Report Overview

South Korea Artificial Intelligence (AI) in Retail Market, By Component (Solutions, Services), By Technology (Machine Learning (ML), Natural Language Processing (NLP)); By Application (Customer Service & Support, Inventory Management & Demand Forecasting), Trend Analysis, Competitive Landscape & Forecast, 2019–2031

South Korea Artificial Intelligence (AI) in Retail Market – Industry Trends & Forecast Report, 2031

South Korea Artificial Intelligence (AI) in Retail Market size was estimated at USD 189.19 million in 2024. During the forecast period between 2025 and 2031, South Korea Artificial Intelligence (AI) in Retail Market size is projected to grow at a CAGR of 28.50%, reaching a value of USD 1,094.54 million by 2031. AI in South Korean Retail Market is driven by several factors, including government-backed initiatives that promote AI adoption. AI-driven personalization enhances customer experiences, while supply chain optimization improves efficiency. Automation reduces operational costs, and predictive analytics enables data-driven decision-making. The rise of e-commerce fuels AI integration, and smart inventory management streamlines retail operations. AI-powered customer service enhances engagement, while digital transformation accelerates market growth. Competitive pressures push retailers to adopt AI for innovation and efficiency. Additionally, AI adoption incentives and technological advancements contribute to the sector's rapid expansion. These factors collectively shape the future of AI in South Korea's retail industry.

Artificial Intelligence (AI) in Retail – Overview

Artificial Intelligence (AI) in retail is revolutionizing the industry by enhancing customer experiences, optimizing operations, and driving sales. AI-powered tools enable personalized recommendations, predictive analytics, and automated inventory management, help retailers streamline supply chains and reduce costs. Chatbots and virtual assistants improve customer service, while AI-driven pricing strategies maximize profitability. Computer vision enhances in-store experiences through smart checkout systems and shelf monitoring. AI also aids fraud detection and security measures, ensuring safer transactions. As AI adoption grows, retailers leverage data-driven insights to refine marketing strategies and improve decision-making, making AI an indispensable asset in the evolving retail landscape.

South Korea Artificial Intelligence (AI) in Retail Market 

Growth Drivers

Advancements in AI-driven Personalization

AI-driven personalization is transforming South Korea’s retail sector by enhancing customer engagement and boosting sales. Retailers leverage AI-powered recommendation engines, predictive analytics, and real-time data processing to deliver tailored shopping experiences. Machine learning algorithms analyze consumer behavior, preferences, and purchase history to offer personalized promotions and product suggestions. AI chatbots and virtual assistants improve customer interactions, while dynamic pricing models optimize revenue. With South Korea’s strong digital infrastructure and government-backed AI initiatives, retailers are rapidly adopting AI-driven personalization to gain a competitive edge, improve customer satisfaction, and drive business growth in an increasingly digital retail landscape.

Challenges

High Implementation Costs for AI Solutions

The adoption of AI in South Korea’s retail sector faces significant financial barriers due to high implementation costs. Retailers must invest in advanced AI infrastructure, including hardware, software, and skilled personnel, which can be prohibitively expensive. Small and mid-sized businesses struggle with budget constraints, limiting their ability to integrate AI-driven solutions. Additionally, ongoing maintenance and upgrades add to the financial burden. Despite government incentives, the cost of AI adoption remains a major restraint, slowing widespread implementation. Retailers must carefully assess return on investment before committing to AI technologies, balancing innovation with financial feasibility in a competitive market.

Impact of Escalating Geopolitical Tensions on South Korea Artificial Intelligence (AI) in Retail Market 

Escalating geopolitical tensions are influencing South Korea Artificial Intelligence (AI) in Retail Market by creating uncertainties in supply chains and trade policies. The country’s reliance on semiconductor exports and AI technology partnerships faces challenges due to global competition and shifting alliances. Restrictions on cross-border data sharing and AI regulations may slow innovation and adoption in retail1. Additionally, economic instability and trade disputes could impact investment in AI infrastructure, affecting retail automation and customer analytics. Despite these hurdles, South Korea continues to push for AI sovereignty, balancing its relationships with major economies while fostering domestic AI advancements.

South Korea Artificial Intelligence (AI) in Retail Market 

Segmental Coverage

South Korea Artificial Intelligence (AI) in Retail Market – By Component

By component, South Korea Artificial Intelligence (AI) in Retail Market is divided into Solution and Services segments. The solutions segment emerged as a larger revenue contributor to the growth of South Korea's Artificial Intelligence (AI) in Retail Market by component. The solutions segment’s market dominance is attributed to the increasing adoption of AI-driven tools, such as machine learning (ML) algorithms, customer relationship management systems, and inventory management software, which enhance operational efficiency and personalize customer experiences. These solutions enable retailers to optimize marketing strategies, improve product recommendations, and streamline supply chains through demand forecasting and stock management. The integration of AI solutions across various retail operations positions this segment as the market leader. The services segment, however, is expected to grow at a faster CAGR, driven by the rising demand for AI implementation, customization, and support services.

South Korea Artificial Intelligence (AI) in Retail Market – By Technology

On the basis of technology, South Korea Artificial Intelligence (AI) in Retail Market is bifurcated into Machine Learning (ML) and Natural Language Processing (NLP) segments. The machine learning segment holds the largest share of South Korea AI in Retail Market. Machine learning is extensively utilized in predictive modeling, fraud detection, recommendation systems, and targeted advertising across industries such as finance, healthcare, and logistics. In the retail sector, machine learning enhances customer experiences through personalized recommendations and efficient inventory management. While natural language processing (NLP) is gaining traction, particularly in applications like chatbots and voice assistants, machine learning remains the dominant technology in South Korea's AI-driven retail landscape

South Korea Artificial Intelligence (AI) in Retail Market – By Application

Based on application, South Korea Artificial Intelligence (AI) in Retail Market is split into Customer Service & Support and Inventory Management & Demand Forecasting segments. The customer service & support segment stands out as the largest application in South Korea's AI in Retail Market, due to the widespread adoption of AI-powered customer relationship management (CRM) systems, chatbots, and virtual assistants that enhance personalized shopping experiences and streamline customer interactions. These technologies enable retailers to analyze vast amounts of customer data, facilitating tailored marketing strategies and improving customer satisfaction. The emphasis on delivering personalized services has led to a significant investment in AI-driven customer support solutions, making this segment the most substantial in the market.

Competitive Landscape

Major companies operating in South Korea Artificial Intelligence (AI) in Retail Market include Samsung Electronics, LG Electronics, Naver Corporation, Kakao Corporation, SK Telecom, Hyundai Motors AI Division, IBM Korea, Microsoft Korea, Oracle Korea, Google Korea, and SAP Korea. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Scope of the Report

By Component

• Solution

• Services

By Technology

• Machine Learning

• Natural Language Processing (NLP)

By Application

• Customer Service & Support

• Inventory Management & Demand Forecasting