The Artificial Intelligence in Retail Market was valued at $7 billion in 2024. This market is anticipated to reach $92.7 billion by 2032 from an estimated $9.4 billion in 2025, at a CAGR of 38.6% during the forecast period from 2025–2032.

Artificial Intelligence [AI] in Retail Market Size & Forecast

Key factors driving the growth of this market include the surge in smart stores, a rising focus on enhancing customer experience, and the rising integration of AI in inventory management. However, the low rate of technology adoption in unorganized retail and the low availability of qualified professionals restrain this market’s growth. 

Furthermore, the rising adoption of AI-based voice assistants and AI-powered personal shopping services is anticipated to create substantial growth opportunities for companies operating in this market. However, stringent regulations, data privacy risks, and the difficulties associated with integrating AI technologies into existing systems are some of the challenges impacting market growth. 

Artificial Intelligence [AI] in Retail Market Growth Drivers

Surge in Smart Stores 

Smart stores, also known as connected stores, autonomous stores, or intelligent retail environments, are brick-and-mortar stores that incorporate various technologies to enhance the shopping experience, optimize operations, and improve customer engagement and lifetime value (CLV). The development of smart shopping and autonomous stores globally has seen significant growth and innovation in recent years. Retailers in recent years have begun to incorporate innovative technologies into their stores to deliver a more frictionless shopping experience for their customers. 

The adoption of smart stores has been driven by advancements in computer vision, AI, and consumer demand for more efficient, frictionless shopping experiences. The integration of these technologies not only improves the shopping experience but also helps retailers streamline their operations and better meet the needs of their customers. 

Recent developments in this market include: 

• In May 2025, the German supermarket chain Rewe opened a hybrid supermarket at Wehrhahn in Düsseldorf, utilizing artificial intelligence (AI) and advanced technology. This marks an expansion of Rewe's experiments with autonomous stores, which are already operational in Cologne, Berlin, and Munich.  

• In March 2021, Amazon (U.S.) opened its first "just walk out" grocery store outside the U.S. in London, under the Amazon Fresh brand. Customers can enter the store by scanning a smartphone app and are automatically charged for their purchases as they exit. 

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Increasing Integration of AI in Inventory Management 

AI has transformed various operational and decision-making aspects in the retail sector. Effective inventory management involves careful monitoring and control of stock levels to ensure product availability while minimizing costs and maximizing profits. In recent years, AI has significantly changed how retailers manage their inventory. AI enhances retail inventory management by analyzing vast amounts of data to optimize stock control. By examining historical sales, customer behavior, market trends, and external factors, AI algorithms provide retailers with valuable insights that improve decision-making and streamline the supply chain. 

With AI, retailers can accurately forecast demand, ensuring the right products are in stock at the right time. By assessing customer preferences and purchasing patterns, AI can identify trends and predict future demand, allowing retailers to adjust their inventory levels accordingly. This approach helps prevent stockouts and overstock situations, improving customer satisfaction by ensuring popular products are consistently available. 

Several retailers are leveraging AI to optimize their inventory management processes. For example, Walmart Inc., a major American multinational retail corporation, uses AI for demand forecasting, inventory control, and supply chain optimization. Its AI initiative, known as the Walmart Intelligent Retail Lab (IRL), utilizes machine learning algorithms to predict sales trends, manage stock levels, and automate warehouse operations. 

Additionally, the increasing focus among market players to develop innovative solutions for retail inventory management is expected to drive market growth. For instance, in January 2024, Google Cloud (U.S.) launched a new AI tool designed to help large retailers better track inventory on their shelves. 

Artificial Intelligence [AI] in Retail Market Growth Opportunity  

Increasing Demand for AI-powered Personal Shopping Services 

AI personal shopping assistants are software tools or applications that utilize artificial intelligence to assist users with their shopping needs. These AI-powered services leverage advanced algorithms and machine learning to understand a customer’s preferences, style, and budget. They can quickly sift through thousands of products, curating selections that align with the customer’s unique requirements. This process not only saves time but also makes online shopping a more enjoyable and hassle-free experience. 

With advancements in AI technology, these services now offer levels of personalization and efficiency that were previously unattainable. By combining powerful algorithms with machine learning, AI personal shopping assistants can effectively interpret customer preferences and deliver a highly customized shopping experience. Various companies and platforms provide these services, each focusing on enhancing different aspects of the shopping experience. For instance, Amazon's platform employs AI to recommend products based on users' browsing and purchasing history. 

Overall, AI personal shopping services aim to enhance convenience, efficiency, and personalization in the shopping experience by leveraging data and advanced algorithms. As technology continues to evolve, the demand for AI-powered personal shopping services is expected to increase, creating significant opportunities for market growth. 

Some of the recent developments from market players are as follows: 

• In January 2025, Etsy (U.S.) launched a new hub that combines artificial intelligence (AI) with human curation to assist shoppers in finding gifts for any occasion. The interactive Gift Mode helps users discover presents that align with the specific interests of the recipient. 

• In November 2024, Mastercard Inc. (U.S.) launched an AI-powered personal shopping assistant tool called Shopping Muse for retailers. Developed under its Dynamic Yield division, Shopping Muse aims to replicate the in-store shopping experience using advanced AI capabilities, offering tailored recommendations based on each customer's preferences and profile. 

Artificial Intelligence [AI] in Retail Market Analysis: Key Findings

By Offering: In 2025, the Solutions Segment to Dominate the Artificial Intelligence in Retail Market 

Based on offering, the artificial intelligence in retail market is segmented into solutions and services. In 2025, the solutions segment is anticipated to dominate the market, with a share of over 72.0%. The segment’s major share is due to the rising adoption of AI technologies in retail aimed at enhancing operations and boosting customer satisfaction. Additionally, key market players are increasingly focused on launching innovative AI solutions that enable retailers to transform the shopping experience for both customers and workers. 

However, the services segment is anticipated to record a higher compound annual growth rate during the forecast period. This growth is due to the growing demand for visibility within organizations, which enables them to identify and address issues proactively before they impact operations or the customer experience. 

By Technology: In 2025, the Machine Learning Segment to Dominate the Artificial Intelligence in Retail Market

Based on technology, the artificial intelligence in retail market is segmented into machine learning, natural language processing, computer vision, and other technologies. In 2025, the machine learning segment is anticipated to dominate the market, with a share of over 36.0%. The segment’s major share is primarily attributed to the growing use of machine learning by retailers to monitor customer behavior, including movements, product interactions, and foot traffic patterns. This information is crucial for optimizing store layouts, improving product placements, and refining marketing strategies. 

Moreover, the machine learning segment is anticipated to record the highest compound annual growth rate during the forecast period. This growth is due to the increasing integration of AI technologies by retailers to enhance customer experiences through personalized interactions, leveraging valuable customer data to inform business decisions that deliver better results. 

By Type: In 2025, the Online Retail Segment to Dominate the Artificial Intelligence in Retail Market 

Based on type, the artificial intelligence in retail market is segmented into online retail and offline retail. In 2025, the online retail segment is projected to dominate the market. The segment’s major share is primarily attributed to the increasing adoption of AI in online retail to enhance customer satisfaction, detect and prevent fraud, adjust pricing and offerings based on real-time user behavior, reduce operational costs, and boost revenue. 

Moreover, the online retail segment is anticipated to record a higher compound annual growth rate during the forecast period. This growth is due to initiatives by market players to develop AI solutions designed specifically for the eCommerce sector, which aims to revolutionize the way online retailers interact with their customers. 

The On-premise Deployments Segment to Dominate the Artificial Intelligence in Retail Market in 2025 

Based on deployment mode, the artificial intelligence in retail market is segmented into on-premise deployment and cloud-based Deployments. In 2025, the on-premise deployments segment is projected to dominate the market. The segment’s major share is primarily attributed to the high preference for on-premise solutions among large enterprises due to the availability of trained IT professionals, established infrastructure, and security concerns associated with cloud-based deployments. 

Moreover, the cloud-based deployments segment is anticipated to record a higher compound annual growth rate during the forecast period. Computing and storage systems are gaining popularity among small and medium-sized enterprises. Several organizations are gradually transitioning to cloud infrastructure, a trend that is expected to grow in the coming years. This transition is primarily driven by the benefits offered by cloud infrastructure, such as easy implementation, low reliance on in-house resources, and scalability. 

The food & groceries Segment to Dominate the Artificial Intelligence in Retail Market in 2025 

Based on end user, the artificial intelligence in retail market is segmented into food & groceries, health & wellness, automotive, fashion & clothing, electronics & white goods, general utility products, cosmetics & personal care, and other end users. In 2025, the food & groceries segment is projected to dominate the market, with a share of over 22.0%. The segment’s major market share is primarily attributed to the rising adoption of AI by food and grocery retailers to optimize supply chains, enhance customer experiences, conduct food quality inspections, personalize promotions across various customer communication channels, and make data-driven decisions. 

However, the fashion & clothing segment is anticipated to record the highest compound annual growth rate during the forecast period. This growth is due to the growing demand for AI solutions among fashion retailers, who are leveraging this technology for analyzing trends, recommending products, optimizing supply chains, improving operational efficiency, and enhancing customer experiences. 

Geographical Analysis

Based on geography, the artificial intelligence in retail market is segmented into five regions: North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. In 2025, North America is anticipated to account for the major share of over 32.0% of the artificial intelligence in retail market, followed by Asia-Pacific and Europe. North America's significant market share can be attributed to several key factors, including early adoption of new and emerging technologies, the presence of prominent market players, increasing government initiatives and investments in AI technology, and a growing focus among e-commerce enterprises on providing enhanced shopping experiences for customers. 

However, the market in Asia-Pacific is anticipated to record the highest compound annual growth rate of 40.6% during the forecast period. The growth of this regional market is driven by the proliferation of smart stores, initiatives by leading retailers to expand their businesses across the region, and the rapidly growing retail and e-commerce industries in developing countries like India and China. Additionally, rising disposable incomes, increasing internet penetration and smartphone usage, and the growing adoption of AI by retailers to enhance customer experiences and optimize supply chain operations contribute to the market’s growth in Asia-Pacific. 

Artificial Intelligence [AI] in Retail Market: Key Companies

The report offers a competitive analysis based on an extensive assessment of the leading players’ product portfolios and geographic presence and the key growth strategies adopted by them over the last three to four years. Some of the key players operating in the artificial intelligence in retail market are Amazon.com, Inc. (U.S.), Google LLC (U.S.), IBM Corporation (U.S.), Intel Corporation (U.S.), Microsoft Corporation (U.S.), Nvidia Corporation (U.S.), Oracle Corporation (U.S.), SAP SE (Germany), BloomReach, Inc. (U.S.), Salesforce.com, Inc. (U.S.), ViSenze (Singapore), SymphonyAI LLC (U.S.), Daisy Intelligence Corporation (Canada), Conversica (U.S.), and RetailNext Inc. (U.S.). 

Artificial Intelligence in Retail Market Overview: Latest Developments from Key Industry Players  

• In June 2025, ParcelLab (U.S.) launched an AI-powered tool designed to help retailers anticipate and mitigate the financial impact of returns. By estimating inbound parcels for retail warehouses, the ParcelLab Returns Forecast AI enables retailers to better plan their warehouse resources, reduce processing times, and lower operational costs. 

• In January 2025, IBM Corporation (U.S.) collaborated with SAP SE (Germany) to develop solutions aimed at helping clients in the consumer packaged goods and retail industries enhance their supply chain, finance operations, and sales and services using generative AI. 

• In January 2025, SAP SE (Germany) announced new AI-driven capabilities to help retailers optimize business processes and drive profitability and customer loyalty. These innovative features, spanning from planning to personalization, will provide retailers with comprehensive customer insights and data analysis to adapt and thrive amid rapid market changes. 

• In January 2025, Google Cloud (U.S.) launched several new tools for retailers utilizing generative AI to improve online shopping experiences and other retail operations. This suite of products includes a generative AI-powered chatbot that retailers can implement on their websites and mobile apps. These virtual agents can interact with consumers and offer product recommendations based on shoppers’ preferences. 

Artificial Intelligence [AI] in Retail Market Research Summary 

Key questions answered in the artificial intelligence in retail market research report