Artificial Intelligence in Retail Market Analysis | 2023-2028

Market Insights

The artificial intelligence in retail market was estimated at USD 5.79 billion in 2022 and is likely to grow at a CAGR of 23.20% during 2023-2028 to reach USD 20.26 billion in 2028.

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Market Dynamics

Introduction

The implementation of artificial intelligence in retail is revolutionizing the industry in a new era of how organizations and companies track their operations to boost business developments, offer better outcomes, and involve customers in the digital world. Companies in the retail sector use artificial intelligence to provide the best customer experience.

COVID-19 Impact

The COVID-19 pandemic has positively impacted the industry. The rapid spread of the virus has led to several thousands of hospital admissions. There was an increase in the popularity of virtual fitting rooms, allowing shoppers to have a better shopping experience, amid the pandemic, as it does not involve any physical contact with the products, The pandemic significantly impacted the retail industry, leading to a shift towards artificial intelligence adoption.

Retailers have shifted to automation and machine learning to manage order management and purchasing operations. The adoption of AI helped retailers realign supply chains, recognize dynamic demand, and understand new market trends, resulting in increased investment in AI technology to understand customer preferences.

Market Drivers

The artificial intelligence in retail market is driven by a host of factors, some of which are noted below:

Significantly increasing internet users & smart devices, favorable government initiatives towards digitization, and growing awareness regarding AI and big data & analytics. The rising adoption of multichannel or omnichannel retailing strategy, growing enterprise demands for streamlining the business process, and untapped opportunities to improve sales efficiency. Increasing need to enhance the end-user experience to further bolster the market growth.

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Key Trends:

• Personalized customer experiences: AI can be used to collect and analyze customer data to create personalized shopping experiences. For example, AI-powered chatbots can answer customer questions, recommend products, and provide personalized offers.
• Automated inventory management: AI can be used to track inventory levels and predict demand. This can help retailers optimize their inventory, reduce waste, and avoid stockouts.
• Fraud detection: AI can be used to detect fraudulent transactions. This can help retailers protect themselves from financial losses.
• Real-time pricing: AI can be used to set real-time prices for products based on factors such as demand, competition, and inventory levels. This can help retailers maximize profits.
• Visual search: AI can be used to enable visual search, which allows customers to find products by image. This can be a more convenient way for customers to shop, especially for those who are visually impaired.
• Augmented reality (AR) and virtual reality (VR): AI can be used to power AR and VR experiences in retail. This can allow customers to try on clothes, see how furniture would look in their home, or even take a virtual tour of a store.

Restraining Factors:

The adoption of artificial intelligence in the retail sector faces challenges due to a lack of infrastructure and technical expertise. Large enterprises and small businesses, such as Walmart, have already implemented artificial intelligence for in-shop operations and online portal management. The high implementation costs also pose a major barrier for small retailers.

Recent Mergers & Acquisitions

• On 21 September 2023, Oracle at CloudWorld 2023 announced collaborations with Microsoft and Red Hat, new cloud infrastructure capabilities, generative AI, and healthcare workplace management tools, emphasizing customer success.
• On 4 May 2023 – Salesforce and Accenture are partnering to expedite the deployment of generative AI for CRM, aiming to create a hub to scale Einstein GPT, Salesforce's generative AI for CRM, boosting employee productivity and enhancing customer experiences.
• On 25 September 2023, Amazon announced plans to invest $4 billion in a partnership with Anthropic to develop generative AI models using Amazon's cloud services and microchips for language model training, with users able to preview the models through Amazon Bedrock.
• On 26 September 2023, Microsoft Advertising Network in the US streamlined retail media campaign creation by connecting retailers, expanding offsite reach, and offering additional buying paths for advertisers.

Segment Analysis

By Application Type

The market has been classified into supply chain and logistics, product optimization, in-store navigation, payment and pricing analytics, inventory management, and Customer Relationship Management (CRM).

Under these, the customer relationship management (CRM) segment held a significant market share of more than 15% in 2022 and is expected to maintain its dominance during the forecast period. Product recommendation and planning is the key areas for artificial intelligence in the retail sector. The developments in Big Data analytics will spur the adoption of artificial-enabled devices and services across different retail end-users, which boosts the segment growth.

By Technology Type

The market has been classified into Machine Learning, Natural Language Processing, Chatbots, Image and Video Analytics, and Swarm Intelligence. Under these, the machine learning segment accounted for a market share of more than 25% in 2022 and is likely to dominate the market during the forecast period.

Regional Insights

The North American market held the largest revenue share of more than 35% in 2022 and is projected to grow at the fastest CAGR in the coming years. This is ascribed to the large presence of major players, early adoption of new and emerging technologies such as big data and AI, the surging need for intelligent business processes, and increasing adoption of digital technologies, which bolsters the regional market growth during the review period.

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Key Players

The following are some of the major key players operating in the market:

• Oracle Corporation (US)
• Salesforce.com Inc. (US)
• IBM Corporation (US)
• Microsoft Corporation (US)
• Google LLC (US)
• Amazon Web Services Inc. (US)
• SAP SE (Germany)
• ViSenze Pte Ltd (Singapore)
• BloomReach, Inc. (US)
• Symphony RetailAI (US)

There is stiff competition in the market. The growth of the companies is directly dependent on industry conditions and government support. These companies differentiate by offering quality and their penetration in the target and emerging markets. Also, there have been some major development strategies adopted by the global key players in the industry in recent years, which significantly influenced the competitive dynamics.

Note: The above list does not necessarily include all the top players in the market.

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Research Methodology

• This strategic assessment report from Stratview Research provides a comprehensive analysis that reflects today’s artificial intelligence in retail market realities and future market possibilities for the forecast period.
• The report segments and analyzes the market in the most detailed manner in order to provide a panoramic view of the market.
• The vital data/information provided in the report can play a crucial role for market participants as well as investors in the identification of the low-hanging fruits available in the market as well as to formulate growth strategies to expedite their growth process.
• This report offers high-quality insights and is the outcome of a detailed research methodology comprising extensive secondary research, rigorous primary interviews with industry stakeholders, and validation and triangulation with Stratview Research’s internal database and statistical tools.
• More than 1,000 authenticated secondary sources, such as company annual reports, fact books, press releases, journals, investor presentations, white papers, patents, and articles, have been leveraged to gather the data.
• We conducted more than 15 detailed primary interviews with market players across the value chain in all four regions and industry experts to obtain both qualitative and quantitative insights.

Report Features

This report provides market intelligence in the most comprehensive way. The report structure has been kept such that it offers maximum business value. It provides critical insights into market dynamics and will enable strategic decision-making for existing market players as well as those willing to enter the market. The following are the key features of the report:

• Market structure: Overview, industry life cycle analysis, supply chain analysis.
• Market environment analysis: Growth drivers and constraints, Porter’s five forces analysis, SWOT analysis.
• Market trend and forecast analysis.
• Market segment trend and forecast.
• Competitive landscape and dynamics: Market share, Service portfolio, New Product Launches, etc.
• COVID-19 impact and its recovery curve
• Attractive market segments and associated growth opportunities.
• Emerging trends.
• Strategic growth opportunities for the existing and new players.
• Key success factors.

Market Segmentation

This report studies the market, covering a period of 12 years of trend and forecast. The report provides detailed insights into the market dynamics to enable informed business decision-making and growth strategy formulation based on the opportunities present in the market.

The artificial intelligence in retail market is segmented into the following categories:

By Deployment Type

• Cloud
• On-Premise

By Application Type

• Supply Chain and Logistics
• Product Optimization
• In-Store Navigation
• On-Premise Payment and Pricing Analytics
• Inventory Management
• Customer Relationship Management (CRM)

By Technology Type

• Machine Learning
• Natural Language Processing
• Chatbots
• Image, and Video Analytics
• Swarm Intelligence

By Region

• North America (Country Analysis: The USA, Canada, and Mexico)
• Europe (Country Analysis: Germany, France, The UK, Russia, and the Rest of Europe)
• Asia-Pacific (Country Analysis: China, India, Australia, South Korea, and the Rest of Asia-Pacific)
• Rest of the World (Country Analysis: Saudi Arabia, Brazil, and Others)

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Report Customization Options

Stratview Research offers one of the following free customization options to our respectable clients:

Company Profiling

• Detailed profiling of additional market players (up to 3 players)
• SWOT analysis of key players (up to 3 players) 

Competitive Benchmarking

• Benchmarking of key players on the following parameters: Technology portfolio, geographical reach, regional presence, and strategic alliances.

Custom Research: Stratview Research offers custom research services across sectors. In case of any custom research requirement related to market assessment, competitive benchmarking, sourcing and procurement, target screening, and others, please send your inquiry to sales@stratviewresearch.com.

Recent Developments

On 17 October 2023, E& launched the world's first independent telecom store powered by Artificial Intelligence tech, 'EASE'. The store, powered by AI, machine learning, facial recognition, smart gates, robotics, smart shelves, and dispensing machines, will bring the future of retail to the UAE. Customers can enter the store using facial recognition or the Etisalat by e& app, explore, and purchase products and services.