From predictive analytics to obtaining valuable customer data, the impact artificial intelligence has on the retail business is unparalleled.
Now, with more and more advanced technologies – such as natural language processing or computer vision – this influence is reaching new depths. How will it evolve in the future? Take a look at statistics and trends proving that AI is reshaping the retail industry.
Evolution of AI in Retail
The use of AI in retail is nothing new, as the technology was already implemented by Amazon over two decades ago for recommendation engines. The difference is, back in the day, AI’s role was mostly limited to the automation of pretty repetitive tasks, such as basic data analytics and inventory management.
Information obtained and processed by AI helped in forecasting demand and optimizing the supply chain to ensure that products were available exactly when needed. AI was also implemented for segmentation – by analyzing demographic data, customer preferences, purchase history, and browsing behavior, AI technology enabled retailers to target specific customer groups – with their unique wants and needs – and craft more effective marketing campaigns.
All of that is still relevant and done today – it’s just taken to the next level.
Chatbots and personal assistants are far more advanced than ever before, with tech such as Natural Language Processing (NLP) allowing for almost human-like conversations and making customer support that much more effective. Visual search tools, like those implemented by Pinterest and ASOS, are transforming e-shopping by enabling users to search for products using images.
AI-driven robots and automation systems handle tasks such as sorting, packing, and even in-store assistance. Retailers use AI to analyze customers’ reviews and feedback on social media to detect their approach to a brand. AI can even help brands build emotional loyalty by providing consumers with ultra-personalized experiences and optimizing communication.
To better illustrate the importance of AI in retail, we’ve rounded up some of the most relevant numbers about the use and impact of modern technologies on the industry.
13 Key Trends and Statistics for the Retail Industry
The AI in retail is expected to reach almost $10 billion in 2024 – a number which is believed to rise to $40.5 billion by 2025, according to a study by Mordor Intelligence.
Using AI for inventory management in retail can cut down demand forecasting mistakes by half, according to Gitnux Marketdata Report 2024.
Artificial Intelligence and other new technologies are thought to enhance retail efficiency by almost 60% up to 2035, according to a study conducted by Knight Frank.
Companies that use AI-driven personalization tactics can see their revenue increase as much as 10% faster, according to a report by the Boston Consulting Group.
69% of retailers claim that AI has had a positive impact on their annual revenue, according to a survey report by NVIDIA.
By using GenAI for personalized recommendations, Amazon boosts its purchases by 35%, according to McKinsey.
Over 40% of retailers believe that AI helped them improve customer experience, according to a survey report by NVIDIA.
The global visual search market, including visual search engines and virtual changing rooms more and more commonly used in the retail business, is expected to be worth $33 billion by 2028, according to Intelliarts.
Nearly 65% of customers actually prefer talking to a chatbot as the first line of customer service rather than waiting for a human agent, according to Tidio.
Retailers that use AI for everyday work optimization and tasks such as analyzing customer feedback report up to 30% increase in conversion rates, according to WorldMetrics.
65% of retailers with a yearly income over $500 million already use AI in their operations, which can hint that modern technologies majorly help with boosting revenue, according to a survey report by NVIDIA.
Using AI can help reduce customer churn by nearly 70%, according to a survey by Capgemini Research Institute.
Implementing Artificial Intelligence can enhance profitability in the retail industry by almost 60%, according to Gitnux.
The Future of AI in the Retail Industry
AI has had retail in its chokehold – and, as proven by the stats above, its role is only poised for growth. The future of AI in retail promises transformative advancements, with new technologies driving hyper-personalization – which, by the way, can increase your revenue by 10% – and even more seamless shopping experiences.
Through solutions such as visual fitting rooms, AR shopping, or facial recognition, retailers can create a whole new depth to the word “immersive.” What’s more, predictive analytics will help them forecast trends and customer behavior with unprecedented accuracy, which will help tailor offers and deliver the exact content your audience expects (or doesn’t yet know they expect). We may also see a rise in autonomous stores and cashier-less checkouts to streamline the shopping process and service, further enhancing customer satisfaction.
And that’s just the trends we know of. Even a couple of decades ago, virtual fitting rooms would have seemed like something straight out of a sci-fi movie, so it’s hard to predict what retail will look like in 10 or 20 years. One thing is certain – embracing AI in retail is no longer an option; rather than if, it’s a question of how to put it to the best use.
Read more:
How Is AI Changing Retail: 13 Trends Reshaping the Retail Industry in 2024