What: AI-driven hyper-personalisation is transforming retail through advanced data analytics and machine learning, with the global market projected to grow at 23% annually as retailers leverage technology to enhance customer experiences and operational efficiency.

Why it is important: As consumer expectations evolve and technology becomes more accessible, retailers must embrace AI-driven personalisation to remain competitive, with industry leaders already demonstrating how this transformation can drive substantial revenue growth and operational efficiency.

The retail industry is witnessing a revolutionary transformation through AI-driven hyper-personalisation, with the global market for AI in retail valued at USD 11.61 billion in 2024 and projected to grow at 23% annually through 2030. This evolution is driven by strong consumer demand, with 67% of customers seeking more personalized interactions and real-time recommendations. Retailers are leveraging AI technologies to enable precision targeting, optimise content delivery, and create seamless omnichannel experiences. Key elements include enhanced data collection through loyalty schemes, AI-powered customer data platforms, and sophisticated machine learning algorithms that enable microtargeting and real-time engagement optimisation. The integration of physical and digital dimensions through augmented reality and virtual reality further enhances the customer experience, while agentic AI and generative AI enable more sophisticated customer interactions through chatbots and voice assistants. Success stories from major retailers demonstrate significant improvements in conversion rates and revenue growth, highlighting the transformative potential of these technologies.

IADS Notes: The retail industry's embrace of AI-driven hyper-personalisation has reached a critical inflection point, as evidenced by recent market developments. McKinsey's February 2025 report highlighting that 71% of consumers expect personalised interactions underscores the urgency of this transformation. This consumer demand aligns with BCG's November 2024 analysis revealing potential gains of USD 570 billion for industry leaders through personalisation. The operational impact is equally significant, with AI agents demonstrating 15-30% improvement in customer service efficiency as of January 2025. Walmart's successful implementation of AI-powered personalised homepages in October 2024 serves as a blueprint for large-scale deployment, showing how retailers can effectively combine data analytics, machine learning, and customer experience optimisation. These developments collectively demonstrate how AI-driven personalisation is evolving from a competitive advantage to an essential component of retail strategy.

How AI-driven hyper-personalisation is transforming retail