North America AI in Retail Market size surpassed USD 1 billion in 2020 and is estimated to witness over 10% CAGR from 2021 to 2027. The increasing awareness of new & advanced technologies, such as AI, data analytics, etc., and government initiatives toward digitalization are driving the regional market growth.
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The market demand can be attributed to the growing adoption of e-commerce platforms by retailers. Retailers are increasingly using e-commerce platforms for inventory management, supply chain management, improved customer engagement, innovative advertising ideas, smart chatbots, and others. The COVID-19 pandemic has accelerated the trend of online shopping across the region as consumers have started purchasing food, grocery, pharmacy products from online platforms. AI has given ample opportunities to retailers to transform their businesses digitally.
Recommendation engine solution segment held a market share of over 25% in 2020, due to the growing adoption of advanced technologies, such as machine learning, AI, data analytics, etc., across the retail sector and a growing need to enhance the customer experience. Retailers increasingly using recommendation engines to show filtered suggestions as per the buying behavior of the customers.
Recommendation engines use machine learning algorithms to suggest the most relevant products to the customer. It helps retailers in providing an improved customer experience through smart solutions. Various companies, such as Amazon, use recommendation engines to present filtered product recommendations. Similarly, Netflix also uses recommendation engines to show filtered movie suggestions to the users.
The automated merchandising application accounted for 30% artificial intelligence in retail market share in 2020, owing to the growing adoption of e-commerce shopping platforms. Online retailers generally use automated merchandising applications to predict the purchasing habits of the consumers and accordingly offer more shopping responses to them.
Automated merchandising uses predictive analytics to make assumptions about the customer’s behavior, according to the previously purchased products. Retailers widely use this technique to increase sales by showing relevant product suggestions to the customers. There are several benefits of automated merchandising such as improved productivity & efficiency, eliminating manual errors, better goal optimization, and enhanced marketing strategies.
Natural language processing (NLP) technology segment is expected to grow at a CAGR of 35% during the forecast period, led by the growing adoption of various software & tools by retailers to understand purchasing habits, behavior, and personality of the consumers.
Retailers widely use Natural Language Processing (NLP) software to automatically translate the native language of the customer. This technology is generally used to understand the culture from where the customer belongs so that retailers can offer more customized and personalized services & solutions. NLP performs various tasks such as speech recognition, part of speech tagging, sentiment analysis, and natural language generation.
The U.S. artificial intelligence (AI) in retail market is poised to generate a revenue of more than USD 10 billion by 2027, impelled by growing investments in AI technology and increasing adoption of AI technology by various SMEs.
The prominent industry participants across the country are actively focusing on developing AI-enabled digital platforms for different end-user industries. For instance, in April 2020, according to a report published by the National Venture Capital Association, 285 AI-based companies in the U.S. raised USD 6.9 billion in the first quarter of 2020. Growing investments in AI technology are providing significant growth opportunities to the market.
Some of the leading players operating in the market are Amazon Web Services, BloomReach Inc., Google LLC, IBM Corporation, Intel Corporation, Lexalytics Inc., Microsoft Corporation, Nvidia Corporation, Oracle Corporation, RetailNext Inc. Salesforce.com, Inc. and SAP SE.
Companies are focusing on expanding their product capabilities to offer advanced & integrated AI-based solutions to the customers. For instance, in June 2020, Jesta I.S. Inc. expanded its state-of-the-art vision AI-based CRM product that offers omnichannel retailers a deep visual insight on customer engagement. The vision analytics solution provides agile & actionable insights on customers across all channels.