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The global AI market in retail is set to skyrocket, growing from USD 7.14 billion in 2023 to an impressive USD 85.07 billion by 2032. Gartner's 2023 Annual CIO and Technology Leaders Survey reveals that nearly half of the industry leaders already leverage AI technologies in retail.

What's fueling this rapid growth? Is it robotics and automation, voice commerce, blockchain, or a combination of these cutting-edge technologies? The acceleration of digital adoption during the COVID-19 pandemic has pushed many brands to enhance their digital experiences. With the rise of Generative AI, brands are poised to transform even further.

This blog explores how AI is revolutionizing the retail industry, delving into real-world use cases in marketing and customer service. Join us as we uncover the future of digital retail and the innovative technologies driving this transformation.

How is the retail industry using AI?

In the retail sector, AI is driving digital experiences across offline and online channels, with its impact enabling not just the B2C experiences but also employee and partner experiences for retail organizations.

Small —to medium-sized retailers have played an important role in pushing the adoption of AI in the retail sector as they seek to increase their margins through Direct-to-consumer (D2C) channels. The bigger retailers then followed suit and amplified their digital presence to be relevant in a competitive market.

Let's first look at AI applications in the B2C context!

The launch of multiple powerful large language models (LLMs) has driven a sea of change in the industry. Applications like voice recognition systems, customer data-driven personalized recommendations, chatbots, and visual search capabilities have significantly transformed customers' online shopping experience.

Here's how AI applications are helping brands deliver a personalized and streamlined retail experience:


  • AI-powered smart mirrors: Smart mirrors allow customers to try on clothes virtually, offering increased customer satisfaction. They also offer personalized recommendations based on customers' past purchases. Virtual try-ons and style suggestions further drive up customer engagement levels. 

  • Digital maps: Digital maps help customers navigate large stores or malls, quickly locating specific products or sections. Sometimes, these digital maps can be personalized according to the customer's preferences. 

  • In-store navigation assistance: In-store navigation assistance uses AI to guide customers to the products they are looking for, enhancing the efficiency of their shopping trip. This feature is especially helpful for customers with disabilities. 

  • AI-powered customer service kiosks: Unlike human staff, AI-powered kiosks can operate around the clock, offering support whenever customers need it. AI algorithms can tailor responses and recommendations based on customer data, making interactions more relevant and helpful.

The evolution from digital to phygital 

But the future of retail will be marked by phygital experiences – a combination of physical and digital. Brands have to create experiences that flow seamlessly between digital and physical channels. For instance, there is an increasing demand for Buy Online Pickup In-Store (BOPIS), where customers purchase something online but pick it up at the store. It combines the benefits of both online and offline shopping.

AI technology is crucial in blending digital and physical shopping experiences, particularly for trends like BOPIS (BuyOnline, Pick Up In-Store). It predicts customer demand to optimize inventory. This ensures that online availability matches in-store stock, reducing the risk of stockouts or overstocking. AI also streamlines order processing and smart routing, which helps quickly and accurately prepare orders for pickup, thus minimizing wait times and boosting customer satisfaction.

Additionally, AI integrates data from various touchpoints to create a unified customer profile, ensuring consistent communication and a seamless omnichannel experience. By automating repetitive tasks and optimizing staff deployment based on predicted order volumes, These AI-driven capabilities enable retailers to provide a cohesive and satisfying experience across channels and mediums, driving customer expectations and fostering loyalty.

How is AI shaping B2B and B2E experiences in the retail sector?

Creating an efficient customer shopping experience requires collaboration between B2B and B2E domains. AI empowers employees with a 360-degree customer view to create detailed customer profiles and pitch relevant strategic communications to customers. 

But that's not all! AI further elevates the digital retail experience by supporting business partners and employees in merchandising and forecasting demand. These domains work in sync to provide customers with an efficient digital shopping experience.

From integrating and automating real-time consumer data to help employees make informed decisions and create detailed customer profiles called Unified Customer Profiles to pitch relevant, strategic communication throughout the customer journey, AI helps employees give their customers a 360-degree digital shopping experience. 

Employees and partners can use automated inventory management systems, product cataloguing, targeted promotions and discounts, and consumer behaviour analysis to optimize to optimize purchase funnels. The power of AI also allows businesses and retail employees to work together in real time to improve distribution and warehouse processes.

Enabling seamless digital experiences for retailers 

AI-powered order management solution: Imagine a global business catering to a worldwide audience. The retailer must consider the traceability of the orders and ensure accurate resource allocation. Nagarro's AI-powered order management system uses smart algorithms to process orders efficiently and manage a global inventory, saving on associated costs through informed decisions.

The solution integrates with digital experience platforms to curate hyper-personalized journeys for customers. These platforms use components like CMS, CDP, and personalization, enabling real-time decisions and minimizing shipping and operational costs.

AI-generated playbooks:  AI-led playbooks are AI-assisted solution guides for tackling complex B2B and B2C challenges. These playbooks use AI to analyze granular data to push the personalization levels. Leveraging them, retailers can go beyond basic personalization based on past purchases.

Let's take the case of a shoe retailer. AI-led playbooks enable the retailer to go beyond recommending shoes based on past data. They can leverage a comprehensive customer profile to offer product recommendations considering workout details, training data, and foot shape and size.

The playbooks further trigger actions across various channels based on insights, intelligently linking different products, services, and ecosystem components to maximize value and utility.

These playbooks integrate with marketing digital twins and help optimize marketing and advertisement spending. In a retail context, they can enable ultra-personalization using AI. 

Nagarro's digital experiences ecosystem

AI and machine learning will continue revolutionizing retail by providing advanced analytics, personalized shopping experiences, and efficient inventory management. Predictive analytics will help retailers anticipate consumer behavior, optimize pricing strategies, and enhance customer service through AI-powered chatbots and virtual assistants.

However, the key to success would hinge on organisations' innovation and agility in applying AI across the value chain. Given our passion for technology and pursuit of innovation, we can help you build digital experiences that deliver unparalleled customer satisfaction and loyalty.

We have a comprehensive ecosystem for creating and supporting seamless digital experiences comprising a highly skilled and experienced global team, unique accelerators and a consulting-forward approach. We help you build next-gen digital experiences by 

  • Managing the entire lifecycle of E-retail, from product cataloguing, order capturing, and orchestration to order fulfilment and seller onboarding.
  • Cost-effective, easily integrated product information management solutions across different channels.
  • Collecting, managing, governing, and enriching product information and distributing it to marketing, sales, and eCommerce channels.


To know more about our AI-powered solution for digital experience in retail, connect with us at and start your journey to become an industry leader in retail.