Artificial Intelligence in Retail Market is expected to reach US$ 25,830.55 million by 2028

The Artificial Intelligence in Retail Market size is expected to reach USD 25,830.55 million by 2028 ; registering at a CAGR of 30.6% from 2022 to 2028, according to a new research study conducted by The Insight Partners

Growing Number of Smartphones to Provide Lucrative Opportunity for Artificial Intelligence in Retail Market Growth

Smartphones are increasingly becoming popular and have become an important element among customers owing to factors such as increasing penetration of the internet, rising digitization, increasing disposable income, and emerging 5G technology. For instance, according to a blog by bankmycell, there were 6.6 billion smartphone users in the world in 2022, which constitutes 83.32% of the world’s population owning a smartphone. Moreover, according to the National Library of Medicine, worldwide smartphone sales have increased rapidly, with an estimated 300 million smartphones being purchased annually after 2010. Such an increase in smartphones increases the growth of m-commerce and e-commerce, thereby increasing the growth of the artificial intelligence in retail market. M-commerce and e-commerce involve shopping through a smartphone with an internet connection. E-commerce and m-commerce have risen massively in recent years and have become major shopping channels. They enable customers to access any product anytime and anywhere, changing consumer shopping habits and experiences. For instance, according to a blog post by OuterBox, Inc., in October 2022, 79% of smartphone users made a purchase online using their mobile devices in the last six months. Not only the number of smartphone users is increasing, but the total time spent on smartphone devices has also been on the rise. For instance, according to Oberlo, in the US alone, the amount of time spent on smartphone devices every day by consumers increased from 188 minutes in 2016 to 234 minutes in 2021. This marks a 24.5% increase in five years. Thus, growing number of smartphone users and increasing time spent on smartphone devices fuel the growth of e-commerce and m-commerce, thereby opening a lucrative opportunity for the artificial intelligence in retail market growth.

Artificial Intelligence in Retail Market – by Region, 2022 and 2028

Source: The Insight Partners Analysis

Europe is anticipated to witness exponential growth in the artificial intelligence in retail market during the forecast period owing to the increasing investment in technology by various artificial intelligence software developing companies. For instance, an artificial intelligence firm “Sentient Technologies” demonstrated how its 256 real-time website design variation for customers of the Swedish flower delivery chain “Euroflorist” had a 17% increased conversion repercussion. Moreover, retail companies in European provinces have become far more advanced in facilitating their customers with coherent point-of-sales experiences. This is majorly attributed to the consistent application of innovative ideas in the European retail industry, which has promoted sales and attracted novel customers in inventive and pioneering new ways, resulting in robust growth of the retail sector in Europe. More robust investments are projected to take place in the European retail industry for the implementation and research & development of artificial intelligence technology. All these factors fuel the growth of the artificial intelligence in retail market growth in Europe.

Impact of COVID-19 Pandemic on Artificial Intelligence in Retail Market Growth

The emergence and rapid spread of SARS-CoV-2 paralyzed several developed and developing countries. The retail industry was severely affected due to government initiatives such as lockdowns and travel restrictions, which greatly restricted physical service in stores. Before the pandemic, the use of AI technology in retail was growing steadily. The pandemic accelerated digital adoption around the world. In such scenarios, AI was widely used as a strategy in COVID-19-related initiatives. Retailers were significantly investing in digital transformations to meet customer expectations. Furthermore, the rise of no-contact pickup, delivery of meals, reservation systems, and the development of autonomous stores was the key factor driving the artificial intelligence in retail market growth during the pandemic period.

Based on retail format, the artificial intelligence in retail market is segmented into e-commerce and brick and mortar. The e-commerce segment is expected to dominate the artificial intelligence in retail market owing to factors such as increase in penetration of digitalization in the retail sector and exponential growth of investments for the improving e-commerce services globally. Artificial intelligence has more prominent penetration in the e-commerce sector than in brick and mortar.

IBM Watson, Amazon, Google Inc., Plexure, Focal Systems, Sentient Technologies Holdings Limited, ViSenze, Salesforce, Microsoft Corporation, and Tata Consultancy Services are among the key players operating in the artificial intelligence in retail market.

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