Spending on artificial intelligence is set to grow 44 percent in 2019—and retail is leading the way.
According to new data released by IDC, the market for AI-based systems is poised to reach $35.8 billion this year, and investments by the retail industry will account for $5.9 billion of that total as companies selling consumer products scramble to deliver on new shopper expectations. By 2022, IDC sees AI investments reaching up to $79.2 billion, representing a combined annual growth rate of 38 percent.
Retailers and others are investing most heavily, IDC said, in AI specialties including chatbots or automated customer service tech, which will draw $4.5 billion in spending this year. Merchants are also budgeting for systems that automate product recommendations and shopping guidance—replicating online the experience consumers expect to encounter in brick-and-mortar stores.
A recent report from Synchrony shows a majority of retailers believes AI will bolster their profits, while some aren’t yet sold on the current generation of AI software even as they move forward with investments.
“Significant worldwide artificial intelligence systems spend can now be seen within every industry as AI initiatives continue to optimize operations, transform the customer experience, and create new products and services,” Marianne Daquila, IDC’s research manager for customer insights and analysis, said. “This is evidenced by use cases, such as intelligent process automation, expert shopping advisors and product recommendations, and pharmaceutical research and discovery exceeding the average five-year compound annual growth of 38%. The continued advancement of AI-related technologies will drive double-digit year-over-year spend into the next decade.”
Systems that enables sales process automation will see $2.7 billion in spending and the same amount is expected to go toward software that automates threat intelligence and prevention, important considerations in a digital, connected world. Businesses operating in the personal and consumer services arena will drive the second strongest CAGR growth of 43.3 percent, trailing only the federal governments, IDC noted.
Artificial intelligence was a hot topic at industry events like NRF’s Big Show and Shoptalk this year, where speakers debated the best use cases for AI in retail, how it can work with RFID and IoT to enhance supply chains, and AI’s role in fueling the future of fashion.
Though companies recognize AI as essential to their future survival, obstacles abound when it comes to deploying these systems and maximizing their value.
“IDC is seeing that spending on both AI software platforms and AI applications are continuing to trend upwards and the types and varieties of use cases are also expanding,” IDC’s research director of cognitive/artificial intelligence systems David Schubmehl said.
“While organizations see continuing challenges with staffing, data, and other issues deploying AI solutions, they are finding that they can help to significantly improve the bottom line of their enterprises by reducing costs, improving revenue, and providing better, faster access to information thereby improving decision making,” he added.