growth Trajectory"
The global artificial intelligence (AI) in retail market size was USD 3.01 billion in 2019 and is projected to reach USD 23.32 billion by 2027, exhibiting a CAGR of 29.6% during the forecast period.
Technology innovations have promoted retail and consumer product industries to enter into a new phase of intelligent automation. Artificial intelligence enables robots and machines to take self-directed decisions. Thus, retailers are adopting AI integrated automation systems to transform business practices. According to the ‘IBM Institute for Business Value’ study, publicized in March 2018, the adoption for AI-based intelligent automation in retail will be projected to reach over 80% by the year 2021.
The demand for AI-based data analytics is mainly driven by the need for proper supply chain management in the retail industry. Additionally, the rising need for enhanced productivity, analytical quality, operational agility, decision making, and customer experience will fuel the demand for AI-based intelligent automation systems among the retailers.
COVID-19 Pandemic to Accelerate Demand for AI-based Retail Analytics
The novel coronavirus pandemic enforced many companies as well as industries to reassess and transform their global supply chain. China is known as a key producer of high-value components and products and plays a significant role in global trade. The COVID-19 global crisis has affected such technology leading nations, resulting in disturbed global supply chain and logistic network. The crisis has not only affected manufacturing and high-tech industries but also demonstrated a major impact on the retail supply chain network. Thus, to manage disrupted logistics and supply chain, manufacturers and retailers are leaning towards advanced and fast pacing artificial intelligence-driven technologies.
COVID-19 pandemic has transformed the customers' shopping prospects and purchasing patterns. The situation led many retailers to adopt digital platforms for product sales. Artificial intelligence will help retailers to realign supply chains, to recognize dynamic demand signals, to redefine labor force necessity, and much more. The sudden transformation in retail shopping patterns has surged the demand for e-commerce and online shopping. As a result, organizations are emphasizing on adopting artificial intelligence technology to amplify their online sales and customer experience. The evolving consumer preference and habits will accelerate AI demand during COVID-19
Request a Free sample to learn more about this report.
Emphasis on Search Engine Optimization in Online Shopping to Boost Growth
The ongoing trend of virtual shops and e-commerce websites has made it crucial for retailers to improve search engine optimization to accelerate user engagement. Several high-intent shoppers are interacting day-to-day through textual, voice, or visual search on e-commerce sites. Progressing social media usage majorly drove the visual search for various shopping and e-commerce sites. In January 2020, Syte Visual Conception ltd. has reported that, almost 80% of shoppers have started with a visual search while shopping. Artificial in visual search optimizes customer-facing functionalities by processing searches and mining the metadata. The visual search engine utilizes AI features to analyze, track, and predict growing shopping trends, enhancing shopper’s experience and engagement. Additionally, AI helps retailers to gain valuable insights into consumer trends and drive superlative business decisions.
Advancements in Virtual Fitting Rooms to Augment Market
The concept of virtual trial rooms has gained popularity over the years, enabling shoppers to experiment with their outfits through a touch-based interface. The integration of artificial intelligence with digital mirrors makes it possible for buyers to try a variety of dresses, accessories, goggles, and other cosmetic products without actually having to wear them. Artificial intelligence along with other advanced technologies such as, virtual reality, augmented reality, or visual computing offers real-time simulation for virtual dressing solutions. The technology significantly enhances the customer experience as well as engagement in both online and offline shopping. After the COVID-19 global pandemic, the demand for a virtual trial room is likely to rise because of its safe shopping experience.
Growing Popularity of AI-Driven Chatbots to Boost Market Growth
In today’s retail industry, every retail company is trying to strengthen its loyal customer base to stay ahead in the market. To offer enhanced personalized experience to each customer is becoming a prime strategy for major brand retailers. Also, to attain customer attention and loyalty. AI-powered chatbots are one of the technologies that can drive customer's engagement effectively. Hence, popularity for both online and in-store chatbots is likely to gain traction across industries. The system helps retailers to handle shopping-related queries of customers using AI-configured chatbots without engaging the human workforce. The quick, personalized, and on-demand support and suggestions provided by AI-driven chatbots augments customer’s experience, thus, favorable across the retail industry.
Lack of Infrastructure and Higher Implementation Costs to Limit Adoption
Well established retailers are trying every possible way to improve the engagement of their customers, however certain factors are limiting the AI in retail market growth. The giant suppliers and global level retailers like Walmart have already deployed an artificial intelligence-based system to their shops as well as to online portals. However, small and medium-sized retailers (SMEs) are still far away from the technology due to a lack of infrastructure and skilled expertise. The high implementation cost associated with the retail solutions is also a major barrier for small retailers which is limiting the adoption. These factors have restricted market expansion across SMEs.
Solution Segment is likely to Supplement the AI in Retail Market Growth
Based on offerings, the market for artificial intelligence in retail is classified into solution and services. Among these segments, the solution segment holds a largest share of the market. The application-oriented continuous development of the platform has led to the integration of advanced technologies including machine learning, neural network, and natural language processing, thus efficiently driving the demand for AI-driven retail solutions. The rising investments by industry-leading players aid the AI-based solution value. However, artificial intelligence in retail service offerings also anticipated and expected to grow moderately with growing claims for operational improvements, strategy building, risk and compliance management and among others.
Customer-Facing Function will Drive the Significant Adoption of AI in Retail Industry
Based on function, the market is segmented into operations-focused and customer-facing segments. Among this, the customer-facing segment will lead in terms of revenue generation. To reduce customer complaints, improve brand loyalty retailers are adopting AI solutions. The customer-facing AI functions like self-checkout services and chatbots have benefited retailers to collect feedback and enhance customer satisfaction.
The AI-enabled services in retail have helped customers to feel more connected, and have provided an abundant number of choices. With AI-enabled digital racks, the customers are now able to search the right item and product information. They can get style recommendations based on their purchasing pattern and preferences. Additionally, retailers can extract vast level efficiencies in their operations by leveraging AI technology.
Owing to inclining retailers' approach to optimize in-store or online operations, the operations-focused segment will drive moderate adoption. By making better products, faster and cost-effective processes, and valuable insights helping retailers to retain better investments. Operational optimizations responsive to research and development activities upgrade business value, hence, retailers are primarily adopting AI-driven retail solutions for operations-focused functionalities. While the customer’s experience also plays a vital role to augment the sale by empowering a loyal customer’s base. Thus, customer-facing functionality is also expected to demonstrate moderate growth in the coming years.
To know how our report can help streamline your business, Speak to Analyst
Natural Language Processing is a Leading Segment
In terms of technology, the market has been divided into machine learning, natural language processing, computer vision, and others. Among all the technologies natural language processing is anticipated to dominate the market. By leveraging voice-based technologies to develop interactive online and in-store chatbots. Integrating chatbots with social media platforms are significantly enhancing the customer shopping experience. Machine learning technology is anticipating to demonstrate significant growth. Many resellers are adopting machine learning algorithms to drive deep insights to customer’s banking data sets to aggregate transactions, govern outcomes and threat issues for each customer order, detect fraudulent orders, and continue learning transactions. In the year 2017, the U.S. based retailer PetSmart had canceled fraudulent orders worth USD 4 million with the help of artificial intelligence.
North America Artificial Intelligence (AI) in Retail Market Size, 2019 (USD Billion)
To get more information on the regional analysis of this market, Request a Free sample
Geographically, the market is studied for five major regions, namely North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America. They are further categorized into countries.
Presently, North America is dominating the AI in retail market growth, owing to its rising investment in research and development activities and the presence of tech-start-ups. Within North America, the United States is one of the early adopters of innovative technologies including artificial intelligence, augmented reality, virtual reality, and robotics. The presence of large retail giants is also one of the reasons for market growth with an aim to optimize operations.
Europe holds the second largest market share in the global artificial intelligence in the retail market. The presence of the large retail supply chains and developed apparel industry utilizes artificial intelligence, AR/VR solutions to drive customer experience and business value. Additionally, growing investments into artificial intelligence research by the region witnessing healthy market growth.
Furthermore, Asia Pacific is anticipated to show the highest CAGR during the forecast period; as retail companies in the emerging APAC countries are taking up AI-oriented initiatives. Brands like Nike and Adidas have employed AI-powered robots to automate tasks. This adoption is likely to enhance in the coming years with growing technology acceptance.
Additionally, Latin America, and the Middle East and Africa are expected to demonstrate significant growth in the market during the forecast period. Development of customer engagement and advanced transaction platforms are witnessing healthy adoption for AI-driven retail solutions across Latin America.
Major Companies to Follow Organic and Inorganic Growth Strategies to Stay Competitive in the Market
The key players including both emerging and established, are investing a major share of their revenue into research and development activities. Tech-giants like Microsoft Corporation, Google LLC., Amazon Web Services (AWS), and IBM Corporation drive major investments to develop an artificial intelligence platform, supporting market future growth. By leveraging advanced technologies companies are strengthening their product portfolio that helps key players to stay ahead in the market competition. Although, strategic partnerships, acquisitions, and collaborations help key players to expand their business and distribution network to maintain their market lead.
July 2020 – Microsoft Corporation launched AI-powered Dynamics 365 solutions for connected stores which uses a combination of IoT sensors, cameras, computer vision to provide personalized recommendations to customers. The solutions also include fraud prevention features which offer account protection and loss prevention.
February 2020 – RetailNext Inc., partnered with YOOBIC to provide enhanced in-store shopping experiences to the customers as well as help retailers to manage store and inventory management in real-time.
An Infographic Representation of Artificial Intelligence (AI) in Retail Market
To get information on various segments, share your queries with us
The artificial intelligence (AI) in retail market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading applications of the product. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the advanced market over recent years.
Value (USD Billion)
Fortune Business Insights says that the global artificial intelligence in retail market size was USD 3.01 billion in 2019 and is projected to reach USD 23.32 billion by 2027.
In 2019, the North America market value stood at USD 1.44 billion.
Growing at a CAGR of 29.6%, the market will exhibit steady growth in the forecast period (2020-2027).
The customer-facing functionality segment within end-use is expected to be the leading segment in this market during the forecast period.
The growing popularity of AI-driven Chatbots to boost the market growth.
Microsoft Corporation., Oracle Corporation., Google LLC., IBM Corporation, and among others are major players of the global market.
North America dominated the market share in 2019.
COVID-19 global pandemic is expected to drive the global market.
“We are happy with the professionalism of your in-house research team as well as the quality of your research reports. Looking forward to work together on similar projects”- One of the Leading Food Companies in Germany
“We appreciate the teamwork and efficiency for such an exhaustive and comprehensive report. The data offered to us was exactly what we were looking for. Thank you!”- Intuitive Surgical
“I recommend Fortune Business Insights for their honesty and flexibility. Not only that they were very responsive and dealt with all my questions very quickly but they also responded honestly and flexibly to the detailed requests from us in preparing the research report. We value them as a research company worthy of building long-term relationships.”- Major Food Company in Japan
“Well done Fortune Business Insights! The report covered all the points and was very detailed. Looking forward to work together in the future”- Ziering Medical
“It has been a delightful experience working with you guys. Thank you Fortune Business Insights for your efforts and prompt response”- Major Manufacturer of Precision Machine Parts in India
“I had a great experience working with Fortune Business Insights. The report was very accurate and as per my requirements. Very satisfied with the overall report as it has helped me to build strategies for my business”- Hewlett-Packard
“This is regarding the recent report I bought from Fortune Business insights. Remarkable job and great efforts by your research team. I would also like to thank the back end team for offering a continuous support and stitching together a report that is so comprehensive and exhaustive”- Global Management Consulting Firm
“Please pass on our sincere thanks to the whole team at Fortune Business Insights. This is a very good piece of work and will be very helpful to us going forward. We know where we will be getting business intelligence from in the future.”- UK-based Start-up in the Medical Devices Sector
“Thank you for sending the market report and data. It looks quite comprehensive and the data is exactly what I was looking for. I appreciate the timeliness and responsiveness of you and your team.”- One of the Largest Companies in the Defence Industry