Artificial Intelligence (AI) in Retail Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024-2030)

AI in Retail Market Trends & Growth Drivers

Usage of AI For Multi-Channel Marketing Is a Key Trend

• The usage of AI technology among retailers for multi-channel marketing is a key trend in the market.
• The large volume of data generated on 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.
• Also, AI supports these functions and can be utilized for automating repetitive tasks, including data entry and product labeling. Thus, its far-expanding application in multi-channel marketing will help create an intelligent blueprint of the data collected through digital platforms and brick-and-mortar stores.
• The adoption of technologies such as machine learning, deep learning, and is helping transform the entire marketing process in the retail industry.
• The technology helps customers save time and makes it easier for them to shop for produce while lowering Walmart’s operational costs.
• Moreover, the rising number of shopping channels, such as websites, physical retail stores, and mobile applications, has forced retailers to employ AI technologies across these platforms to capture a larger customer base.

Growing E-Retail Industry Drives the Market

• The expansion of the e-retail industry is a major factor driving the growth of the market for AI in retail solutions globally.
• This growth in e-retailing can be mainly ascribed to rising internet penetration, surging smartphone adoption, increasing usage of alternate payment methods, and rising investments in logistics across the globe.
• The retail market is rapidly evolving, more so because the incorporation of AI in operations allows retailers to predict consumer behavior and offer personalized services, thus enhancing customer experience and satisfaction.
• Also, AI technologies help in accurate demand forecasting, real-time customer intelligence, and supply chain planning. Thus, retail firms are greatly benefitting through streamlined and automated operations, which, in turn, help them achieve their organizational growth goals.

Lack of Qualified AI Professionals Is a Challenge

• The lack of qualified AI professionals is one of the biggest barriers to the implementation of AI in industries including healthcare, banking, financial services, and insurance (BFSI), and retail.
• The development of machine learning, IoT, and technologies requires skilled professionals with thorough technical knowledge.
• Since there is a dearth of such professionals at present, technology adoption is being vastly impacted across the globe.
• However, globally, AI-related jobs are estimated to reach two million by 2025, with 54% of the global workforce skilled in digital technologies, to meet the job requirements.
• Moreover, the adoption of AI in the retail industry is expected to increase in the coming years, as a result of which the requirement for AI professionals is expected to rise significantly for technology development, deployment, and maintenance.

Artificial Intelligence in Retail Market Analysis

Offering Insights

• The solution category is estimated to have accounted for the larger revenue share, of around 75% in 2024 in the market.
• This is due to the high adoption of AI-based retail solutions in developed economies, such as the U.S., Canada, Germany, and Japan, to provide a better shopping experience to customers.
• Whereas, the service category is expected to witness faster growth in the coming years. This can be mainly ascribed to the growing demand for professional services from retailers integrating AI into their operations.

Offerings covered in the report include:

• Solution (Larger and Faster-Growing Category)
• Service

Technology Insights

• The NLP category is projected to witness the fastest growth, advancing at a CAGR of around 34%, in the AI in retail market during the forecast period (2024–2030).
• This is because NLP enables computers to understand and process human language. This allows retailers to understand the shopping preferences of customers in a better way, which helps them in offering more personalized services.
• Whereas, the machine learning category holds the largest market share. This is attributed to the increasing use of machine learning by online retailers to offer personalized services and enhance customer experience.

The following technologies are included in the report:

• Machine Learning (Largest Category)
• Natural Language Processing (NLP) (Fastest-Growing Category)
• Computer Vision

Geographical Analysis

• North America is estimated to have held the largest revenue share, of about 35%, in 2024 in the AI in retail market.
• This is due to the growing e-commerce industry, the rising dependence of companies on digital marketing in the U.S. and Canada, the high internet and smartphone penetration, and the greater convenience associated with online shopping in the region.
• On the other hand, the APAC market is expected to witness the fastest growth during the forecast period. This can be ascribed to the surging adoption of machine learning technology by online retailers in the region, particularly in China.
• E-commerce companies, such as Alibaba Group Holding Limited, Amazon.com Inc., and JD.com Inc., are witnessing rising rales. Thus, they are increasingly adopting AI-driven recommendation engines, price optimization solutions, and supply chain management (SCM) solutions to enhance the shopping experience of customers.

Further, regions and countries analyzed for this report include:

• North America (Largest Regional Market)
  • U.S. (Larger Country Market)
  • Canada (Faster-Growing Country Market)
• Europe
  • Germany (Fastest-Growing Country Market)
  • U.K. (Largest Country Market)
  • France
  • Italy
  • Spain
  • Rest of Europe
• Asia-Pacific (APAC) (Fastest-Growing Regional Market)
  • China (Largest Country Market)
  • Japan
  • India (Fastest-Growing Country Market)
  • South Korea
  • Australia
  • Rest of APAC
• Latin America (LATAM)
  • Brazil (Largest Country Market)
  • Mexico (Fastest-Growing Country Market)
  • Rest of LATAM
• Middle East and Africa (MEA)
  • Saudi Arabia (Largest Country Market)
  • South Africa
  • U.A.E. (Fastest-Growing Country Market)
  • Rest of MEA

AI in Retail Market Share

The global AI in retail market is highly fragmented in nature, due to the presence of a large number of local and international players. Competition in the market is becoming intense on account of the growing number of global and regional players offering these solutions and services. These players have been involved in several development strategies, such as product launches, mergers and acquisitions, partnerships and collaborations, and facility expansions, to gain a competitive edge.

AI in Retail Market News

• In January 2024, Lenovo introduced AI-powered, end-to-end retail solutions at NRF, to support safer, smarter, and more secure experiences for shoppers and retailers across any category.
• In January 2024, Walmart leveraged AI/ML to build NLP models that effectively speak retail, specifically Walmart retail. This feature is driving multiple use cases across the company.
• In January 2024, IBM collaborated with SAP to develop new AI solutions for retail industries and consumer packaged goods.
• In January 2024, Microsoft introduced new generative AI and data solutions across the retail shopper journey, empowering store associates, providing personalized shopping experiences, offering copilot experiences through Microsoft Cloud for Retail, and unifying retail data that helps brands effectively reach their customers.