AI in Retail Market Size & share, By Component (Solution [Chatbot, Customer Behavior Tracking, CRM, Inventory Management, Price Optimization, Recommendation Engine, Supply Chain Management, Visual Search], Service), Application, Regional Forecast, Industry Players, Growth Statistics Report 2024-2033

Market Outlook:

AI in Retail Market size exceeded USD 6.3 Billion in 2023 and is anticipated to cross USD 115 Billion by 2033, registering a CAGR of more than 33% during the forecast period. Over the past few years, the use of artificial intelligence (AI) in the retail sector has progressively increased, changing a variety of areas of retail operations, consumer experiences, and decision-making. Customers are receiving highly personalised purchasing experiences thanks to AI. In order to analyse customer data, forecast preferences, and offer products, retailers use AI algorithms. This increases customer engagement and sales.

Retailers can avoid overstock and understock problems thanks to AI-driven demand forecasting and inventory optimisation, which also results in cost savings and increased productivity. Retailers use AI to extract insights from enormous amounts of customer data, which enables them to comprehend consumer purchase trends, preferences, and behaviour. AI enables merchants to effectively segment their client base and target particular demographics with niche marketing initiatives.

• Base Year Value (2023): USD 6.3 Billion
• CAGR (2024-2033): 33%
• Forecast Year Value (2033): USD 115 Billion
• Historical Data Period: 2019-2022
• Largest Region: North America
• Forecast Period: 2024-2033

Market Dynamics:

Growth Drivers and Opportunities:

Increasing investment in AI to propel the market growth

A strategic decision that can produce major benefits for retailers is increasing investment in AI in the retail sector. The retail sector has already begun to change as a result of AI technology, and this trend is anticipated to continue and grow in the years to come.  Customers' buying experiences can be personalised with the help of AI. Retailers can use AI-powered recommendation systems to make product recommendations that are specific to a customer's interests and purchasing history, which will enhance sales and customer happiness. AI can assess market conditions and rival pricing in real-time to optimise product pricing, assisting merchants in maximising earnings and maintaining competitiveness. AI-enabled systems can help retail staff with a range of jobs, including inventory management, customer support, and even language translation, increasing total productivity.

Increasing disruptive technologies

By examining client information, behaviour, and preferences, AI helps merchants to develop marketing strategies that are extremely focused. As a result, advertising is more successful and customers are more engaged. To better personalise interactions and marketing efforts, some shops are experimenting with AI systems that can analyse client emotions through facial recognition or sentiment analysis. Blockchain is being utilised in retail supply chains to improve transparency, traceability, and authenticity of items, which can assist increase consumer trust even though it is not strictly an AI technology.

Report Scope

Report Coverage	Details
Segments Covered	Component, Application
Regions Covered	• North America (United States, Canada, Mexico)   • Europe (Germany, United Kingdom, France, Italy, Spain, Rest of Europe)   Asia Pacific (China, Japan, South Korea, Singapore, India, Australia, Rest of APAC)   • Latin America (Argentina, Brazil, Rest of South America)   • Middle East & Africa (GCC, South Africa, Rest of MEA)
Company Profiled	NVIDIA Corporation; Microsoft Corporation; Google LLC; IBM Corporation; SAP SE; Oracle Corporation; Sentient Technologies; Intel Corporation; Salesforce, Inc.

 

Industry Restraints & Challenges

Privacy risks associated with the use of AI

Large volumes of data are frequently needed for the training and operation of AI systems. This data may occasionally be gathered without people's knowledge or consent, raising privacy issues. Face recognition technology is being used widely, which raises questions about surveillance and potential abuses including tracking people without their permission. While AI-driven personalisation might improve user experiences, it can also create echo chambers and filter bubbles where people are only exposed to material that supports their preexisting opinions, limiting the diversity of thinking. If not adequately secured, AI-powered smart gadgets, such as virtual assistants and IoT devices, may unintentionally record and broadcast private conversations or actions.

Regional Forecast:

North American Market

North America is anticipated to dominate the AI in Retail market from 2024 to 2033. Retailers in North America are employing recommendation engines that are powered by AI to offer customers customised product recommendations. These programmes use consumer data analysis to provide product recommendations based on browsing habits and personal preferences, boosting both sales and client pleasure. Given the enormous size of the continent, North American retailers must optimise their supply chains, which is where AI plays a critical role. AI assists with demand forecasting, inventory optimisation, route planning, and warehouse automation. In order to implement competitive pricing strategies, retailers in North America utilise AI algorithms to dynamically modify pricing based on variables including demand, competition, and market conditions.

Asia Pacific Market

Asia Pacific is witnessing the fastest market growth up to 2033. China and India are two of the greatest e-commerce markets in the world, and the Asia-Pacific region as a whole. AI is widely utilised to improve delivery services, supply chain efficiency, and online shopping experiences. Asia-Pacific retailers are putting more of an emphasis on providing seamless omnichannel experiences. With consistent product information and tailored recommendations across all touchpoints, AI is essential in bridging online and physical retail channels.

Segmentation Analysis:

Insights by Component

The solution segment is likely to expand at around 33% CAGR between 2024 and 2033. Retailers have been making investments in recommendation engines powered by AI that examine client data and offer tailored product recommendations. Cross-selling and upselling are strongly impacted by this technology, which boosts sales and fosters client loyalty. Retailers may optimise inventory levels, lower stockouts, and minimise excess inventory by using AI to predict demand patterns more precisely.  Retailers are engaging customers through messaging applications and social media platforms with AI-powered chatbots, facilitating seamless purchasing experiences.

Insights by Application

The programmatic advertising segment accounted for the largest market share and is estimated to reach USD 28.75 billion by 2033. Retailers may now gather and analyse a large quantity of data, including demographics, behaviour, and preferences of their customers. Ads are displayed to the appropriate audience at the appropriate moment thanks to the utilisation of this data to construct highly targeted programmatic advertising campaigns. Platforms for programmatic advertising that use AI can automatically allocate funds to the campaigns and distribution channels that produce the highest returns. This optimisation makes sure that advertising dollars are utilised effectively to boost revenue and profitability.

Competitive Landscape:

Major players in the market

• NVIDIA Corporation
• Microsoft Corporation
• Google LLC
• IBM Corporation
• SAP SE
• Oracle Corporation
• Sentient Technologies
• Intel Corporation
• Salesforce, Inc.