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The global artificial intelligence (AI) in retail market size stood at USD 2,306.8 million in 2018 and is projected to reach USD 23,426.3 million by 2026, exhibiting a CAGR of 33.7% during the forecast period.
The artificial intelligence-driven intelligent automation is witnessing a healthy rate of adoption in the retail and related consumer products based industries. Innovative ways of doing business are emerging with the maturing capability of using artificial intelligence in retail operations. AI implantation in retail has the capability to improve operational agility, quality improvement, and pace up decision making while also enhancing the customer experience. In the retail sector, supply-chain planning is likely to reap the maximum benefits of AI-powered data analytics.
Today, several retailers and brands are using intelligent automation to offer advance efficiency and decrease operational costs. By utilizing AI algorithms, machines that are equipped with intelligent automation gain the capability to assess emerging production issues, which may cause quality problems. In case of detection of a potential issue, such machines can independently execute corrective actions or automatically notify manufacturing personnel.
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Furthermore, AI-enabled conversational business platforms and tools enable retailers to support various customer engagement features, collect new streams of behavioral data, while comprehending mood for adapting tone as well as desired content. In retail, the next big thing is providing an enhanced in-store experience with personalized recommendations, offers, and product support. Such recommendations are based on customer information gathered, including gender, age, behavior, and location of customers. Artificial intelligence is the most popular technology among retailers for this purpose. This is because retailers are aware of the capabilities of artificial intelligence, which includes reducing the cost of production and shipping to provide a more personalized customer experience.
“Rising Focus on Offering Better Customer Support via AI-Powered Chatbots Likely to Augment Artificial Intelligence in Retail Market Demand”
Retailers are now considerably associated with the impact of artificial intelligence on customer relations and sales in several aspects. AI-powered chatbots are making it possible for retail brands to engage customers effectively. It has become possible for brands to handle several queries simultaneously with the help of chatbots, without the need to employ a large workforce.
Close-ended chatbots can be configured to answer shopping-related questions, provide quick support and suggestions. Thus, by utilizing a combination of human support and AI chatbots, brands can successfully handle customers and offer a better resolution to their problem. Customers are more likely to engage deeply with the brand when they receive swift and personalized attention. As a result, the use of AI chatbots is paving the way for enhanced customer loyalty and thus, fostering the AI in retail market growth.
“Advancement in Virtual Trial Rooms to Boost the AI in Retail Market Trend”
Artificial Intelligence enables retail companies to collect and organize the enormous customer data in a better way compared to traditional methods of doing business. Using this data, the AI algorithm provides conclusions and offers a platform for creating a more personalized shopping experience for the users. The user data demonstrates their choice and demand. The AI model also helps retailers predict the performance level of a product in the market by analyzing records of sales and feedback. This allows retail companies to plan better strategic decisions.
The concept of virtual trial rooms has gained popularity over the years with the ongoing development across the retail supply chain. Virtual trial rooms make it possible for buyers to try different dresses without actually having to wear them, by the help of digital mirrors. This advance concept allows shoppers to experiment with their outfit through a touch-based interface. Cosmetic companies are also likely to gain from the development of AI-based virtual platform. As customers do not require to apply product physically but instead virtually to check what suits them the best.
“AI solution segment is predicted to generate highest revenue”
Based on the offering, the scope of the study is classified into solutions and services. The AI in retail solution segment accounts for a maximum revenue share of the market with continuous integration of multiple technology platforms. In the case of AI in retail services, the high investment on AI retail service is predicted to aid growth of the market. AI services help the retail sector in making better decisions, strategy building, operational improvement, end-to-end risk, and compliance management capabilities. Also, these services guarantee streamlined workflows by offering tools for image and video analysis, natural language processing, as well as personalized recommendations based on data analysis.
“Operations-Focused Retail Function to Exhibit High Growth Rate Due to Higher Profitability”
Based on function, the scope includes operations-focused and customer-facing segments. There is a vast potential for AI in operations and are among the most profitable in terms of cost returns. Till now, only a small share of AI use cases focused on operations, and the majority of use cases are for customer-facing functions. For instance, implementing AI for procurement tasks, optimizing supply chain route plans, and using image detection algorithms for detecting minor in-store theft. A resulting transformed retail supply chain will have the potential to offer a substantial operational opportunity.
“Machine Learning Segment to Hold the Highest Share During the Forecast Period”
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By technology, artificial intelligence (AI) in retail market segments include machine learning, computer vision, natural language processing, and others. The natural language processing segment accounts for maximum share since it serves many essential applications such as text parsing, machine translation, speech processing, semantic disambiguation, and Informational Retrieval (IR). Machine Learning is estimated to be the fastest-growing technology segment. Many AI solution providers are implementing machine learning technology for various use in the retail sector that require real-time analytics with the help of self-learning technology.
The artificial intelligence (AI) in retail market has been studied across five major regions, which are North America, Europe, Asia Pacific, Middle East & Africa, and Latin America. The regions are further categorized into countries for the study. Huge investments by tech giants for the development of AI in North America has enabled the region to maintain its dominant position throughout the forecast period, which, in turn, will boost the AI in retail market share in the North America. In the region, many retailers have deployed AI-based solutions to improve their supply chain operations and product portfolio. In Europe, the European Union (EU) member states announced to collaborate on AI technology across borders. Also, the EU announced an investment of USD 24 billion in AI research by 2020. Latin America (LATAM) and Middle East & Africa (MEA) market are projected to exhibit healthy growth. In Brazil, focus on developing enhanced customer engagement platforms and simplifying financial transactions for customers is augmenting the adoption of artificial intelligence in retail.
North America Artificial Intelligence (AI) in Retail Market Size, 2018 (USD Million)
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The demand for AI is predicted to increase in APAC in the forthcoming years, making it the fastest-growing region. The government in several countries is supporting for implementation of AI in the business process and to introduce AI integrated products and solutions in the market. For instance, the China government has taken the initiative to implement AI in the country development plan. The country government introduced AI plans in their 13th Five-year plans (which runs for 2016 -2020). China has stated that it aims to be a world-leading AI center by 2030.
“Development of Highly Reliable, Scalable, Low-Cost AI Platform by Key Market Players is Dominating AI in Retail Market Landscape”
The key companies operating in the artificial intelligence in retail market, including Baidu Inc., Microsoft Corporation, and others, are investing in developing a strong brand portfolio by launching various AI projects designed for retail-specific applications. These key companies are focused on integrating several core technologies such as big data, cloud computing, and others with artificial intelligence platforms to fulfil the demand from the retail industry value chain. The retail sector needs AI-powered solutions, particularly for price optimization, inventory management, customer behaviour tracking, recommendation engine, visual search, customer relationship management, and supply chain management. The major focus area of prominent players is offering AI solutions that guarantee improvisation in end-to-end supply chain visibility.
Further, market leaders undergoing R &D in developing product offerings that lead to accelerated information sharing and decision making through implementing cognitive technology, predictive analytics, collaboration technology, and automated reports. Also, many start-up companies are entering the AI market, especially in the US, China, and Europe. This is due to surging demand for AI-enabled products & solutions in a retail and good return on investments in such projects.
The global AI in retail market research report provides various key insights such as market trend analysis, recent industry developments including mergers & acquisitions, macro and microeconomic factors, ecosystem analysis, consolidated SWOT analysis, competitive landscape, competition matrix, and company profiles.
An Infographic Representation of Artificial Intelligence (AI) in Retail Market
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Value (USD million)
Fortune Business Insights says that the market was valued at USD 2,306.8 million in 2018 and is projected to reach USD 23,426.3 million by 2026.
In 2018, the market was valued at USD 2,306.8 million.
Growing at a CAGR of 33.7%, the market will exhibit healthy growth during the forecast period (2019-2026). Rising inclination of retail brands on offering better customer support is expected to pave the way for new developments in the market.
The customer-facing function segment is expected to be the leading segment in artificial intelligence (AI) in retail market during the forecast period.
The capability of AI-driven solutions to improve operational agility, quality improvement, and pace up decision making while also enhancing the customer experience likely to drive the growth of the Market.
Microsoft Corporation, IBM Corporation, Amazon, and Google are the top players in the market.
North America is expected to hold the highest market share in the market.
The services segment has a high return on investment and use cases implementation of retail sector and is projected to emerge as the fastest growing offering segment.
Improved retail data accumulation and developing virtual trial rooms to offer personalized shopping experience is probable to emerge as a prominent market trend.
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