According to a new research report by the market research and strategy consulting firm, Global Market Insights, Inc, the value of artificial intelligence (AI) in the retail market is predicted to surpass $8bn by 2024.
The increased importance of AI in retail markets is driven by the increasing investments in it across the globe. The growing investment in the technology is attributed to the wide applications of AI technology including things such as advanced analytics and machine learning. AI is set to unleash the next phase of digital disruption and the market participants are preparing themselves for it. The investment in the technology is growing rapidly, dominated by the tech giants such as Google, Microsoft, IBM, AWS, and Baidu. In 2016, approximately $30bn had been invested in the technology, with more than 90% on the R&D activities and remaining 10% on merger & acquisition activities. Furthermore, private equity financing, seed investment, and venture capital investment also grew significantly amounting to a cumulative total of over $6bn.
The technological advancement and the development of advanced machine learning and deep learning algorithms are also major
driving forces for AI in the retail market. Machine learning is estimated to grow prominently in AI in the retail market at a compound annual growth rate (CAGR) of over 42%. This growth is primarily driven by the increasing adoption of the technology by the retailers to provide enhanced customer experience and offer a personalized shopping experience to the customers.
Artificial Intelligence (AI) in Retail Market
The visual search solution segment in AI is assessed to grow at a CAGR of over 45% during the forecast timeline due to the increasing trend of online shopping and mobile commerce. The solution allows customers to search products using images instead of text or speech. It leverages image recognition technology to analyse images and recommend relevant products to improve the shopping experience of the customers. The demand for solutions is estimated to grow significantly in the future, due to the increasing popularity among online retailers and shoppers for such a service.
Programmatic advertising is one of the most prominent applications of AI in the retail market. As the competition among retailers is increasing rapidly, companies are looking for new ways to gain customers by implementing advanced advertising strategies. The companies are focusing on “Precision Targeting” to deliver the right messages to the right audience to maximize the sales and reduce the advertising spend. Furthermore, the demand for programmatic advertising is also being driven by the increasing investments by the retailers on digital marketing.
Asia Pacific AI in the retail market is anticipated to grow at a CAGR of over 45% during the forecast period. The growth of the market is attributed to the growing investments in AI technology and increasing digitalisation in the region. China is leading the investments and accounts for around 17% of the total global external investment in AI. Increasing investments by Chinese players will also drive AI growth and adoption in the region. For instance, Baidu has invested more than $1.5bn in AI research over the past two years, in addition to the $200m invested by the company for the development of a new R&D facility.
Some of the prominent vendors of the AI in retail market are AWS, Baidu, BloomReach., CognitiveScale., Google, Inbenta Technologies, Intel, Interactions, Lexalytics., Microsoft, NEXT IT., Nvidia, Oracle, RetailNext, Salesforce.com., SAP, Sentient Technologies, and Visenze.
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