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Artificial Intelligence in Retail Market Size, Share & COVID-19 Impact Analysis, By Offerings (Solution, Services), By Function (Operation-Focused, and Customer-Facing), By Type (Online and Offline), By Application (Predictive Analytics, In-Store Visual Monitoring & Surveillance, Customer Relationship Management, Market Forecasting), By Technology (Computer Vision, Machine Learning), and Regional Forecast, 2021-2028

Region : Global | Format: PDF | Report ID: FBI101968



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The global Artificial Intelligence in retail market size was USD 3.75 billion in 2020 and is expected to grow from USD 4.84 billion in 2021 to USD 31.18 billion in 2028, at a CAGR of 30.5% in the 2021-2028 period. The report covers solutions such as automated inventory management, demand forecasting, customer assistance, predictive analytics, and more to enhance retail operations. The global impact of COVID-19 has been unprecedented and staggering, with artificial intelligence (AI) in retail witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a significant growth of 29.1% in 2020 as compared to the average year-on-year growth during 2017-2019.  The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

The digital transformation and revolution in the retail industry are driving the adoption of artificial intelligence in the retail sector. Retailers and brands worldwide are rapidly implementing AI technology for optimizing intelligent automation in retail stores. The technology is helping retailers to drive the automation for both the online and offline services and customer-facing aspects. According to the IBM Institute for Business Value study 2018, the adoption of AI-based intelligent automation in retail is projected to reach over 80% by the year 2021.

COVID Impact

Rapidly Changing Customer Purchasing Patterns to Surge AI Adoption amid COVID-19

The COVID-19 pandemic has severely impacted the retail industry worldwide. The pandemic and the lockdown practice have significantly changed the purchasing pattern, customer behavior, product demand, and in-shop operations. For instance, as per the Tata Communication report, in March 2020, US spending drop by 7.5%. As a result of these huge drops, retailers emphasize adopting artificial intelligence technology to augment their online sales and customer experiences.

The implementation of artificial intelligence is helping retailers to realign supply chains, recognize dynamic demand, understand new market trends, and more. For instance, to manage order management and purchasing, Zara’s parent company Inditex, shifted to automation during the pandemic. Similarly, the demand for machine learning is growing rapidly during pandemics owing to its capable multivariate forecasting models. Thus, retailers are likely to invest more in artificial intelligence technology to understand the changing customer preference and the Artificial Intelligence in retail market trends due to pandemics.


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AI-driven Visual and Voice Search to Propel Market Opportunities

The e-commerce website and virtual shops are growing rapidly. Today, consumers can use new techniques such as product images, videos, and voice, to search for new products. Artificial intelligence in visual search optimizes its functionalities by processing inquiries and mining the metadata. The visual search engine utilizes AI features to analyze, track, and predict growing shopping trends, enhancing shopper’s experience and engagement.

According to the report published by Syte Visual Conception Ltd. 2020, almost 80% of shoppers have started with a visual search while shopping. Thus, it has become essential for retailers to implement AI-based search engines to enhance customer service and boost revenue growth. Further, AI-powered searching capabilities help retailers to gain valuable insights into consumer trends and drive excellent business decisions. In the coming years, AI-driven search engines are expected to offer a rich data pool along with potential growth opportunities to retailers.


AI-powered Chatbots for Improved Customer Experience to Drive Market Growth

Artificial intelligence-powered chatbot assistance is gaining vast popularity across the retail industry owing to its highly efficient customer service. Chatbot offers dedicated and personalized responses to the customers to boost their experience. According to Accenture insights, in 2018, 91% of customers were more interested in shopping for the brands offering personalized recommendations and services.

The AI chatbots are backed with natural language processing (NLP) and machine learning technologies. These technologies offer real-time insights regarding customer preferences. Also, it helps the chatbot understand the customers’ sentiments and behavior patterns, which assist in responding to the customer query and building relations. For instance, Levis has implemented a chatbot platform, Levi’s Virtual Stylist, to provide recommendations to the customer. The bot asks users for basic details such as size, fit, material, and even preferred brands to offer quick suggestions. Thus, the AI-driven chatbot is expected to drive artificial intelligence in retail industry sector.


Lack of Infrastructure and Higher Implementation Costs to Limit Adoption

Well-established retail brands continuously invest in innovative technologies to enhance customer engagement; however, different factors are likely to limit the Artificial Intelligence in retail market growth. Large enterprises and global level retailers like Walmart have already implemented artificial intelligence technology for the in-shop operations and to manage online portals. However, today, new start-ups, small and medium-sized enterprises face challenges in adopting the technology due to a lack of infrastructure and technical expertise. As per IBM's cloud-data service insights, 37% of respondents stated lack of AI expertise is an obstacle in implementing such technology. The high implementation cost associated with the intelligent retail solution is also a major barrier for the small retailers, which is limiting the implementation. These factors are expected to hamper the market expansion.


By Offering Analysis

Increasing Automation in Retail Industry to Fuel AI-based Solution Segment

Based on offering, the Artificial Intelligence in retail market is segmented into solutions and services. The solution is dominating the market. The solutions considered are smart store, digital commerce, intelligent customer insights, smart delivery, intelligent supply chain, and more. The growing challenges in managing various retail operations are likely to drive the new and innovative automated solutions in the retail industry. The AI-based retail solution helps retailers manage logistics, supply chain operation, warehouse management, and improved customer experience. This is expected to fuel the implementation of AI in the retail sector.

Services are likely to showcase significant growth during the forecast period. The retailers need additional support from the vendor in specific services such as installation, management, maintenance, and more. Thus, the rapid implementation of AI solutions is driving the demand for services.

By Function Analysis

Growing Demand for Efficient Operations to Boost Operations-focused Segment

Based on function, the Artificial Intelligence in retail market is bifurcated into operations-focused and customer-facing. Operation-focused captures maximum market revenue share. The operation-focused solutions considered are Intel Movidius VPUs, Taskdesk Virtual Agents, RetailNext Store Layout, ViSenze merchandising planning. The retailers are implementing AI to boost the efficiency of the operation, such as merchandising, logistics, supply chain, on-time delivery, and more. Proper management of backend functions helps retailers with more time to focus on revenue expansion and new growth strategies.

Customer-facing is likely to showcase rapid growth during the forecast period owing to the increasing demand for a solution to improve customer experience. To reduce customer complaints and enhance brand loyalty, retailers are adopting AI-driven solutions.

By Application Analysis

Rapid Changing Customer Behavior to Drive Predictive Analytics Segment

Based on applications, the market is categorized into predictive analytics, in-store visual monitoring and surveillance, customer relationship management (CRM), market forecasting, inventory management, and others. Among these, predictive analytics dominated the segment share in 2020, and some of its key solutions are demographic segmentation, store operations, shelf management, inventory management, labor optimization, and more. The retailers are implementing AI-based predictive analysis to understand the future market opportunities and customer behavior. The AI is also implemented in gaining analysis based on a different location, country, culture, gender, age, and other demographics.

Customer relationship management is likely to gain rapid growth owing to increasing demand for better customer engagement. AI-driven virtual assistance, chatbots, search engine, and more help retailers maintain strong customer relationships and loyalty. The demand for AI in market forecasting is also gaining traction owing to the uncertain and rapid changes in customer buying behavior. Similarly, the AI in in-store visual monitoring and surveillance is likely to showcase steady growth. The continuous surveillance offers high security and captures customer insights, shelf replenishment alerts, control fraud and shrinkage, face recognition, and more.

By Type Analysis

Increasing Virtual and Online Shopping to Fuel Online Segment’s Growth

Based on type, the Artificial Intelligence (AI) in retail market is bifurcated into online and offline. Offline captures maximum revenue share and is expected to maintain its dominance during the forecast period. The demand for the technology is growing owing to its capabilities such as managing in-store operation, enhancing merchandising & assortment, automated personalized product recommendations, among others, to enhance customer shopping experiences. Online is expected to gain rapid growth owing to the increasingly virtual and online shopping. The retailers are improving their online customer serving capabilities by implementing artificial intelligence technology. For instance, ViSenze offers a wide range of intelligent e-commerce solutions such as cross-device experience, smart recommendations, discovery and inspiring SEO marketing.

By Technology Analysis

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Highly Accurate Customer Insights to Boost Natural Language Processing Segment

Based on technology, the Artificial Intelligence in retail market is categorized into computer vision, machine learning, natural language processing, and others. Natural language processing is expected to gain rapid growth during the forecast period. The retailers are keen on understanding the customer behavior, emotions, personality type, and more to provide customized and personalized services.

Machine learning is likely to dominate the segment’s revenue share. Machine learning offers quick deep insights from the collected information and is useful in providing personalized experiences to its customers. To boost inventory productivity, it helps retailers in optimizing supply chain plans and demand forecasts. For instance, Amazon Inc. Amazon SageMaker is a fully managed service that deploys machine learning models for any application, right from predictive analytics to customer experience. Similarly, the implementation of computer vision is expanding significantly in the retail industry. AI-based computer vision is being adopted to gain data from facial recognition and video searches.


North America Artificial Intelligence (AI) in Retail Market Size, 2020 (USD Billion)

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Geographically, the Artificial Intelligence in retail market is fragmented into five major regions such as North America, Europe, Asia Pacific, the Middle East & Africa, and South America. They are further categorized into countries.

North America dominates the global revenue share. The retailers in the region are focusing on extracting the available data on customers’ preferences to boost customer service efficiency. The United States is an early adopter of AI technology and is witnessing high technology investment in AI. The country is also witnessing new startups and small enterprises emerging due to the rising demand for technology. This is expected to boost artificial intelligence (AI) in retail industry growth.

Asia Pacific is likely to showcase rapid growth during the forecast period owing to the growing digitalization. The retail industry of the region is going through a rapid transition phase. This is driving the demand for advanced technologies to improve operations and customer experience. For instance, as per the SAP SE analysis, China has secured a 23.4% share of AI investments for the commerce and retail industry. India is anticipated to gain the highest CAGR due to the high demand for automation tools to improve decision-making capabilities and operations.

Europe is likely to rank second in dominating the Artificial Intelligence in retail market share. The present big retailers in the region across cosmetics, fashion, apparels sectors, and more are actively investing in advanced technologies to boost customer experience. As per Global Data Insights, in the first quarter of the year 2020, the European technology industry witnessed a 26.7% rise in the artificial intelligence segment. This is expected to surge the demand for artificial intelligence in the retail industry.

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The Middle East and Africa will showcase prominent opportunities in the coming year due to the increasing shift towards implementing innovative solutions to uplift customer engagement. As per the 2018 survey by the IBM institute, the primary driver for high investment in AI technology is potential revenue expansion and advanced customer relationships. Similarly, Latin America is to witness steady growth owing to the rise in investment in AI in the retail industry.


New and Innovative Product Launches to Boost Market Positions of Key Players

The key players in the market are continuously investing in innovative solutions. This innovative solution helps the retailers in quickly adapting new services in the businesses. The growing data in the retail industry is further driving the implementation of artificial intelligence. Thus, the market players are launching tailored and customer targeting solutions. By leveraging advanced technologies, companies are strengthening their product portfolio that helps key players to stay ahead in the market competition. Further, the key players are implementing partnership, merger, and acquisition strategies to expand Artificial Intelligence in retail market share.

June 2021 – Talkdesk, Inc. launched an AI-based Talkdesk Retail Smart Service that offers automated self-service to the customer and support agents for focusing on other major revenue generation tasks. The services provide higher engagement and personalized recommendations to help customers.

September 2020 – IBM Corporation collaborated with Nielsen Holdings plc. to launch Watson Advertising Weather Targeting, an advanced tool to offer insights on weather and product sales.


  • Amazon.com, Inc. (Washington, U.S.)

  • Google LLC (California, U.S.)

  • IBM Corporation (New York, U.S.)

  • Intel Corporation (California, U.S.)

  • Microsoft Corporation (Washington, U.S.)

  • Nvidia Corporation (California, U.S.)

  • Oracle Corporation (California, U.S.)

  • SAP SE (Walldorf, Germany)

  • Salesforce.com, Inc. (California, U.S.)

  • Talkdesk, Inc. (California, U.S.)


  • March 2021 – Inbenta Technologies launched a new AI-based solution, Conversational AI Search, to boost revenue generation by engaging customers. The new search tool uses natural language processing to answer and engage the customer with the right product offering.

  • July 2021 – Antuit.ai launched AI Demand Modeling Studio for retailers and consumer product sellers. The new use-case-centric studio helps retailers in forecasting and merchandising along with a better understanding of its customers.    


An Infographic Representation of Artificial Intelligence (AI) in Retail Market

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The artificial intelligence in retail market report highlights leading regions across the world to offer a better understanding of the user. Furthermore, the report provides insights into the latest industry and market trends and analyzes technologies deployed at a rapid pace at the global level. It further highlights some of the growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the market.




Study Period


Base Year


Estimated Year


Forecast Period


Historical Period



  Value (USD billion)


  Offering; Function; Application; Type; Technology; and Geography

By Offering

  • Solution

  • Services

By Function

  • Operations-Focused

  • Customer-Facing

By Application

  • Predictive Analytics

  • In-Store Visual Monitoring and Surveillance

  • Customer Relationship Management (CRM)

  • Market Forecasting

  • Inventory Management

  • Others (Payment and Pricing Analytics, Real-Time Product Targeting, etc.)

By Type

  • Offline

  • Online

By Technology

  • Computer Vision

  • Machine Learning

  • Natural Language Processing

  • Others (Speech Recognition, Deep Learning, and Robotics)

By Region

  • North America (By Offering, By Function, By Application, By Type, By Technology, and By Country)

    • U.S. (By Technology)

    • Canada (By Technology)

  • Europe (By Offering, By Function, By Application, By Type, By Technology, and By Country)

    • U.K. (By Technology)

    • Germany (By Technology)

    • France (By Technology)

    • Scandinavia (By Technology)

    • Rest of Europe

  • Asia Pacific (By Offering, By Function, By Application, By Type, By Technology, and By Country)

    • China (By Technology)

    • Japan (By Technology)

    • India (By Technology)

    • Southeast Asia (By Technology)

    • Rest of Asia Pacific

  • The Middle East & Africa (By Offering, By Function, By Application, By Type, By Technology, and By Country)

    • GCC (By Technology)

    • South Africa (By Technology)

    • Rest of the Middle East & Africa

  • Latin America (By Offering, By Function, By Application, By Type, By Technology, and By Country)

    • Brazil (By Technology)

    • Mexico (By Technology)

    • Rest of Latin America

Frequently Asked Questions

The market is projected to reach USD 31.18 billion by 2028.

Predictive analytics is likely to lead the market.

The rising automation to enhance customer experience is likely to drive market growth.

Amazon.com, Inc., Google LLC, IBM Corporation, Intel Corporation, Microsoft Corporation, Nvidia Corporation, Oracle Corporation, and SAP SE are the top players in the market.

North America is expected to hold the highest market share.

Asia Pacific is expected to grow with a remarkable CAGR.

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