The artificial intelligence (AI) in retail market is expected to be worth $57.8bn by 2030, with a CAGR of 41% from 2023 to 2030, according to Meticulous Research.

AI in retail can gather and analyse massive amounts of data, helping companies create personalised shopping experiences for customers via recommendation engines, structured web shops, intelligent in-store bots and chatbots. These also assist retailers in supply chain optimisation, price optimisation and market forecasting.

The implementation of AI in the retail industry is transforming the traditional retail experience and taking it to the next level with automation, personalisation and increased productivity.

The growth of this market is driven by factors such as growing awareness about AI, big data and analytics, and the need to enhance end-user experiences and improve productivity. However, the lack of infrastructure and the impact of Covid-19 may hinder growth. The increasing number of smartphones is expected to create growth opportunities. However, the reluctance towards AI implementation among small vendors is a major problem.

The Covid-19 pandemic highlighted the significance of online shopping, with consumers considering online platforms as their primary shopping channel. This has given retailers and consumer goods organisations an opportunity to undertake sustainability initiatives that integrate with their digital presence. Therefore, retailers are using ecommerce platforms and online marketplaces to capitalise on this changing trend.

For instance, Yonghui supermarkets provide online recommendations to help consumers choose combinations of fresh produce rather than select items individually, resulting in improved fulfilment rates and better customer experiences. In April 2020, India-based brick-and-mortar store Spencer’s Retail partnered with the online marketplace Flipkart. Similarly, in 2020, UK-based Morrisons announced a partnership with the food-delivery platform Deliveroo.

Owing to increased customer preference for online retail, organisations working in the retail segment are progressively adopting AI to improve efficiency and productivity. Retailers are using online platforms for personalised and improved customer engagement, inventory management, supply chain management, programmatic advertising, smart recommendations, and chatbots, among others. AI also lets retailers scale up capabilities, such as voice commerce, to strengthen engagement.

Based on offering, the services segment is expected to account for the largest share of the AI in retail market in 2023. Innovative retailers are using AI to drive the next wave of the smart retail sector. With chatbots, customer behaviour tracking, customer relationship management (CRM), inventory management, price optimisation, recommendation engines, supply chain management, and visual search, retailers are improving margins and delivering better customer experiences.

Based on application, the predictive merchandising segment is expected to account for the largest share of the AI in retail market in 2023. Predictive merchandising is becoming increasingly necessary for retail companies as they seek proactive methods of harnessing new and extensive data sources in unique ways.

Based on learning technology, the machine-learning segment is expected to account for the largest share of AI in retail in 2023. The segment’s large share is attributed to the capability of machine-learning technologies to provide more efficient delivery based on past customer data and customer behaviour, helping increase sales.

Based on type, the online retail segment is expected to account for the largest share. This is attributed to increasing investments in online platforms and growing consumer preference for online shopping. AI in the online retail sector helps enhance the purchase decisions, informs on the availability of alternative or new products, optimises buying processes, identifies new markets, and automates workflows.

Based on end user, the food and groceries segment is expected to account for the largest share of AI in retail in 2023. This is mainly due to the increasing customer preference for private-label brands and the growing supermarket shopping culture contributing to the growth of the food and grocery retail industry.

Based on deployment mode, the cloud-based segment is expected to account for the largest share in 2023. This is attributed to the greater flexibility that cloud-based AI in retail offers to users in accessing and browsing products. The applications of retail cloud related to disaster recovery, CRM, discounts and promotions management, data analytics, and workforce management contribute to AI cloud deployments.

The market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. North America is expected to dominate the AI in retail market in 2023. The large share of the North American market is attributed to increasing government initiatives and investments in AI technology and the presence of major tech players such as Microsoft, Google and Intel in the region.

However, the Asia-Pacific region is expected to record the highest CAGR during the forecast period. Factors such as the presence of high-growth economies, growing adoption of AI-based services among retailers, increasing digitalisation in the region, and improving connectivity infrastructure are expected to drive the growth of this region. In addition, the growing accessibility of IoT-enabled gadgets, rising disposable incomes and favourable government initiatives in the region are also supporting growth in Apac.

The key players operating in the AI in retail market are Amazon, Google, Intel, Microsoft, IBM, Nvidia, Oracle, SAP, Salesforce and BloomReach.