The artificial intelligence (AI) in retail market was valued at $720.0 million in 2018, and it is on path to reaching $4,337.1 million by 2024, demonstrating a CAGR of 35.4% during the forecast period (2019–2024). This growth can be driven by factors like expanding e-retail industry and surging investments in AI by retail companies. Moreover, growing penetration of internet and smartphone has altered the shopping behavior of customers. This behavior is being captured by retailers who deploy AI solutions to consolidate the competition.

One of the key factors driving the AI in retail market growth is the expansion of e-retail sector, on account of rising internet penetration, surging number of alternate payment methods, growing smartphone usage, and soaring investments in logistics, across the world. By deploying AI technologies, such as supply chain planning, accurate demand forecasting, and real-time customer intelligence, the retail firms aim to benefit from streamlined and automated operations that help them in achieving organizational growth goal.

Additionally, the rising usage of AI-based image recognition technology in the retail sector is stimulating the AI in retail market growth. In recent years, facial recognition technology has been increasingly deployed in the retail industry to improve staff management, facilitate customer satisfaction, and provide valuable insights related to customer preference. Further, the adoption of image recognition technology in physical stores enables the retailers to analyze in-store traffic, determine customer loyalty, map customer behavior, and monitor stock.

Categories under the technology segment of the AI in retail market include machine learning (ML), natural language processing (NLP), computer vision, and others that include analytics and gesture recognition. Among these, the ML category accounted for the largest market share in 2018 and is projected to register the fastest growth during the forecast period. This is due to the growing application of ML technology by online retailers to enhance customer experience and provide personalized services. In recent years, China and the U.S. have witnessed a widescale adoption of this technology in the retail sector.

Globally, North America generated the highest revenue in the AI in retail market, due to the rising deployment of ML and NLP technologies by online and physical stores. Enterprises, such as Walmart Inc. and Amazon.com Inc., are using these technologies to understand customer behavior and improve their overall shopping experience. For example, Amazon.com Inc. launched Amazon Go convenience stores in 2018, in San Francisco, which deploy computer vision technology to monitor products that are taken off the shelves of the stores. These stores also deploy other AI-enabled technologies to reduce billing and checkout time.

During the forecast period, the Asia-Pacific (APAC) AI in retail market is projected to register the fastest growth, on account of surging demand for ML technology from online retailers in the region, primarily in China. Moreover, the market penetration and escalating sales of e-commerce giants, like Amazon.com Inc., JD.com Inc., and Alibaba Group Holding Limited, in the APAC region have increased the adoption of price optimization solutions, AI-driven recommendation engines, and supply chain management (SCM) solutions, to enhance customer experience.

Thus, the increasing need to monitor customer behavior and growing reliance on e-shopping platforms are driving market growth.