AI & ML in Retail H1 2024

We are delighted to share our insights on AI & ML in the Retail sector, aiming to bolster transparency and communication among market participants and financial and strategic investors. Furthermore, the report accentuates M&A and Private Placement (PP) deal activity and highlights the valuation of publicly listed entities in the space.

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Key trends highlighted in the report include:

  • The global AI in retail market is forecasted to reach $94.5BN by 2031, registering a robust CAGR of 37.5% during 2023-2031, driven by the ongoing digital transformation in retail, which is propelling the adoption of AI technologies focused on automating operations and improving customer experience
  • AI & ML in the retail sector across North America and Europe saw 46 M&A deals during Jan’22 to Mar’24
    • Some of the notable transactions since Jan’22 include: Unbxd – Netcore ($100.0MM), The Yes – Pinterest ($87.6MM), Attraqt- Crownpeak ($71.3MM), Oversight – Instacart ($59.0MM), and UNTIENOTS – Eagle Eye Solutions ($38.8MM)
    • Key retailers/marketplaces like eBay (acquired Certilogo and 3 PM Shield), Instacart (acquired Oversight), and Walmart (acquired MemoMi) have resorted to the inorganic route during the period to bolster their AI capabilities
    • Moreover, key AI & ML vendors including Databricks, CommerceIQ, VusionGroup, SymphonyAI, Gather AI, Gupshup, etc. are actively seeking to expand their tech capabilities and range through acquisitions
  • PP funding activity has dropped and then remained relatively stable since Q1’22. The space witnessed 93 PP deals aggregating $5.2BN+ since Jan’22. Investors have shown high interest in retail planning, analytics, conversational AI/commerce, and AI-powered site search/recommendation platforms
  • Nvidia-backed conversational AI firm SoundHound AI commands a substantial revenue multiple premium (22.0x FY24E revenue) on the back of high revenue growth expectations vis à vis its peers

Other key themes covered in the report include:

  • A majority of retailers are looking to ramp up AI infrastructure investments in the next 18 months, with analytics, loss prevention, and personalization being the key focus areas
    • Gen AI is poised as a transformative technology, with the majority of retailers planning to invest in it within the next 18 months
  • Computer vision is revolutionizing traditional retail by meticulously monitoring customer movements and product interactions, providing retailers with invaluable data
  • High inflation and intensifying competition are driving retailers to embrace AI & ML-powered retail planning and analytics tools