Artificial Intelligence (AI) in Retail Market Size By Component (Solution [Chatbot, Customer Behavior Tracking, Customer Relationship Management (CRM), Inventory Management, Price Optimization, Recommendation Engine, Supply Chain Management, Visual Search], Service [Professional Service, Managed Service]), By Technology (Machine Learning, Natural Language Processing (NLP), Computer Vision), By Application (Automated Merchandising, Programmatic Advertising, Market Forecasting, In-Store AI & Location Optimization, Data Science), Industry Analysis Report, Regional Outlook, Growth Potential, Competitive Market Share & Forecast, 2018 - 2024

Published Date: May 2018  |  Report ID: GMI2568  |  Authors: Ankita Bhutani, Preeti Wadhwani

Report Format: PDF   |   Pages: 300   |   Base Year: 2017




Summary Table of Contents Industry Coverage Methodology

Industry Trends

AI in Retail Market size valued at USD 650 million in 2017 and is anticipated to grow at a CAGR of around 40% from 2018 to 2024.
 

AI in Retail Market

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The growing need among retail enterprises to provide enhanced customer experience, maintain their inventory accuracy, and improve productivity is proliferating the use of AI in retail market. AI is used by retailers to automate their business operations and decision-making processes to propel their transactional business. Additionally, AI deploys trend analysis on historical data to expedite the business process, reduce the time from ideation to sale, and improve trading decisions. Major retailers are investing heftily on advanced technology, such as machine learning, big data automation, and predictive analysis, to improve ROI and enhance supply chain optimization.
 

Changing customer preferences related to real-time engagement, differentiated personalization, relevant recommendations, and value-oriented shopping are propelling the use of AI in retail market. Additionally, retailers are rapidly deploying AI to increase customer engagement and ease financial transactions for their customers. This will reduce the operating cost and increase revenue generation for retailers.  
 

However, the absence of skilled professionals related to AI and cloud-based technology is expected to hinder the market growth. The rise in integration issues of AI in several retail-related software is restraining the deployment of AI. Additionally, the emergence of risk associated with machine responsibility and ethics is anticipated to impede market growth.
 

Artificial Intelligence (AI) in Retail Market Report Coverage
Report Coverage Details
Base Year: 2017 Market Size in 2017: 650 Million (USD)
Historical Data for: 2013 to 2017 Forecast Period: 2018 to 2024
Forecast Period 2018 to 2024 CAGR: 40% 2024 Value Projection: 8 Billion (USD)
Pages: 300 Tables, Charts & Figures: 193
Geographies covered (19): U.S., Canada, UK, Germany, France, Spain, Sweden, Switzerland, Australia, China, India, Japan, South Korea, Singapore, Brazil, Mexico, UAE, Israel, South Africa
Segments covered: Component, Technology, Computer Vision, Application and Region
Companies covered (19): Amazon Web Services, Baidu Inc., BloomReach Inc., CognitiveScale Inc., GoogleInc., IBM Corporation, Inbenta Technologies, IntelCorporation, Interactions LLC, Lexalytics Inc., MicrosoftCorporation, NEXT IT Corp., NvidiaCorporation, OracleCorporation, RetailNext Inc., Salesforce.com Inc., SAPSE, Sentient Technologies, Visenze
Growth Drivers:
  • Growing investment in AI
  • Increasingly empowered consumer
  • Disruptive technologies
  • Advent of new business models
  • Advancement in data science
Pitfalls & Challenges:
  • Limited public-private parTrillion (USD)ership to address social implications directly
  • Privacy issues associated with the use of AI Growth potential analysis

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By Component

The customer behavior tracking subsegment in the solution segment is estimated to exhibit more than 46% CAGR over the forecast timeline. Customer behavior analytics form the basis of clear customer knowledge that allows organizations to extract actional insights from customers’ information. It also assists retailers in providing improved shopping experiences to customers. Retailers are looking for more advanced ways to understand buying patterns, customer behavior, preferences, and sentiments, which play a key role in acquiring and retaining customers. This propels the demand for customer behavior tracking solutions among retailers.
 

The professional service subsegment held over 84% artificial intelligence (AI) in retail market share in 2017 and is projected to dominate the market share over the forecast timeline. Several market players are offering professional services to support clients’ requirements and help them in the successful implementation of AI platforms. Various service consultants work with AI solution providers to offer them a roadmap on how to use AI-based solutions to help them grow their businesses. It includes consulting, maintenance, integration, and deployment services as well as custom offerings including software implementation, test plans, and product testing in labs.

By Technology

Mexico AI in Retail By Technology

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The machine learning & deep learning technology is estimated to grow at a CAGR of more than 43% over the forecast period. The growing adoption of intelligent algorithms among retailers to analyze customers’ behavior and provide personalized shopping experience is the primary factor driving the artificial intelligence (AI) in retail market. These solutions allow retailers to automatically recommend products to customers by analyzing their purchase behavior and historical data. It also assists retailers to interact with customers via virtual assistance and chatbots to provide a personalized shopping experience. The increasing adoption of the IoT and M2M devices among retailers is also one of the major forces propelling the adoption of machine learning and deep learning technology. As the adoption of IoT devices, such as Wi-Fi hotspots and Beacons devices, to fetch customer data increases, the need to analyze this data and extract actionable insights also rises.  
 

By Application

The market forecasting segment is projected to exhibit a CAGR of more than 43% over the forecast timeline. The market growth is attributed to the changing customer preference and the growing need to maintain inventory among retailers. The solution allows retailers to predict the demand for a product to meet the customer requirement. It assists companies with decision making and through the planning process by conducting marketing activities, resource scheduling, and financial planning activities. It analyzes patterns of demand from historical data to provide actionable insights into a more behavior-based understanding of customers, their interests & needs, and their consumption of products & services.
 

 By Region

Europe AI in retail market held more than 23% revenue share in 2017 and is estimated to maintain its dominance over the forecast timeline due to the proliferation of smart devices coupled with rising internet penetration in the region. Growing investments by tech giants for the development of AI in the region are estimated to augment market growth. For instance, in 2016, Google announced the establishment of a new research & development facility in Zurich, Germany. Similarly, Amazon Web Services also announced the investment of USD 2.3 million in Max Planck Institute for Intelligent Systems, a Germany-based AI research center, for the development of AI and robotics technology, which is estimated to have a significant impact on market growth. For instance, France is emerging as one of the largest hubs for artificial intelligence and machine learning start-ups with approximately 270 start-ups dedicated to AI and over USD 325 million raised.
 

APAC Artificial Intelligence (AI) in Retail Market By Region

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Asia Pacific is projected to exhibit a CAGR of more than 45% over the forecast timeline due to rapid digitalization across the regions coupled with increasing investments in AI technology. Supportive government initiatives in the region to propel e-commerce and retail sector are proliferating the deployment of AI to increase customer engagement, improve customer experience, and enhance business-related decision making. For instance, in May 2018, the South Korean government announced to invest about USD 2 billion by the year 2022 to strengthen its AI R&D capabilities. The government is also offering tax benefits and subsidies for private companies to set up R&D facilities.
 

Competitive Market Share

Prominent vendors present in the AI retail market are AWS, Baidu, Google, Intel, Microsoft, IBM, Salesforce, Interactions, Lexalytics, NEXT IT, Nvidia, Oracle, RetailNext, SAP, Sentient, and Visenze. The market players include both established and emerging market players. Technology market players are collaborating, acquiring, and merging to enhance their AI platform for retailers. Investments in AI technology driven by tech giants, such as Google, Microsoft, IBM, AWS, and Baidu, will further propel the market growth. Several retailing giants are developing their in-house AI platform to enhance their customer experience, increase customer engagement, and optimize their supply chain.  
 

Retailers and payment providers are entering into strategic alliances with technology players developing the AI platform to enhance their business operations and improve the decision-making process. For instance, in May 2018, PayPal acquired Jetlore for an undisclosed sum. Jetlore develops the AI prediction platform for retailers, such as Nordstrom Rack, JCPenney, and Uniqlo, to personalize their customer experiences. It further predicts color, size, and style preferences for these retailers. Additionally, it customizes email templates for individual shoppers and help retailers optimize their site according to search experience. The acquisition will add new capabilities to the PayPal Marketing Solutions platform.
 

 Industry Background

The changing customer preference and growing competition among retailers to hold significant market share have increased the deployment of AI in the retail industry. The growing digitalization coupled with rising internet penetration and proliferation of smart devices across the globe is rapidly increasing the use of AI by retailers. This helps retailers to increase their customer base, reduce operational cost, generate more revenue, and improve business decision making. Technology giants are investing heftily in their R&D to enhance the AI platform experience for both retailers and customers.

Frequently Asked Questions (FAQ) :

The market size of AI in retail was valued at USD 650 million in 2017.
The industry share of AI in retail is anticipated to grow at a CAGR of around 40% to 2024.
Growing need among retail enterprises to deliver an enhanced customer experience while enhancing productivity and accurately maintaining their inventory is driving the integration of AI in retail.
Rising internet penetration coupled with the growing proliferation of smart devices and increasing investments by prominent tech firms towards AI development may impel revenue growth in Europe.
Increasing adoption of M2M and IoT devices like Beacons devices and Wi-Fi hotspots to collect consumer data to deliver a personalized shopping experience is pushing the demand for machine learning.
The APAC market is projected to exhibit a CAGR of more than 45% till 2024 due to rapid digitalization across the regions coupled with increasing investments in AI technology.

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Premium Report Details

  • Published Date: May 2018
  • Pages: 300
  • Tables: 170
  • Charts / Figures: 23
  • Companies covered: 19
  • Countries covered: 19

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