Artificial Intelligence in Retail Market Report Scope and Overview
The SNS Insider report indicates that the Artificial Intelligence in Retail Market was valued at USD 7.11 Bn in 2023. It is estimated to reach USD 67.12 Bn by 2031 and grow at a phenomenal CAGR of 32.38% over the forecast period 2024-2031. This exponential growth signifies the retail industry’s increasing reliance on AI to optimize operations, enhance customer experiences, and gain a competitive edge.
Several factors contribute to the market’s impressive trajectory. The ever-expanding user base of the internet, coupled with the proliferation of smart devices, has fueled the need for robust surveillance and monitoring solutions in physical stores. Additionally, retailers are laser-focused on maximizing productivity to stay competitive, and automation plays a pivotal role in achieving this goal. AI empowers retailers by automating tedious tasks, leading to higher profits and streamlined operations.
Furthermore, the growing awareness and application of AI are leading to enhanced user experiences within retail spaces. Digital transformation, fueled by data analytics and the Internet of Things (IoT), has revolutionized the retail landscape by prioritizing speed, efficiency, and accuracy. Integrating AI empowers retailers with valuable customer data, enabling operational enhancements and the creation of new revenue opportunities – both crucial for success in today’s dynamic market.
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Major Key Players Studied in this Report are:
- Amazon
- IBM Corporation
- Intel Corporation
- Microsoft Corporation
- Nvidia Corporation
- Oracle Corporation
- SAP SE
- Salesforce
- BloomReach
- Others
Segmentation Analysis
By Offering, the solution segment currently holds the dominant market share, capturing a staggering 69.5%. This dominance can be attributed to the constant innovation in solutions aimed at addressing retail’s most pressing operational challenges. These cutting-edge technologies focus on automation, improving warehouse management, streamlining supply chains, and ultimately, enhancing consumer experiences. Software introductions have further propelled growth within this segment.
The services segment, on the other hand, is poised for significant growth due to the escalating demand for managed solutions. These solutions play a vital role in boosting operational efficiency, accuracy, and productivity within retail businesses. As AI adoption gains momentum, the demand for services facilitating advanced functionalities, maximizing revenue generation, fostering innovation, and minimizing errors in retail operations is expected to surge.
Market Segmentation and Sub-Segmentation Included Are:
By Offering
- Solution
- Product Recommendation and Planning
- Customer Relationship Management
- Visual Search
- Virtual Assistant
- Price Optimization
- Payment Services management
- Supply chain management and Demand Planning
- Others
- Service
- Professional Services
- Managed Services
By Type
- Online
- Offline
By Technology
- Computer Vision
- Machine Learning
- Natural Language Processing
- Others
By Function
- Operations-Focused
- Customer-Facing
By Application
- Predictive Analytics
- In-Store Visual Monitoring and Surveillance
- Customer Relationship Management (CRM)
- Market Forecasting
- Inventory Management
- Others
Impact of Global Disruptions
The Russia-Ukraine conflict has significantly disrupted global supply chains, consequently impacting the retail sector. Supply shortages and escalating prices have made it challenging for retailers to fulfill customer demands. These uncertain market conditions are prompting a cautious approach to investments and strategic planning among retail businesses. Sourcing products has become increasingly difficult, forcing retailers to adjust pricing strategies accordingly. These economic challenges pose a potential threat to the growth of the retail industry, potentially impacting consumer confidence and spending habits.
The potential economic slowdown is another concern for the market. Businesses may be more hesitant to invest in cutting-edge AI solutions during an economic downturn. However, AI can be a powerful tool for navigating economic challenges. By optimizing operations, minimizing waste, and providing valuable customer insights, AI can empower retailers to weather economic storms. For instance, AI-powered demand forecasting can help retailers optimize inventory management, reducing costs associated with excess stock.
Future Growth and Regional Development
North America currently leads the global market, holding a revenue share exceeding 36%. This dominance stems from retailers in the region placing a strong emphasis on extracting valuable customer data to enhance customer service efficiency. Additionally, North America is witnessing a notable rise in AI-focused startups and small businesses due to the surging demand for AI solutions.
The Asia Pacific region is expected to register a rapid CAGR during the forecast period. Extensive digitalization initiatives across the region are a key driver of this growth. China, for example, has secured a significant 24% share of AI investments in its commerce and retail sectors. India is also anticipated to experience the highest CAGR owing to the high demand for automation tools that enhance decision-making capabilities and streamline operations.
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Recent Developments
In January 2023: EY, a leading Fintech company, unveiled the EY Retail Intelligence solution, powered by Microsoft Cloud. This innovative solution leverages advanced technologies like AI, analytics, and image recognition to revolutionize the shopping experience by providing clients with a secure and time-saving platform.
In January 2023: Perfect, a leading provider of AI solutions, collaborated with Valmont, a renowned luxury cosmetics brand. This partnership focuses on developing an AI-powered beauty solution that combines Valmont’s expertise in skincare with Perfect’s cutting-edge AI technology. The result is a comprehensive skin analysis offering that caters to the individual needs of consumers.
Key Takeaways
- AI is rapidly transforming the retail landscape by enhancing customer experiences, streamlining operations, and optimizing resource allocation. Retailers that embrace AI can gain a significant competitive edge in today’s dynamic market.
- The solutions segment currently dominates the market due to the constant innovation in automation, supply chain management, and customer experience-enhancing technologies. As AI adoption matures, the services segment is expected to witness significant growth as retailers seek managed solutions to maximize the benefits of AI.
- The global economic slowdown and supply chain disruptions pose challenges to the market’s growth. However, AI can be a powerful tool for navigating these challenges by optimizing operations, minimizing waste, and providing valuable customer insights.
- North America is the current leader, but the Asia Pacific region is expected to experience the fastest growth due to extensive digitalization initiatives and the high demand for automation tools.
Table of Contents- Major Key Points
- Introduction
- Research Methodology
- Market Dynamics
- Drivers
- Restraints
- Opportunities
- Challenges
- Impact Analysis
- Impact of Ukraine- Russia war
- Impact of Ongoing Recession on Major Economies
- Value Chain Analysis
- Porter’s 5 Forces Model
- PEST Analysis
- Artificial Intelligence (AI) In Retail Market Segmentation, By Offering
- Introduction
- Trend Analysis
- Solution
- Service
- Artificial Intelligence (AI) In Retail Market Segmentation, By Type
- Introduction
- Trend Analysis
- Online
- Offline
- Artificial Intelligence (AI) In Retail Market Segmentation, By Technology
- Introduction
- Trend Analysis
- Computer Vision
- Machine Learning
- Natural Language Processing
- Others
- Artificial Intelligence (AI) In Retail Market Segmentation, By Function
- Introduction
- Trend Analysis
- Operations-Focused
- Customer-Facing
- Artificial Intelligence (AI) In Retail Market Segmentation, By Application
- Introduction
- Trend Analysis
- Predictive Analytics
- In-Store Visual Monitoring and Surveillance
- Customer Relationship Management (CRM)
- Market Forecasting
- Inventory Management
- Others
- Regional Analysis
- Introduction
- North America
- Europe
- Asia-Pacific
- The Middle East & Africa
- Latin America
- Company Profile
- Competitive Landscape
- Competitive Benchmarking
- Market Share Analysis
- Recent Developments
- USE Cases and Best Practices
- Conclusion
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