AI will bring a trillion-dollar increase to the retail industry! Amazon and Walmart will benefit the most!

According to the latest Retail AI Readiness Index released by the analysis company IHL Group, artificial intelligence will bring more than $1.5 trillion in additional growth to the wholesale North American retail industry by 2029. Among them, Amazon and Walmart are expected to receive more than $580 billion, accounting for 38.5% of the total.

The report notes that slightly less than half of this growth will be created by generative AI, which is based on machine learning (ML) and can create new content and ideas, including conversations, stories, images, videos and music.

The Retail AI Readiness Index provides a comparison of AI readiness scores and the potential financial impact on each company in terms of sales growth, gross margin improvement, and selling/general administrative cost improvements.

The study includes rankings of the top seven companies in the following market segments: fast-moving consumer packaged goods (grocery, mass merchandisers, warehouse clubs), apparel/footwear, hard goods (home improvement, electronics, pets, sporting goods, furniture), health and beauty (drugstore and cosmetics), restaurant chains (fast food and table service) and pure-play e-commerce companies (companies that sell entirely online or have very few physical stores compared to total sales), as well as a total of 212 public companies.

Next-generation artificial intelligence will bring an additional $9 trillion to North American retail industry

While generative AI currently accounts for only 9% of the retail industry’s overall financial impact, by 2029, generative AI will account for 78% of the overall financial impact, reaching $4.4 trillion.

IHL’s research found that the benefits of generative AI will come primarily from three areas: increased sales (51%), improved gross margins (20%), and reduced selling and administrative (S&A) costs (29%).

According to IHL’s forecast, by 2029, 47% of AI’s cumulative impact will come from traditional AI/ML technologies in closed systems, 48% from generative AI capabilities, and 5% from AI tools launched in the next decade.

Greg Buzek, President of IHL Group, commented: “AI is already transforming the retail market by improving upon traditional AI/ML. Generative AI simply adds rocket fuel to this potential financial impact. This financial impact depends on whether a company’s data and structure are ready to take advantage of advanced technologies, as well as the scale and free cash flow to invest in these technologies. The truly exponential impact occurs when generative AI is added to the hard work companies do to clean, label and manage core data such as customer, inventory and product data for traditional AI/ML applications.”

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