The artificial intelligence in retail market allows retailers to incorporate AI technologies like machine learning, natural language processing, computer vision and predictive analytics to enhance customer experience, optimize operations and drive business growth. AI helps retailers to deeply understand consumer behavior and preferences through analysis of purchasing patterns, browsing history and social media activities. This helps retailers to provide personalized recommendation and targeted marketing. AI is also being used to automate repetitive tasks like replenishing inventory, streamlining supply chain operations, augmenting workforce and fraud detection.
The Global artificial intelligence in retail market is estimated to be valued at US$ 10.48 Bn in 2024 and is expected to exhibit a CAGR of 32% over the forecast period 2024 to 2031.
Key Takeaways
Key players operating in the artificial intelligence in retail are Adobe, Alibaba Group, Amazon Web Services (AWS), Apple, Appier, Ceconomy, Edeka, Foot Locker, Home Depot, IBM, Kroger, Lemon AI, Lowe's, Microsoft, and NIKE.
The key opportunities in the market include boosting customer experience through hyper-personalization, optimizing supply chain operations through demand forecasting and autonomous logistics, and driving sales through targeted promotions and recommendations. Advancements in computer vision, natural language processing and machine learning are helping retailers gain deeper customer insights, automate repetitive tasks and optimize workforce.
Market drivers
One of the key drivers for Artificial Intelligence in Retail Market Growth is the increasing need among retailers to enhance customer experience through personalization. AI helps retailers gain a holistic view of customer preferences, behavior and purchase history which helps in delivering hyper-personalized shopping experiences. This increases customer satisfaction, builds loyalty and boosts sales. Other drivers include the growing focus on automation of repetitive tasks to optimize operations and workforce, and increasing adoption of AI-driven predictive analytics to streamline inventory management and demand forecasting.
Current challenges in Artificial Intelligence in Retail Market:
The artificial intelligence in retail market is still in a nascent stage and facing many challenges. The major challenges include lack of skilled AI workforce, data privacy and security issues, and high initial investment requirements. Getting quality training data labeled is also a tedious and expensive task. Integrating AI solutions with legacy systems is another hurdle for many retailers. Convincing top management about the long term benefits of AI also remains a challenge given the uncertainty around ROI. Overall, developing human-like intelligence and gaining customer trust are significant roadblocks that need to be addressed for realizing the true potential of AI in retail.
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