The Artificial Intelligence in Retail Market was valued at USD 1.80 billion in 2020 and is expected to reach USD 10.90 billion by 2026, at a CAGR of 35% over the forecast period 2021 - 2026. AI will drive faster business decisions in marketing, e-commerce, product management, and other areas of the business by decreasing the gap from insights to action.
- The machine learning and deep learning technologies are expected to have the most significant market share during the forecast period. Organizations in the retail industry are using machine learning and deep learning technology to offer a more personalized experience to the end users as well as to provide an interactive environment to them. Moreover, the growing trend of rising technology adoption can be associated with the need for streamlining retail operations, minimizing efforts, and increasing revenue mostly for e-commerce retailers.
- The use of artificial intelligence in retail spans every aspect of the industry. Whether the goal is to optimize the supply chain, use existing data to increase conversion, or customize shopping experiences with predictive modeling and micro-targeting or pricing, AI can help meet these challenge in the retail space.
- The AI equipped retailers with sharper forecasting tools will help in making smarter business decisions. The use of algorithms increases visibility into ROI implications, translating to results like lower costs and higher sales. AI has brought real disruption to the retail sector by improving efficiency, as well as prediction.
Key Market Trends
Product Optimization Segment is Expected to Hold Significant Share
- Product recommendation and planning will be the growing area for AI in the retail sector. The advancement in Big Data analytics will drive the growing adoption of artificial enabled devices and services across different industrial domains and verticals.
- There is a range of different technologies involved in AI and Big Data, including machine learning, natural language processing, deep learning, and more for the automated machine-driven decisions.
- According to the Consumer Technology Association, AI has different benefits in the retail industry like cost saving, increased productivity, faster resolution of business problems, faster delivery of new products and services, increase in innovation which is rapidly making its way into many advanced solutions, including autonomous vehicles, smart bots, advanced predictive analytics, in the retail space. This factor is expected to improve customer analytics and behavior experience raising significance of product optimization.
North America Accounts for the Largest Share
- North America is expected to dominate the market with the largest market share mainly because of the presence of several developed economies, such as the United States and Canada, focusing on enhancing the existing solutions in the retail space. North America hosts the primary AI solution providers and is an early adopter of AI technology.
- Many retailers in this region have deployed AI-based solutions to optimize their supply chain operations and inventory. AI is helping the retailers in managing and maintaining their customers and understanding the buying patterns of the consumers. To engage customers and improve sales turnover, AI technologies are being adopted by both online and offline retail businesses.
- Many US-based companies like NVIDIA Corporation, Intel Corporation, Salesforce, Sentient Technologies, Microsoft Corporation, Google Inc., IBM Corporation, Amazon Web Services, are extensively involving themselves in the product innovation and optimization.
- For instance, in April 2019, Warby Parker, a US-based company started practicing innovative ways. By the use of artificial intelligence, it is providing its customer to try the virtual Try-On that allows them to try on virtual frames through augmented reality, a technology that overlays computer-generated images (frames) onto real-world images (your face).
Artificial intelligence in the retail market is fragmented. The growing adoption of IoT, Big Data analytics, and e-commerce marketing provide lucrative opportunities for artificial intelligence in the retail market. Overall, the competitive rivalry among existing competitors is high. Moving forward, acquisitions and collaborations of large companies with startups are expected, which are focused toward innovation. Some of the key developments in the area are:
- May 2019 - SAP SE announced a series of innovations to SAP S/4HANA to make it easier to add artificial intelligence (AI) and robotics and to customize apps. This will help companies improve business results, automate business processes, and make accurate predictions for better decisions.
- April 2019 - Amazon Web Services Inc. allows developers to create applications that speak in Arabic and build speech-enabled products and services, including cars, internet of things devices, appliances, automated contact centers, language learning platforms, translation apps, and newsreaders. The artificial intelligence-powered Polly uses deep-learning technologies to synthesize speech that sounds like a human voice.
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