Artificial Intelligence In Retail Market | Contrive Datum Insights

Market Overview:

The Global Artificial Intelligence (AI) In Retail Market Size Accounted For USD 8.41 Billion In 2022 And Is Projected To Attain Around USD 32.58 Billion By 2030, Poised To Grow At A CAGR Of 18.45% During The Forecast Period 2023 - 2030.

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The implementation of artificial intelligence (AI) in retail is revolutionizing the industry in a new era of how organizations and companies track their operations to boost business developments, offer better outcomes, and involve customers in the digital world. The companies involved in the retail sector are using AI to provide the best customer experience.

The growth is driven by factors such as the increasing number of internet users, smart devices, the need for surveillance and monitoring at physical stores, and government policies that promote digitization. AI in retail is based on the business practices of the past several decades. AI and big data analytics are essential components of digital enterprise. They can alter everything from the customer experience to how an organization operates.

Because technology is improving, there are more apps and smart devices, more people use cloud services, and the Internet of Things (IoT) is gaining popularity, the retail industry is increasingly utilizing big data analytics and artificial intelligence. For instance, in February 2020, Baker Hughes, an oil field services company, partnered with C3.ai and announced the release of BH3 Production optimization, an AI-based application. This application enables operators to view production statistics in real-time, optimize operations, and more accurately predict future production in order to increase gas and oil production rates.

COVID-19 Impact:

• Rapidly Altering Customer Purchasing Patterns Will Accelerate AI Adoption During COVID-19

The global retail industry has been severely impacted by the COVID-19 pandemic. The pandemic and lockdown procedure have substantially altered the purchasing pattern, customer behavior, product demand, and in-store operations. For instance, according to a report by Tata Communication, US spending will decrease by 7.5% in March 2020. As a result of these precipitous declines, retailers are prioritizing the adoption of artificial intelligence technology to enhance their online sales and customer experiences.

Implementing artificial intelligence assists retailers in realigning supply chains, recognizing dynamic demand, and understanding new market trends, among other things. During the pandemic, the parent company of Zara, Inditex, implemented automation to manage order management and purchasing. Similarly, machine learning is in high demand during pandemics due to its effective multivariate forecasting models. Due to pandemics, retailers are likely to invest more in artificial intelligence technology in order to comprehend the changing customer preferences and Artificial Intelligence in retail market trends.

Market Dynamics:

Latest Trends:

• AI-powered Visual and Voice Search to Drive Business Opportunities

The e-commerce website and online stores are rapidly expanding. Today, consumers can search for new products using techniques such as product images, videos, and voice. Artificial intelligence optimizes the functionality of visual search by processing queries and mining metadata. Using AI, the visual search engine analyzes, tracks, and predicts growing shopping trends, thereby enhancing the experience and engagement of shoppers.

According to a report published by Syte Visual Conception Ltd. in 2020, nearly 80% of shoppers begin their search with a visual query. Therefore, retailers are required to implement AI-based search engines in order to improve customer service and increase revenue growth. Moreover, search capabilities powered by AI enable retailers to gain valuable insights into consumer trends and make excellent business decisions. In the coming years, AI-powered search engines are anticipated to provide retailers with a wealth of data and potential growth opportunities.

Driving Factors:

• AI-powered Chatbots for Improved Customer Experience

Customer service provided by chatbots powered by artificial intelligence is gaining immense popularity in the retail industry due to its high efficiency. To enhance the customer experience, Chatbot provides dedicated and personalized responses. In 2018, 91% of customers were more interested in purchasing from brands that offer personalized recommendations and services, according to Accenture insights.

The AI chatbots are supported by technologies for natural language processing (NLP) and machine learning. These technologies provide real-time customer preference insights. Additionally, it enables the chatbot to comprehend the emotions and behavior patterns of the customer, which aids in responding to the customer's question and fostering relationships. For example, Levis has implemented a chatbot platform called Levi's Virtual Stylist to provide customer recommendations. The bot requests basic information from users, including size, fit, material, and preferred brands, in order to provide quick recommendations. Thus, the AI-powered chatbot is anticipated to propel artificial intelligence in the retail sector.

• Data-Driven Decision-Making

AI makes it easier and faster for retailers to analyze large amounts of data. It can give you valuable information about how customers act, how the market is changing, and how well your business is running. With analytics powered by AI, retailers can make decisions based on data that increase sales, make it easier to manage inventory, and improve supply chain operations.

• Inventory Optimization

AI algorithms can look at past sales data, current inventory levels, and outside factors like the weather and market trends to find the best way to manage inventory. This helps retailers cut down on out-of-stocks, avoid overstocking, and improve inventory turnover, which saves money and makes them more money.

Restraints/Challenges:

• Lack of Infrastructure and Higher Implementation Costs to Limit Adoption

Adoption will be hampered by a lack of infrastructure and higher implementation costs. Well-established retail brands continually invest in innovative technologies to increase customer engagement; however, various factors are likely to limit the market growth of artificial intelligence in retail. Large corporations and international retailers, such as Walmart, have already implemented artificial intelligence technology for in-store operations and online portal management. Due to a lack of infrastructure and technical expertise, however, new startups and small and medium-sized businesses face obstacles when attempting to adopt the technology. According to IBM's cloud-data service insights, 37% of respondents cited a lack of AI expertise as a barrier to the implementation of this technology. Implementation of the intelligent retail solution is hindered by the high implementation costs for small retailers. These factors are anticipated to impede the expansion of the market.

• Ethical Considerations and Bias

AI systems are only as fair as the information they learn from. If the data that is used to train AI algorithms has biases or shows up inequalities in society, it can lead to unfair decisions in retail operations. This can lead to unfair treatment of customers, discrimination, and a bad name for the brand.

• Integration and Compatibility Issues

It can be hard to connect AI solutions to retail systems like point-of-sale systems, inventory management software, or customer relationship management (CRM) platforms. Compatibility problems and the need to connect data from different systems can slow down and complicate the implementation process.

Opportunities:

• Increased Adoption of AI-powered Voice-enabled Devices 

Artificial intelligence (AI) advancements are increasingly disrupting functions across industries, including retail. Increasingly, the emergence of smart technologies for various applications in these industries is creating opportunities for the incorporation of AI-powered voice recognition tools into smart solutions to further enhance the end-user experience. In addition, the widespread adoption of smart gadgets and smart devices by consumers is driving the retail industry's demand for various AI-powered voice and speech-enabled tools. Google has partnered with major retailers such as Walmart, Home Depot, and Target to provide consumers with voice-based shopping experiences through Google Express, a shopping service. According to the 2018 Voice Shopping Consumer Adoption Report by voicebot.ai, voice commerce is poised to become the third-most-important online shopping channel, after web and mobile. According to the Conversational Commerce Report 2018 from the Capgemini Digital Transformation Institute, approximately 34% of consumers in the United States, the United Kingdom, France, and Germany currently use voice assistants to order meals, and 49% of consumers use voice assistants to check the delivery status of their orders.

• Fraud Detection and Security

AI can help a lot with finding fraud and keeping stores safe. AI algorithms can look at customer transaction data, find patterns, and look for outliers that could be signs of fraud. By putting in place fraud detection systems that are powered by AI, retailers can reduce their financial losses, keep customer information safe, and improve overall security.

• Virtual Reality (VR) and Augmented Reality (AR) Experiences

When AI is combined with VR and AR, it can make shopping more immersive and interactive. Customers can "try on" clothes virtually, imagine how furniture would look in their homes, and look at products in a virtual setting. These technologies improve engagement, boost conversion rates, and make it less important to go to a store in person.

Strategic Development:

• In September 2022 - Microsoft collaborated with the Indian global IT company Infosys. Through this alliance, the organizations aimed to enable enterprises to rapidly reimagine customer experiences, augment systems with cloud and data, and update processes.
• In August 2022 - The company introduced ViSenze's Session-Based Recommendations, a new solution for personalized e-commerce product suggestions. With the new strategy, clients would receive a more personalized experience without providing any personal data.
• In July 2022 - Intel introduced novel reference kits. The new solution aimed to make it simpler for data scientists and engineers to comprehend how to implement AI in manufacturing, retail, healthcare, and other settings.
• In June 2021 - Talkdesk, Inc. launches an AI-based Talkdesk Retail Smart Service that provides customers with automated self-service and frees up support agents to concentrate on other major revenue-generating tasks. The services provide enhanced customer engagement and personalized recommendations.
• In September 2020 - IBM Corporation and Nielsen Holdings plc collaborate to launch Watson Advertising Weather Targeting, a sophisticated tool that provides insights on weather and product sales.

Key Vendors:

Top market players in Artificial Intelligence in Retail Market includes

• IBM Corporation

IBM (International Business Machines) offers computer solutions. The company provides application, technology consulting and support, process design and operations, cloud, digital workplace, and network services in addition to business resilience, strategy, and design solutions. IBM serves clients worldwide.

• Microsoft

Microsoft is the world's largest provider of computer software. It is also an industry leader in cloud computing services, video games, computer and gaming hardware, search, and other online services. Microsoft's headquarters are located in Redmond, Washington, and the company has offices in over 60 countries.

• SAP SE

SAP SE (SAP) is a provider of enterprise application software and services associated with software. It includes enterprise resource planning and financial management, intelligent technologies, analytics, human resource, people engagement, digital supply chain, network, speed management, customer resource management, and customer experience. The company provides an extensive selection of business software and enterprise applications designed for applications, analytics, cloud, mobile, database, and technology operations.

• Amazon Web Services

Launched in 2006, Amazon Web Services (AWS) began providing businesses with key infrastructure services in the form of web services — what is now commonly referred to as cloud computing. The greatest advantage of cloud computing and AWS is the ability to leverage a new business model and convert fixed infrastructure costs into variable costs.

• Oracle

Oracle Cloud Infrastructure provides increased efficiency, security, and cost savings. It is designed to facilitate the migration of workloads from on-premises systems to the cloud, as well as between the cloud, on-premises, and other clouds. Oracle Cloud applications provide business leaders with contemporary applications that assist them in innovating, achieving sustainable growth, and becoming more resilient.

• Salesforce Inc.

Salesforce, Inc. is a provider of cloud-based software. The company develops software and applications for customer relationship management with a focus on sales, customer service, marketing automation, analytics, and application development. Salesforce serves global customers.

• Intel

Intel Corporation is the largest semiconductor chip maker in the world and the inventor of the x86 series of microprocessors, the processors found in the majority of personal computers. Integrated Electronics Corporation was established on July 18, 1968, by semiconductor pioneers Robert Noyce and Gordon Moore, and rose to prominence under the executive leadership and vision of Andrew Grove.

• NVIDIA

NVIDIA has been a pioneer in accelerated computing since its founding in 1993. The company's invention of the GPU in 1999 fueled the expansion of the PC gaming market, redefined computer graphics, ushered in the era of modern AI, and is driving the development of the metaverse. NVIDIA is now a full-stack computing company with offerings at the data center scale that are reshaping the industry.

• Google LLC

Google LLC is a global technology company specializing in services and products related to the internet. The company focuses on search engine, cloud computing, software, and hardware. Google serves global customers.

• Sentient Technology

Sentient is widely recognized as the foremost provider of mission-critical technology to lenders on a global scale. Sentient offers instantaneous, scalable lending solutions that enhance financial outcomes and accelerate origination workflow. Our Sentient Predictive Lending Platform makes everything simpler, more efficient, and faster.

• ViSenze

ViSenze is the most intelligent search and recommendation platform on the planet. ViSenze is trusted by retailers such as Rakuten, ASOS, Zalora, John Lewis, Myntra, Mango, Meesho, Target, DFS, and EyeBuyDirect to power their product discovery for customers. The automated AI and ML platform enables retailers to boost conversion rates and accelerate revenue growth.

Segmentation Analysis:

The market is segmented on the basis of offering, technology, function, application, type and region.

By Offering:

Based on what is offered, artificial intelligence in the retail sector is divided into solutions and services. The remedy dominates the market. Consideration is given to smart shop, digital commerce, intelligent consumer insights, smart delivery, intelligent supply chain, and other solutions. Due to the increasing difficulty of managing diverse retail activities, the retail industry is anticipated to be driven by novel and innovative automated solutions. Using the AI-based retail solution, retailers can manage logistics, supply chain operations, warehouse management, and enhanced consumer experiences. This is expected to accelerate the adoption of AI in the retail sector.

The service sector is anticipated to experience robust growth during the forecast period. The vendor must provide merchants with additional support for specific services, including installation, management, and maintenance. As a result, the rapid adoption of AI technologies is driving demand for services.

• Solutions
• Services

By Function:

The retail industry divides artificial intelligence into two functional categories: operations-focused and customer-facing. Concentration on operations increases market share revenue. Under consideration for implementation are Intel Movidius VPUs, Taskdesk Virtual Agents, RetailNext Store Layout, and ViSenze merchandising planning. Retailers are integrating AI to increase the efficiency of their operations, including merchandising, logistics, supply chains, and on-time delivery. Effective backend management allows retailers more time to focus on revenue growth and new expansion initiatives.

Customer-facing is anticipated to develop rapidly during the forecast period due to the rising demand for a solution to enhance the customer experience. To decrease consumer complaints and increase brand loyalty, retailers are implementing AI-driven solutions.

• Operations-Based
• Consumer-Facing

By Application:

Market applications include predictive analytics, in-store visual monitoring and surveillance, customer relationship management (CRM), market forecasting, and inventory management, among others. In 2020, predictive analytics dominated this market, with labor optimization, shelf management, store operations, and demographic segmentation among its most important applications. Retailers are utilizing AI-based predictive analysis to gain a deeper understanding of future market prospects and consumer behavior. AI is also used to obtain demographic analyses based on factors such as region, country, culture, gender, age, and others.

Customer relationship management will experience significant growth due to a growing demand for increased client participation. With the help of AI-powered virtual assistance, chatbots, search engines, and other tools, retailers can maintain strong client relationships and loyalty. Due to the erratic and rapid changes in consumer purchasing behavior, the demand for AI in market forecasting is rising. It is also anticipated that the use of AI for in-store visual monitoring and surveillance will increase steadily. The continuous monitoring provides robust security and collects information about customers, replenishment alerts, fraud and shrinkage controls, face recognition, and more.

• Predictive Analytics
• In-Store Visual Monitoring and Surveillance
• Customer Relationship Management (CRM)
• Market Forecasting
• Inventory Management
• Others

By Technology:

In the retail industry, artificial intelligence is classified using computing technologies like computer vision, machine learning, and natural language processing, among others. Throughout the forecast period, it is anticipated that natural language processing will experience rapid growth. Businesses pay close attention to client behavior, emotions, personality type, and other variables in order to provide specialized and personalized services.

Machine learning will likely account for the majority of the segment's revenue share. Machine learning is useful for providing personalized experiences to clients and for gaining quick, in-depth insights from collected data. It assists retailers in streamlining supply chain plans and demand projections in order to boost inventory productivity. Amazon.com, for example. Amazon Sage Maker is a fully managed service that enables the deployment of machine learning models for any application, from customer experience to predictive analytics. Likewise, the use of computer vision in the retail sector is expanding rapidly. AI-based computer vision is utilized for facial recognition and video search data collection.

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

By Type:

Based on type, artificial intelligence (AI) in the retail industry is divided into online and offline categories. The greatest proportion of revenue is generated offline, and it is anticipated that this trend will continue throughout the forecast period. The ability of the technology to manage in-store operations, improve merchandising and assortment, and automate personalised product recommendations, among other things, to enhance the shopping experiences of customers, is driving demand. Due to an increase in virtual and online shopping, online is expected to grow rapidly. Using artificial intelligence technology, retailers are improving their online customer service capabilities. ViSenze, for example, offers a number of intelligent e-commerce solutions, such as cross-device usability, intelligent recommendations, discovery, and motivational SEO marketing.

• Offline
• Online
• Other

Regional Insights:

In 2021, North America held a majority revenue share of 38.5%. Given the substantial expenditures on AI projects and associated research and development initiatives, there are numerous opportunities for industry growth. Regional retail suppliers are also concentrating on extracting the available data on consumer preferences to improve their customer service.
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The market leaders, including Google Inc., Microsoft, IBM Corporation, Salesforce, and Amazon Web Services, use both organic and inorganic strategies. Google Cloud, for instance, launched Product Discovery Solutions for retail in January 2021 to promote personalized online purchasing.

Asia-Pacific is anticipated to have the highest CAGR between 2022 and 2030, at 31.6%. The growth of the region is due to the advancement of technology in countries such as China, Japan, and India. The rapid adoption of smart devices and the widespread adoption of 5G technology in the retail industry are the primary growth drivers of the Asia-Pacific AI in retail market.

• North America
• US
• Canada
• Mexico
• Rest of North America
• Europe
• Germany
• France
• Italy
• Spain
• UK
• Nordic Countries
• Denmark
• Finland
• Iceland
• Sweden
• Norway
• Benelux Union
• Belgium
• The Netherlands
• Luxembourg
• Rest of Europe
• Asia-Pacific
• Japan
• China
• India
• Australia
• South Korea
• Southeast Asia
• Indonesia
• Thailand
• Malaysia
• Singapore
• Rest of Southeast Asia
• Rest of Asia-Pacific
• The Middle East & Africa
• Saudi Arabia
• UAE
• Egypt
• South Africa
• Rest of the Middle East & Africa
• Latin America
• Brazil
• Argentina
• Rest of Latin America

Scope of Report:

Conclusion:

• This report provides the most comprehensive intelligence available.
• The structure of the report has been maintained to provide maximum business value.
• It provides vital insights into the market's dynamics and facilitates strategic decision-making for existing market participants and those seeking to enter the market.
• The report provides exhaustive analysis of market revenue over the projected time frame.
• Analyze the market segments that are anticipated to be dominant.
• Analysis of the region that is anticipated to experience the greatest growth over the forecast period.