Global spending by retailers on AI services will reach US$12 billion by 2023, according to Juniper Research.
That figure is more than three times the amount expected to be spent this year, of $3.6 billion and represents investment by more than 325,000 retailers expected to adopt the technology during the next four years.
According to Juniper Research’s report, AI in Retail: Segment Analysis, Vendor Positioning & Market Forecasts 2019-2023, AI use by retailers will unlock efficiencies across back office operations. Advanced analytics employed in functions such as demand forecasting and automated marketing will make retailers more agile and improve margins.
Juniper forecasts that retailers will face an AI adoption race, where AI-equipped retailers, which have adopted systems as early movers, will displace slower moving retailers, offering superior service at optimised price points.
Demand forecasting crucial
The use of machine learning in demand forecasting will prove to be a key market for AI vendors, with associated service revenues reaching $3 billion by 2023, up from $760 million in 2019.
Juniper Research says demand forecasting will be essential to enable an effective omnichannel experience and drive higher margins.
“With the rise of collect-in-store and one-off events such as Black Friday, understanding demand and supply chains is more crucial than ever with AI playing the central role,” said research author Nick Maynard.
The research also found that smart checkouts, largely powered by AI technologies such as computer vision, will have a strong future in the convenience area; leading to annual transaction volumes of more than 1.4 billion by 2023, compared with just 42 million this year.
While Amazon is currently highly visible with its Go model, China will be the biggest driver of future growth. This reflects the rapidly growing Chinese market, as well as the backlash Amazon has had recently due to its cashless model.
Juniper Research provides research and analytical services to the global hi-tech communications sector, providing consultancy, analyst reports and industry commentary.