The global artificial intelligence (AI) in retail market, valued at USD 6 billion in 2023, is projected to reach USD 85 billion by 2033, growing at a CAGR of 30.3%. Driven by digital transformation and e-commerce expansion, AI enhances customer experiences, streamlines operations, and optimizes supply chains. Machine learning, with a 30% share in 2022, leads technology segments, while North America holds a 38.5% market share. Challenges include high implementation costs for smaller retailers, but innovations like Niflr’s cashier-less checkout and Microsoft’s partnership with Infosys (September 2022) fuel growth with a USD 79 billion opportunity.

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Market Analysis

The AI in retail market thrives on the retail sector’s digital transformation, accelerated by the COVID-19 pandemic, which shifted consumer behavior and boosted online sales. A Fact.MR report highlights AI’s role in enhancing customer relationship management (CRM), inventory management, and supply chain efficiency. Machine learning and natural language processing (NLP) drive personalized experiences, with 80% of shoppers using visual search (Syte, 2020). The proliferation of IoT, cloud services, and AI-driven chatbots, like those powered by Zoho’s Zia, supports market growth. High costs and technical skill shortages challenge smaller retailers, but partnerships like Fujitsu’s with Zippin (December 2020) and start-up innovations ensure robust expansion through 2033.

Segment Analysis

The market is segmented by offering, type, technology, deployment, application, and region. Solutions dominate offerings, while online retail outpaces offline due to e-commerce growth. Machine learning leads technologies (30% share in 2022), followed by NLP and computer vision, which enhance visual search and sentiment analysis. Cloud deployment grows fastest for scalability, while CRM and supply chain applications drive demand. North America, with a 38.5% share, leads due to early AI adoption, while Asia-Pacific, particularly Japan and South Korea, grows rapidly due to e-commerce and digitization. Direct sales and strategic partnerships, like Microsoft-Infosys, dominate distribution channels.

Country-wise Insights

The U.S. drives North America’s 38.5% share with USD 6.9 billion in AI investments in 2020, focusing on inventory and CRM solutions. The UK leads Europe with over 25% AI sector growth in 2020, driven by R&D and investments in fashion and cosmetics. Japan and South Korea fuel Asia-Pacific’s growth with e-commerce and AI collaborations, like Fujitsu-Zippin. China and India see rising AI adoption due to internet infrastructure and government support. Germany follows the UK in Europe, emphasizing sustainable AI solutions. GCC countries and Latin America show moderate growth, driven by retail digitalization, with global trends supporting AI expansion through 2033.

Key Players

• Amazon Web Services
• Salesforce.Com, Inc.
• Bloomreach, Inc.
• Google LLC
• Intel Corporation
• Microsoft Corporation
• IBM Corporation
• Oracle Corporation

Strategic Outlook and Industry Trends

The market evolves with AI-driven innovations like Tiliter’s product recognition software and Niflr’s cashier-less checkout, enhancing in-store efficiency. Trends include AI-powered visual/voice search, NLP-driven chatbots, and cloud-based analytics for real-time insights. Challenges like high costs and skill gaps persist, but partnerships (e.g., Microsoft-Infosys) and start-up funding drive growth. Asia-Pacific’s e-commerce boom and Europe’s focus on sustainable AI, alongside global adoption of Industry 4.0, position AI as critical for retail transformation, boosting revenue and customer engagement through 2033.

Segmentation of AI in Retail Market

By Offering:

• Solutions
• Services

By Type:

• Offline
• Online

By Technology:

• Machine Learning
• Natural Language Processing
• Computer Vision
• Other Technologies

By Deployment:

• Cloud
• On-premise

By Application:

• Customer Relationship Management (CRM)
• Supply Chain and Logistics
• Inventory Management
• Product Optimizations
• In-Store Navigation
• Payment and Pricing Analytics
• Virtual Assistants

By Region:

• North America
• Latin America
• Europe
• Asia Pacific & China
• Middle East & Africa

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