Artificial Intelligence In Retail Market Size

ID: MRFR/ICT/3574-HCR

200 Pages

Aarti Dhapte

October 2025

Artificial Intelligence in Retail Market Research Report By Application (Customer Service, Inventory Management, Sales and Marketing, Fraud Detection, Supply Chain Optimization), By Deployment Mode (Cloud-Based, On-Premises, Hybrid), By Technology (Machine Learning, Natural Language Processing, Computer Vision, Robotic Process Automation), By End Use (E-commerce, Brick-and-Mortar Stores, Wholes...

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Artificial Intelligence In Retail Size

Artificial Intelligence In Retail Market Growth Projections and Opportunities

Artificial Intelligence (AI) is being widely adopted and growing in the retail industry due to a number of market considerations. The growing emphasis on improving customer experiences is one of the main causes. Retailers are using artificial intelligence (AI) to analyze massive volumes of client data as customers seek more tailored and seamless experiences. Retailers may offer individualized product suggestions and focused marketinag campaigns by using AI algorithms that can analyze individual tastes, past purchases, and online activities. This indicator shows how important it is for businesses to use AI to improve customer experiences in order to stay competitive and build a loyal client base.

Another important market aspect is the requirement for effective supply chain optimization and inventory management. Retailers are using AI to manage inventory levels, estimate demand accurately, and improve supply chain procedures due to the complexity of modern retail operations. AI systems' capacity to examine past data and spot trends helps to cut costs, increase operational effectiveness, and reduce instances of stockouts and overstocks. This element tackles a crucial facet of retail operations, enabling companies to react quickly to shifts and needs in the market. Retail AI adoption is being driven by cost-effective automation. Automation driven by AI becomes an appealing option for merchants looking to decrease labor expenses and streamline operations. Automation driven by AI improves productivity and lessens dependency on manual labor, whether it is used in chatbot-powered customer care or backend operations like inventory management.

This element plays a key role in generating cost savings, enabling merchants to invest in other aspects of their business and use resources more wisely. The use of AI technology is being influenced by the drive toward omnichannel retail experiences. Customers anticipate an easy and smooth online, mobile, and in-store buying experience across all platforms. Retailers may create a uniform and seamless buying experience by leveraging AI to integrate consumer interactions across several channels. Offering an omnichannel experience improves customer happiness and puts shops in a position to adjust to the changing needs of contemporary consumers. This component recognizes the value of a comprehensive strategy for retail operations.

Artificial Intelligence In Retail Market Size Graph

Market Highlights

Author

Aarti Dhapte

Team Lead - Research

She holds an experience of about 6+ years in Market Research and Business Consulting, working under the spectrum of Information Communication Technology, Telecommunications and Semiconductor domains. Aarti conceptualizes and implements a scalable business strategy and provides strategic leadership to the clients. Her expertise lies in market estimation, competitive intelligence, pipeline analysis, customer assessment, etc.

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FAQs

What is the projected market valuation of Artificial Intelligence in Retail by 2035?

The projected market valuation of Artificial Intelligence in Retail is expected to reach 76.96 USD Billion by 2035.

What was the market valuation of Artificial Intelligence in Retail in 2024?

The overall market valuation of Artificial Intelligence in Retail was 8.13 USD Billion in 2024.

What is the expected CAGR for the Artificial Intelligence in Retail Market from 2025 to 2035?

The expected CAGR for the Artificial Intelligence in Retail Market during the forecast period 2025 - 2035 is 22.67%.

Which companies are considered key players in the Artificial Intelligence in Retail Market?

Key players in the market include Amazon, Google, IBM, Microsoft, Salesforce, SAP, NVIDIA, Oracle, Alibaba, and C3.ai.

What are the main applications of Artificial Intelligence in Retail and their market values?

Main applications include Customer Service (15.12 USD Billion), Inventory Management (14.88 USD Billion), and Sales and Marketing (22.36 USD Billion).

How is the deployment mode of Artificial Intelligence in Retail segmented?

The deployment mode is segmented into Cloud-Based (32.0 USD Billion), On-Premises (24.0 USD Billion), and Hybrid (20.96 USD Billion).

What technologies are driving the Artificial Intelligence in Retail Market?

Technologies driving the market include Machine Learning (25.0 USD Billion), Natural Language Processing (15.0 USD Billion), and Computer Vision (20.0 USD Billion).

What is the market value of Artificial Intelligence in E-commerce as of 2025?

The market value of Artificial Intelligence in E-commerce is 25.0 USD Billion as of 2025.

How does the market value of Artificial Intelligence in Brick-and-Mortar Stores compare to other segments?

The market value for Brick-and-Mortar Stores is 30.0 USD Billion, which is higher than E-commerce and Wholesale segments.

What role does fraud detection play in the Artificial Intelligence in Retail Market?

Fraud Detection accounts for a market value of 13.27 USD Billion, indicating its critical role in enhancing security within retail operations.

1. Market Overview

2. Market Trends

3. Market Segment Insights

4. Key Players and Competitive Insights

5. Industry Developments

6. Market Segmentation

7. Report Scope

8. Market Highlights

9. FAQs

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Market Summary

As per MRFR analysis, the Artificial Intelligence in Retail Market Size was estimated at 8.13 USD Billion in 2024. The Artificial Intelligence in Retail industry is projected to grow from 9.973 USD Billion in 2025 to 76.96 USD Billion by 2035, exhibiting a compound annual growth rate (CAGR) of 22.67 during the forecast period 2025 - 2035.

Key Market Trends & Highlights

The Artificial Intelligence in Retail Market is experiencing robust growth driven by technological advancements and evolving consumer expectations.

Personalization of customer experience is becoming a pivotal trend, enhancing engagement and loyalty.
Supply chain optimization is increasingly prioritized, particularly in North America, to improve efficiency and reduce costs.
Enhanced customer service capabilities are being adopted widely, with the customer service segment leading the market.
Data-driven decision making and automation of retail operations are key drivers propelling growth in both North America and Asia-Pacific.

Artificial Intelligence In Retail Market

CAGR

22.67%

Market Size & Forecast

2024 Market Size	8.13 (USD Billion)
2035 Market Size	76.96 (USD Billion)
CAGR (2025 - 2035)	22.67%
Largest Regional Market Share in 2024	North America

Major Players

Amazon (US), Google (US), IBM (US), Microsoft (US), Salesforce (US), SAP (DE), NVIDIA (US), Oracle (US), Alibaba (CN), C3.ai (US)

Market Trends

The Artificial Intelligence in Retail Market is currently experiencing a transformative phase, characterized by the integration of advanced technologies that enhance customer experiences and streamline operations. Retailers are increasingly adopting AI-driven solutions to analyze consumer behavior, optimize inventory management, and personalize marketing strategies. This shift appears to be driven by the need for businesses to remain competitive in a rapidly evolving landscape, where consumer expectations are continuously rising. As a result, AI technologies are becoming indispensable tools for retailers aiming to improve efficiency and foster customer loyalty. Moreover, the market seems to be influenced by the growing emphasis on data analytics and machine learning capabilities. Retailers are leveraging these technologies to gain insights into purchasing patterns and preferences, which may lead to more informed decision-making. The potential for AI to automate routine tasks and enhance operational efficiency is also noteworthy, as it allows businesses to allocate resources more effectively. Overall, the Artificial Intelligence in Retail Market is poised for continued growth, driven by innovation and the increasing demand for personalized shopping experiences.

Personalization of Customer Experience

Retailers are increasingly utilizing AI to tailor shopping experiences to individual preferences. By analyzing customer data, businesses can offer personalized recommendations, targeted promotions, and customized content, thereby enhancing customer satisfaction and loyalty.

Supply Chain Optimization

AI technologies are being employed to streamline supply chain processes. Through predictive analytics and real-time data processing, retailers can improve inventory management, reduce waste, and ensure timely delivery of products, ultimately leading to cost savings.

Enhanced Customer Service

The integration of AI-powered chatbots and virtual assistants is transforming customer service in retail. These tools provide instant support, answer queries, and assist with transactions, thereby improving overall customer engagement and operational efficiency.

Artificial Intelligence In Retail Market Market Drivers

Enhanced Customer Insights

The ability to gain enhanced customer insights is a crucial driver within the Artificial Intelligence in Retail Market. AI technologies enable retailers to analyze customer interactions across multiple channels, providing a comprehensive view of consumer behavior. This insight allows for more targeted marketing strategies and personalized shopping experiences. Retailers utilizing AI-driven insights have reported a 15% increase in customer retention rates. By understanding customer preferences and behaviors, businesses can tailor their offerings, thereby fostering loyalty and driving sales.

Data-Driven Decision Making

The integration of Artificial Intelligence in Retail Market facilitates data-driven decision making, allowing retailers to analyze vast amounts of consumer data. This capability enables businesses to identify trends, preferences, and purchasing behaviors with remarkable accuracy. For instance, predictive analytics can forecast demand, optimize inventory levels, and enhance pricing strategies. According to recent estimates, retailers leveraging AI-driven analytics have seen a 20% increase in operational efficiency. This trend underscores the importance of data in shaping retail strategies, as companies increasingly rely on AI to make informed decisions that align with consumer expectations.

Automation of Retail Operations

Automation stands as a pivotal driver in the Artificial Intelligence in Retail Market, streamlining various operational processes. Retailers are increasingly adopting AI technologies to automate tasks such as inventory management, order fulfillment, and customer service. This shift not only reduces labor costs but also enhances accuracy and speed. For example, AI-powered chatbots can handle customer inquiries 24/7, improving response times and customer satisfaction. Reports indicate that automation can lead to a 30% reduction in operational costs, making it a compelling reason for retailers to invest in AI solutions.

Improved Supply Chain Management

Improved supply chain management is increasingly recognized as a vital driver in the Artificial Intelligence in Retail Market. AI technologies facilitate real-time tracking of inventory and shipments, enabling retailers to respond swiftly to market changes. By employing machine learning algorithms, businesses can predict supply chain disruptions and optimize logistics. Studies suggest that retailers implementing AI in their supply chains can reduce costs by up to 25%. This efficiency not only enhances operational performance but also ensures that products are available when and where customers need them.

Personalized Marketing Strategies

Personalized marketing strategies represent a significant driver in the Artificial Intelligence in Retail Market. AI enables retailers to analyze customer data and segment audiences effectively, allowing for tailored marketing campaigns. By leveraging machine learning algorithms, businesses can deliver personalized recommendations and promotions that resonate with individual consumers. This approach has been shown to increase conversion rates by as much as 30%. As retailers continue to embrace AI-driven personalization, they are likely to see enhanced customer engagement and improved sales performance.

Market Segment Insights

By Application: Customer Service (Largest) vs. Sales and Marketing (Fastest-Growing)

In the Artificial Intelligence in Retail Market, customer service is the most significant segment due to its critical role in enhancing customer experience and retention. Retailers are increasingly employing AI-driven chatbots and virtual assistants to provide 24/7 support, leading to improved customer satisfaction rates. Meanwhile, sales and marketing applications are swiftly gaining traction, leveraging AI algorithms for targeted advertising and personalization, which is essential as retailers strive to enhance customer outreach and engagement.

Customer Service (Dominant) vs. Fraud Detection (Emerging)

Customer service has emerged as a dominant application area in the Artificial Intelligence in Retail Market, transforming how retailers engage with their customers. AI technologies such as chatbots and virtual assistants enable real-time customer support, ensuring a seamless shopping experience. Conversely, fraud detection has gained ground as an emerging application, employing machine learning algorithms to identify and mitigate fraudulent activities effectively. This sector is driven by increasing online transactions and the need for robust security measures. Retailers are prioritizing these advanced AI solutions to protect both their business and their customers, fostering trust and loyalty in the marketplace.

By Deployment Mode: Cloud-Based (Largest) vs. On-Premises (Fastest-Growing)

In the Artificial Intelligence in Retail Market, the deployment mode significantly influences the adoption and implementation of AI solutions. Cloud-Based deployment currently holds the largest share, favored for its scalability, flexibility, and lower upfront costs. On the other hand, the On-Premises model is witnessing a surge in demand as retailers prioritize data security and compliance, leading to a more balanced market distribution between these two deployment types. The growth trends in this segment reflect the evolving preferences of retailers. While Cloud-Based solutions continue to dominate due to their cost-effectiveness and ease of deployment, the On-Premises model is becoming increasingly attractive, especially for larger retailers with stringent data protection needs. Moreover, the Hybrid deployment mode is also gaining traction, allowing businesses to leverage the benefits of both models for a more customized approach to their AI strategies.

Cloud-Based (Dominant) vs. On-Premises (Emerging)

The Cloud-Based deployment mode remains dominant in the Artificial Intelligence in Retail Market, primarily due to its wide-ranging benefits, including accessible infrastructure, enhanced collaboration, and cost efficiency. It enables retailers to quickly deploy and scale AI applications without significant investment in hardware. Conversely, the On-Premises model, while emerging and less prevalent, is steadily gaining traction for businesses requiring enhanced security, control over data, and regulatory compliance. This model suits larger organizations and those in sensitive sectors, as it provides a more secure environment for handling customer information and retail analytics.

By Technology: Machine Learning (Largest) vs. Natural Language Processing (Fastest-Growing)

In the Artificial Intelligence in Retail Market, the 'Technology' segment is dominated by Machine Learning, as it significantly contributes to various applications such as personalized recommendations and inventory management solutions. Following closely is Natural Language Processing, which also plays a critical role in enhancing customer interactions through chatbots and virtual assistants, reflecting its growing importance in the retail landscape.

Technology: Machine Learning (Dominant) vs. Natural Language Processing (Emerging)

Machine Learning serves as the dominant force in the Artificial Intelligence in Retail Market, providing retailers with the tools to analyze customer behavior, optimize pricing strategies, and improve supply chain efficiency. On the other hand, Natural Language Processing is emerging as a critical technology that enables businesses to understand and respond to customer inquiries more efficiently, driving engagement and satisfaction. As consumers demand seamless interaction, the integration of NLP into retail strategies is being prioritized, showcasing its potential for rapid growth in the coming years.

By End Use: E-commerce (Largest) vs. Brick-and-Mortar Stores (Fastest-Growing)

In the Artificial Intelligence in Retail Market, E-commerce holds the largest share among all end-use segments, propelled largely by the increasing online shopping trend that has gained momentum in recent years. E-commerce leverages AI for personalized experiences, predictive analytics, and efficient inventory management, outperforming traditional channels. Brick-and-Mortar Stores, while representing a smaller segment, are swiftly adopting AI technologies, thereby growing at the fastest rate. This shift is a result of the need to enhance customer experiences and streamline operations with automation and data-driven insights.

E-commerce (Dominant) vs. Brick-and-Mortar Stores (Emerging)

E-commerce remains the dominant end-use segment in the Artificial Intelligence in Retail Market, thanks to its extensive integration of AI solutions that optimize various processes, such as consumer engagement and supply chain management. Through AI, e-commerce platforms can offer personalized recommendations, dynamic pricing, and enhanced customer service, leading to higher conversion rates and customer retention. Conversely, Brick-and-Mortar Stores are emerging as significant players in this space as they increasingly incorporate AI to improve in-store experiences. Innovations such as smart checkout systems, inventory management, and tailored marketing strategies are transforming these traditional stores into agile retail environments that can compete effectively with their online counterparts.

Get more detailed insights about Artificial Intelligence in Retail Market Research Report - Global Forecast to 2035

Regional Insights

North America : Innovation and Leadership Hub

North America is the largest market for Artificial Intelligence in Retail, holding approximately 45% of the global share. The region's growth is driven by rapid technological advancements, increasing consumer demand for personalized shopping experiences, and significant investments in AI technologies. Regulatory support from government initiatives further catalyzes market expansion, fostering innovation and competition. The United States leads the market, with major players like Amazon, Google, and IBM driving advancements in AI applications for retail. The competitive landscape is characterized by a mix of established tech giants and emerging startups, all vying for market share. The presence of robust infrastructure and a skilled workforce enhances the region's attractiveness for AI investments, ensuring continued growth in the retail sector.

Europe : Emerging AI Adoption Region

Europe is witnessing a significant rise in the adoption of Artificial Intelligence in Retail, accounting for about 30% of the global market share. The growth is fueled by increasing consumer expectations for enhanced shopping experiences and the need for operational efficiency. Regulatory frameworks, such as the EU's Digital Strategy, promote innovation while ensuring consumer protection, creating a conducive environment for AI deployment. Leading countries in this region include Germany, the UK, and France, where companies like SAP and various local startups are making strides in AI solutions. The competitive landscape is diverse, with a mix of established firms and innovative newcomers. The European market is characterized by a strong emphasis on ethical AI practices, which influences the development and implementation of retail technologies.

Asia-Pacific : Rapid Growth and Innovation

Asia-Pacific is emerging as a powerhouse in the Artificial Intelligence in Retail market, holding approximately 20% of the global share. The region's growth is driven by rapid urbanization, increasing internet penetration, and a tech-savvy consumer base. Countries like China and India are at the forefront, with government initiatives supporting AI research and development, thus accelerating market growth. China is the largest market in the region, with significant contributions from companies like Alibaba and local startups. The competitive landscape is vibrant, with numerous players focusing on AI-driven retail solutions. The region's unique blend of traditional retail and e-commerce creates opportunities for innovative AI applications, enhancing customer engagement and operational efficiency.

Middle East and Africa : Emerging Market Potential

The Middle East and Africa region is gradually recognizing the potential of Artificial Intelligence in Retail, currently holding about 5% of the global market share. The growth is driven by increasing investments in technology and a growing middle class that demands enhanced retail experiences. Government initiatives aimed at digital transformation are also catalyzing market development, creating a favorable environment for AI adoption. Leading countries in this region include South Africa and the UAE, where local companies are beginning to explore AI solutions for retail. The competitive landscape is still developing, with a mix of local and international players entering the market. As infrastructure improves and consumer awareness grows, the region is poised for significant growth in AI-driven retail solutions.

Key Players and Competitive Insights

The Artificial Intelligence in Retail Market is experiencing significant growth as retailers leverage advanced technologies to enhance customer experiences, streamline operations, and develop personalized marketing strategies. This burgeoning market is rife with competitive dynamics as businesses seek to differentiate themselves through innovative solutions powered by artificial intelligence. Companies in this space are increasingly investing in machine learning, data analytics, and automation technologies to drive efficiency and improve decision-making processes. As the industry evolves, insights into the competitive landscape become crucial for understanding market trends, emerging players, and opportunities for growth.

The adoption of AI is being propelled by the need for retailers to respond to changing consumer behaviors and preferences, paving the way for fierce competition among market participants.Shopify has established a strong foothold in the Artificial Intelligence in Retail Market by providing a robust e-commerce platform that integrates AI-driven tools to empower retailers of all sizes. The company's strengths lie in its user-friendly interface, seamless integrations with third-party applications, and emphasis on customer support, making it an attractive option for businesses looking to harness the power of AI.

Shopify's capabilities include AI-enhanced customer insights, automated inventory management, and personalized product recommendations, which enable retailers to enhance overall efficiency and drive sales. The company's widespread presence across various regions facilitates its role as a key player in advancing AI solutions within the retail sector. Moreover, its ecosystem approach allows partners to contribute additional services, creating a rich environment that fosters innovation and collaboration.Oracle, as a major entity in the Artificial Intelligence in Retail Market, offers a comprehensive suite of AI-based solutions tailored for retail operations.

Known for its cloud-based services, Oracle delivers tools that optimize inventory management, enhance customer engagement, and enable predictive analytics. The strength of Oracle lies in its extensive product portfolio, combining advanced data capabilities and machine learning technologies to meet the dynamic needs of retailers worldwide. The company has developed key products, such as its Retail Cloud and Customer Experience platforms, which streamline processes and improve decision-making. Oracle's strategic initiatives, including acquisitions aimed at augmenting its AI capabilities, have fortified its market presence and positioned it as a leader in the sector.

These efforts, coupled with a focus on continuous innovation, solidify Oracle's significance in shaping the future of AI applications in retail on a global scale.

Key Companies in the Artificial Intelligence In Retail Market market include

Industry Developments

The Artificial Intelligence in Retail Market has seen significant developments recently, with numerous companies enhancing their offerings. Shopify, Oracle, Microsoft, and Amazon are increasingly integrating AI-driven solutions to optimize customer experiences and streamline supply chains. In August 2023, NVIDIA announced an expansion of its AI services tailored for retail, which is projected to enhance inventory management and customer interaction. Additionally, IBM's partnership with Fractal Analytics aims to leverage AI for predictive analytics in retail. Notably, Oracle completed its acquisition of a leading AI startup in July 2023, further strengthening its capabilities in retail analytics.

Alibaba and Google have also made strides by adopting machine learning for personalized marketing, showcasing a commitment to sophisticated retail technologies. The market’s growth trajectory is notable, with reports indicating that the segment is expected to surpass USD 30 billion by 2025, driven by heightened demand for AI solutions. In past years, developments such as the launch of Amazon Go in December 2016 revolutionized the retail space, and ongoing advancements reflect a robust commitment to integrating AI across the sector for enhanced operational efficiency and customer engagement.

Future Outlook

Artificial Intelligence In Retail Market Future Outlook

The Artificial Intelligence in Retail Market is projected to grow at a 22.67% CAGR from 2024 to 2035, driven by enhanced customer experiences, operational efficiencies, and data analytics advancements.

New opportunities lie in:

Personalized AI-driven marketing automation tools
Advanced inventory management systems utilizing predictive analytics
AI-powered customer service chatbots for 24/7 support

By 2035, the market is expected to be robust, driven by innovative AI applications and strategic implementations.

Market Segmentation

Artificial Intelligence In Retail Market End Use Outlook

E-commerce
Brick-and-Mortar Stores
Wholesale
Distribution

Artificial Intelligence In Retail Market Technology Outlook

Machine Learning
Natural Language Processing
Computer Vision
Robotic Process Automation

Artificial Intelligence In Retail Market Application Outlook

Customer Service
Inventory Management
Sales and Marketing
Fraud Detection
Supply Chain Optimization

Artificial Intelligence In Retail Market Deployment Mode Outlook

Cloud-Based
On-Premises
Hybrid

Report Scope

MARKET SIZE 2024	8.13(USD Billion)
MARKET SIZE 2025	9.973(USD Billion)
MARKET SIZE 2035	76.96(USD Billion)
COMPOUND ANNUAL GROWTH RATE (CAGR)	22.67% (2024 - 2035)
REPORT COVERAGE	Revenue Forecast, Competitive Landscape, Growth Factors, and Trends
BASE YEAR	2024
Market Forecast Period	2025 - 2035
Historical Data	2019 - 2024
Market Forecast Units	USD Billion
Key Companies Profiled	Market analysis in progress
Segments Covered	Market segmentation analysis in progress
Key Market Opportunities	Integration of advanced analytics and personalized shopping experiences in the Artificial Intelligence in Retail Market.
Key Market Dynamics	Rising consumer demand for personalized shopping experiences drives innovation in Artificial Intelligence applications within retail.
Countries Covered	North America, Europe, APAC, South America, MEA