Growing Number of Applications for AI Pushes Huge Growth in Retail Market

Credit: HutchRock

Artificial intelligence (AI) has become a big force in retail and is in the process of reshaping the global landscape. In a report recently released by Technavio, it was found that AI, in relation to retail, is poised to grow by $29.57 billion from 2021 to 2026, at an impressive annual rate of 35.69%. The astonishing growth underscores the big investments in AI solutions and the increasing adoption of AI in various retail sectors following the onset of COVID-19.

Many of these investors and early AI adopters come from the United States and Canada. With this, much of the market’s growth, at 40%, will come from North America. In addition, a growing number of organizations are researching and developing AI to create new solutions or expand on existing ones. Companies like Microsoft, Google, and Softbank have placed huge investments in automation, biotech, AI in robotics, and the general expansion of the technology’s use cases.

As a result of the increased AI adoption, the share of retailers that deploy AI solutions has increased from a mere 4% in 2016 to 28% in 2022. And this would grow even further in the next few years, given the rising popularity of AI and machine learning (ML) among digital sellers. Speaking of sellers, a study conducted by Juniper Research shows that the number of retailers leveraging AI and ML is expected to reach 325,000 by 2023. Meanwhile, the number of transactions powered by smart checkout technologies is anticipated to be around 1.4 billion in the same year.

So, how exactly are today’s retailers leveraging AI?

Popular AI Use Cases in Retail

Prior to AI, big data was the buzzword surrounding retail, as vendors regularly quantified their sales, marketing, and operational performance. AI and ML entered the fray to enable retailers to derive insights from the data, optimize operations, and automate workflows. As a result, the current AI trends in retail have led to a number of useful applications.

Price Management

AI-powered systems can collate pricing data on a retailer’s products, competitors, and alternative goods and then suggest pricing schemes to users. These can also evaluate the margins of each product line, which is instrumental when a business is finding ways to increase profits. In addition, some AI platforms can give pricing forecasts based on demand, competitor performance, trends, and other pertinent information.

Supply Chain Management

The growth of AI in the global supply chain market surpasses that of the technology’s already-impressive growth in retail. This is chiefly because of the adoption of computer vision, which allows computers to quantify details of visual media like videos and photos. The technology enables retailers to leverage visual inputs, like people, products, and prices, for selling and marketing. Moreover, AI can help brands avoid stock outs and leftovers by calculating demand. This is a big deal since businesses lose around $1.1 trillion annually from poor supply chain management. AI also helps in categorizing products and identifying the lines to which each unit belongs.

Customer Service and Satisfaction

In place of human agents, many retailers opt to use AI-powered chatbots to communicate with their clientele. In fact, around 80% of retail brands worldwide already use or plan to use chatbots in their online stores. Besides lowering salary expenses, the bots can be cued to suggest products to customers, send notifications, and address basic inquiries. Meanwhile, some physical stores leverage AI to produce video ads and smart tags and push promotions.

In regard to customer satisfaction, advanced AI platforms can recognize the facial expressions of customers to infer their moods. There are also platforms that analyze one’s purchase history and predict future purchases.

Aside from these three major use cases, AI is used to make the shopping experience convenient for both sellers and customers. Some stores have leveraged cashier-free solutions while others use the technology to enhance visual and voice searches. There are even brands that found a way to digitize fitting rooms with the help of AI. What’s more, the staggering growth of AI in retail assures brands and their customers that there will be an uptick in use cases in the near future. After all, the full potential of artificial intelligence has yet to be realized.