AI in Retail Market Overview
The global AI in retail market valued at $720.0 million in 2018, is expected to advance at a CAGR of 35.4% during the forecast period 2019–2024. This can be attributed to factors including growing e-retail industry, and increasing investments in AI by retail companies. The internet- and smartphone-fueled changes to the consumer shopping behaviors are captured by the retailers who strategize to turn to AI solutions to remain competitive.
Based on solution, the AI in retail market is classified into chatbot, CRM, price optimization, recommendation engine, SCM, visual search, and others. Among these, recommendation engine accounted for largest share in the market during the historical period. This can be ascribed to the increased use of AI-driven recommendation engines by online retail companies, such as Amazon.com Inc. and eBay Inc., for the personalized marketing of products based on customers’ past purchases. Also, with the growing focus on digital marketing in North America and APAC, the demand for recommendation engines is expected to increase, further driving the market in this category.
On the basis of technology, the AI in retail market is categorized into machine learning, NLP, computer vision, and others. Of these, machine learning held the largest market share in 2018. Besides, it is expected to be fastest-growing category in the market, during the forecast period. This can be attributed to the increasing use of machine learning technology by online retailers to offer personalized services and enhance customer experience. The technology has witnessed increased adoption across the globe in recent years, particularly in the U.S. and China.
North America led the AI in retail market in 2018, in terms of revenue generation, on account of the increased deployment of AI, including machine learning and NLP technologies, by online as well as brick-and-mortar retail stores. Organizations such as Amazon.com Inc. and Walmart Inc. are increasingly using these technologies to understand consumer behavior and enhance the overall shopping experience. For instance, in 2018, Amazon.com Inc. opened Amazon Go convenience stores in San Francisco that deploy computer vision and other AI-assisted technologies to monitor the items that are taken off the store shelves. With this technology, the company aims to improve the shopping experience of its customers and reduce the billing and checkout time.
AI in Retail Market Dynamics
Increasing adoption of AI technology among retailers for multi-channel marketing can be viewed as a key trend in the market. The large volume of data generated on the basis of in-store consumer behavior, e-mail marketing, and campaign management, when analyzed, helps identify consumption patterns and develop personalized campaigns, thus facilitating better decision making.
The adoption of technologies such as machine learning, deep learning, and chatbot is helping in transforming the entire marketing process in the retail industry. For instance, in 2018, Myntra Designs Private Limited, a subsidiary of Flipkart Internet Private Limited, partnered with Netcore Solutions Pvt. Ltd. and utilized Smartech, an AI-powered multi-channel marketing platform, which helped the company improve its email marketing campaign by 60%. Moreover, the growing number of shopping channels, such as websites, physical retail stores, and mobile applications, has compelled retailers to employ AI technologies across these platforms to capture a larger customer base. This increased use of AI to monitor and analyze data is, thus, revolutionizing the retail industry, globally.
The growing implementation of AI-based chatbots is one of the key growth opportunities for the players operating in the market. AI-based chatbot technology is widely being integrated by retail companies into their work processes. Companies such as H&M Hennes Mauritz AB, Burberry Group PLC, and eBay Inc. have deployed AI-based chatbots to provide personalized experience to their customers and thus, gain customer loyalty.
AI solution providers are, thus, increasingly focusing on the launch of AI tools that can support processes in the retail industry. For instance, in 2018, a U.S.-based computer vision company, Mode.ai, launched a chatbot on Facebook Messenger for Louis Vuitton North America Inc. Through this chatbot, users can share products with their friends and access the full catalogue of the company online. Thus, the growing demand for AI-based chatbots from retail companies is creating ample scope in terms of product development and business expansion for the players operating in the market.
AI in Retail Market Competitive Landscape
Competition in the AI in retail market is becoming intensive on account of the growing number of global and regional players offering AI solutions and services. In recent years, major players in the AI in retail market have primarily focused on product launches, partnerships, and mergers and acquisitions to expand their market reach and share. For instance, in January 2019, Microsoft Corporation partnered with The Kroger Co. and introduced retail as a service (RaaS), a solution powered by Microsoft Azure. It offers support to retailers in obtaining customer insights, improving out-of-stocks, and enhancing employee productivity.
Some of the key players operating in the AI in retail market include IBM Corporation, Microsoft Corporation, Google LLC, Salesforce.com Inc., Oracle Corporation, SAP SE, Accenture PLC, Infosys Limited, Intel Corporation, Amazon Web Services Inc., ViSenze Pte. Ltd., Evolv Technologies Inc., and Numenta Inc.