Research: Retailers to spend $37.3bn on AI software between 2019 and 2025Research: Retailers to spend $37.3bn on AI software between 2019 and 2025
Research: Retailers to spend $37.3bn on AI software between 2019 and 2025
March 25, 2020
With supply chain and inventory management software responsible for $5.3 billion
by Max Smolaks 24 March 2020
The retail industry is suffering from the decline of physical stores, and is turning to artificial intelligence in order to breathe new life into the shopping experience, suggests latest research from Omdia.
Theanalyst firm predicts that spending on AI software by retailorganizations will reach $9.8 billion per year by 2025, up from just$1.3 billion in 2019.
Omdia has identified a total of 24 use cases for AI software in retail, and analyzed the 11 that are expected to account for 91 percent of spending in the next five years; it predicts that this particular niche of the AI market will be led by supply chain and inventory management software, with a 15 percent market share.
Thiswill be followed by AI-based applications in image recognition andvisual search (13 percent), virtual digital assistants fine-tuned forthe needs of eCommerce (12 percent), video surveillance analytics (12percent), and tools that enable personalized customer journeys (10percent).
“AItechnologies have begun to move from research lab projects to theengines that drive genuine business solutions. These technologies aredisrupting a variety of industries, from healthcare andtelecommunications to financial services and retail, primarily bybringing scale and efficiency to bear in solving business problems,”said Mark Beccue, principal analyst at Omdia.
He added that the scope for AI-driven optimization in the retail industry was especially high: “It is estimated that hundreds of billions of dollars are lost every year through missed opportunities and excess costs due to issues like out-of-stock inventory, abandoned online shopping carts, underutilized trade to spend funds, excessive online returns, and merchandise markdowns due to poor demand forecasting/inventory management.”
Atthe same time, Beccue warned that enterprise-scale adoption ofAI-based tools remains far from straightforward:“There is no singlebarrier to the adoption of AI for practical applications,” he said.“Instead, the barriers come from a variety of different sources andrange from unrealistic expectations about the capabilities of AI, anear-continuous hype cycle, social controversy, demand for accurateinput data, and change management and talent issues.”
You can purchase the full 59-page report as part of an Omdia subscription. The document includes profiles for key industry players, detailed use case information and global market forecasts for retail AI software spending, segmented by region and use case, extended through 2025.