The Complete Guide to Using AI in the Retail Industry in South Korea in 2025

South Korea's retail leaders are navigating a rare convergence: a pro‑innovation, risk‑aware law plus a surging market - the AI Framework Act (promulgated Jan 21, 2025; effective Jan 22, 2026) introduces mandatory transparency and generative‑AI labeling for services and sets obligations for

high‑impact

systems while funding AI data centers to spur adoption (South Korea AI Framework Act overview (FPF)); at the same time, AI in Korean retail was about USD 189.19M in 2024 and is forecast to grow at a 28.5% CAGR toward roughly USD 1.09B by 2031, driven by personalization, demand forecasting and inventory optimization (South Korea AI in retail market forecast 2024–2031 (BlueWeave Consulting)).

That mix means practical tradeoffs for stores: faster, AI‑driven personalization and fewer stockouts - but new documentation, labeling, domestic‑representation and modest penalties (up to KRW 30M) are part of the price of doing business; frontline teams can gain the day‑one skills to respond via courses like Nucamp's Nucamp AI Essentials for Work bootcamp - 15-week workplace AI course, which teaches promptcraft and workplace AI use in 15 weeks.

Metric	Value
AI Framework Act effective	22 Jan 2026
2024 AI in retail market (KR)	USD 189.19M
CAGR (2025–2031)	28.50%
2031 market forecast	USD 1,094.54M
Max administrative fine	KRW 30,000,000 (~USD 20–21k)

South Korea's national AI strategy pairs aggressive industrial support with clear, risk‑based guardrails so retailers can scale with confidence: the AI Basic/Framework Act was promulgated on 21 Jan 2025 and gives businesses a one‑year transition before most obligations take effect on 22 Jan 2026, while directing the Ministry of Science and ICT (MSIT) and a President‑chaired National AI Committee to publish a Basic AI Plan and stand up institutions like an AI Policy Center and an AI Safety Research Institute to oversee implementation (Araki Law analysis of South Korea AI Basic/Framework Act).

The law pairs transparency rules (mandatory labeling for generative outputs and upfront user notices), extraterritorial reach and domestic‑representative requirements with strong public investments - think a KRW 4 trillion National AI Computing Center and plans to expand GPU capacity by 15× to make training and inference affordable for SMEs and platforms alike - so retailers get infrastructure and predictable rules at once (Future of Privacy Forum overview of South Korea AI Framework Act, Nemko regulatory briefing on South Korea AI investment and targets).

The result: incentives, clearer compliance steps (risk management for powerful models, high‑impact reviews, and generative‑AI labeling) and modest enforcement (administrative fines up to KRW 30M) that together make Korea's approach one of measured promotion plus accountability - an operational playbook retailers can plan around rather than fear.

Metric	Value
Promulgated	21 Jan 2025
Effective (major provisions)	22 Jan 2026
Max administrative fine	KRW 30,000,000
National AI Computing Center budget	KRW 4 trillion
AI talent target by 2030	200,000 experts

“The purpose of this Act is to protect human rights and dignity, and to contribute to enhance the quality of life, while strengthening national competitiveness…”

South Korea's AI-in-retail market is at an inflection point in 2025: estimates put 2024 revenue at roughly USD 187–189 million, and analysts expect it to balloon to about USD 1 billion within the next six to seven years - a nearly fivefold expansion that will shift AI from pilot projects to mainstream retail ops.

Grand View Research forecasts growth to USD 989.2M by 2030 (CAGR 31.3% from 2025–2030), while BlueWeave Consulting models a closely aligned path to USD 1,094.54M by 2031 (CAGR 28.5% from 2025–2031), reflecting slightly different horizons and assumptions; see Grand View Research market outlook for AI in retail and BlueWeave Consulting forecast for AI in retail for the full breakdown.

Growth is being driven by ML- and NLP-powered personalization, demand forecasting and inventory optimization, and participation from homegrown heavyweights like Samsung, Naver and SK Telecom, but adoption hurdles remain - high implementation costs, data/privacy concerns and a talent gap - so retailers that pair bold pilots with clear governance will capture the upside while staying compliant.

Metric	Value
2024 market size (Grand View)	USD 186.9M
2024 market size (BlueWeave)	USD 189.19M
Forecast (Grand View)	USD 989.2M by 2030 (CAGR 31.3% 2025–2030)
Forecast (BlueWeave)	USD 1,094.54M by 2031 (CAGR 28.5% 2025–2031)

In South Korea retailers are turning AI from experiments into daily tools: ML and NLP power hyper‑personalization on platforms and apps, recommendation engines and generative content that lift engagement; predictive analytics and LLM‑enhanced demand forecasting pull in social media, weather and market signals to cut stockouts and rebalance inventory across stores and fulfillment centers; computer‑vision and shelf‑scanning robots monitor shelf levels and loss prevention in physical stores while cashierless checkout and heat‑map analytics speed the in‑store journey; chatbots and conversational AI scale customer service across channels; and AR/VR virtual try‑ons plus unified omnichannel systems (BOPIS, real‑time inventory) stitch online and offline experiences into a single customer view.

These use cases - detailed in BlueWeave Consulting market report and in practitioners' writeups - are why Korea's retail AI market is racing ahead: practical wins (fewer markdowns, faster replenishment) coexist with implementation hurdles like costs and data governance, so smart pilots that combine human oversight and phased rollouts tend to win.

For concrete examples of forecasting and pricing in action, see Retail TouchPoints demand forecasting coverage and resources on dynamic pricing for Coupang & Naver from Nucamp AI Essentials for Work syllabus.

Use case	Typical tech / outcome
Personalization & recommendations	ML / NLP - higher engagement & conversions
Demand forecasting & inventory	Predictive analytics, LLMs - fewer stockouts, lower carrying costs
In‑store automation	Computer vision, shelf‑scanning robots, cashierless checkout
Customer service	Chatbots & conversational AI - 24/7 support
AR/VR experiences	Virtual try‑ons - reduced returns, richer discovery
Dynamic pricing & promotions	Real‑time optimization - improved margin & promo ROI

“Demand is typically the most important piece of input that goes into the operations of a company,”

Retailers in South Korea should treat the AI Framework Act as both an opportunity and a new operating rulebook: the law (promulgated Jan 21, 2025; most provisions take effect Jan 22, 2026) demands upfront transparency - including mandatory labeling when outputs are generated by generative AI - and a risk‑based regime that singles out “high‑impact” systems for extra steps like impact assessments, documented risk‑management plans and human oversight, while giving MSIT powers to investigate (including on‑site inspections) and issue corrective orders (FPF overview: South Korea AI Framework Act).

The law reaches beyond borders (extraterritorial scope), requires foreign providers meeting prescribed thresholds to appoint a domestic representative, and levies administrative fines up to KRW 30 million (≈ USD 21k) for non‑compliance - modest compared with some other regimes but material for smaller operators, so vendor vetting, documentation and clear user notices are essential preparation steps (OneTrust guide: preparing for South Korea AI law compliance).

Security and coordination gaps remain - particularly around defence, cyber risk and dual oversight - so retailers should monitor MSIT and PIPC guidance, map where AI touches customer data and operations, and treat explainability, domestic representation and labeled generative outputs as compliance priorities rather than optional extras (CSIS analysis: South Korea AI security and governance challenges).

Requirement	Key detail
Effective date	22 Jan 2026 (most provisions)
Generative AI	Mandatory labeling / advance user notice
High‑impact AI	Impact assessment, risk plan, human oversight, documentation
Extraterritorial reach	Applies to activities affecting Korean users/market
Domestic representative	Required for certain foreign providers (thresholds by decree)
Enforcement	MSIT investigations, corrective orders, fines up to KRW 30,000,000

Retailers using generative AI in South Korea must treat data practices as a frontline operational risk: the Personal Information Protection Commission's guideline clarifies when publicly available personal information can be used for AI training (notably permitting legitimate interest in narrow cases) and spells out layered safeguards - source verification, pseudonymization or “machine unlearning,” privacy impact assessments, and clear disclosure of training data sources in privacy policies - to tip the balance in favour of lawful processing; see the PIPC guidance for developers and the practical checklist from legal advisers at PIPC guideline on publicly available personal information for AI training and commentary from firms like Kim & Chang legal commentary on AI data practices.

Key operational controls include encryption, access logs, and retention limits, careful cross‑border transfer notices or consent, and readiness for the 72‑hour breach notification trigger and related enforcement risks - measures that keep personalization projects live while protecting customers and compliance posture.

Data / privacy consideration	What retailers should do
Legal basis for training data	Legitimate interest possible for publicly available info with balancing and necessity
Transparency	Disclose collection sources, methods and safeguards in privacy policies
Technical safeguards	Source vetting, encryption, access control, machine unlearning
Breach & reporting	Notify affected users / regulator (72 hours threshold for major leaks)
Cross‑border transfers	Consent/notice and recipient protection / ISMS‑P or equivalent
Governance	Privacy impact assessments, appointed CPO and dedicated review task force

“legitimate interest” can serve as a legal basis for processing publicly available information

High‑impact AI in South Korea reaches straight into staffing and livelihoods: the Framework Act expressly categorizes “judgments or evaluations that have a significant impact on rights and obligations - such as employment” as high‑impact, so any retailer that uses AI for hiring, automated screening, performance scoring, scheduling or benefits decisions must treat those systems like regulated services and build risk management, explainability and human‑oversight controls into deployments (see the Act's high‑impact list in a practical briefing Chambers blueprint for AI governance under Korea's AI Framework Act).

Obligations include pre‑deployment impact checks, documented risk plans and user notices, plus potential MSIT investigations and administrative fines (up to KRW 30M) for non‑compliance - a compliance bar that also applies extraterritorially and can require a domestic representative for foreign vendors (Future of Privacy Forum overview of South Korea's AI Framework Act).

For retailers this is both a governance and people strategy issue: automation can displace front‑line roles, but practical upskilling pathways exist - think supervisor and exception‑handling roles that pair human judgment with automated systems - and planning those transitions is a regulatory as well as operational imperative (Nucamp Job Hunt Bootcamp: retail jobs most at risk from AI and how to adapt).

“The purpose of this Act is to protect human rights and dignity, and to contribute to enhance the quality of life, while strengthening national competitiveness…”

Retailers operating in Korea should build an audit‑ready AI program that threads governance, documentation and technical controls together so an MSIT on‑site inspection or a PIPC review doesn't turn into a scramble: designate clear accountability (Nemko and PIPC guidance recommend a Chief Privacy Officer and cross‑functional teams), map every model and dataset, and treat every high‑impact or generative use case as a mini‑regulatory project that requires pre‑deployment impact assessments, human‑oversight plans and preserved safety documentation (Nemko guide to implementing generative AI privacy requirements in South Korea).

Practical controls include source verification, pseudonymization or machine‑unlearning for training sets, encryption and granular access logs, input/output filters and continuous monitoring (Nemko and Baker McKenzie both stress multi‑layered safeguards and lifecycle records), plus vendor contracts that enforce transparency and domestic‑representative duties where applicable.

OneTrust's readiness checklist captures the process: discover and classify AI assets, run documented risk reviews, label generative outputs and keep an evidence trail of testing, mitigation and CPO sign‑offs to meet the AI Basic Act's transparency and risk‑management demands (OneTrust guide to preparing for South Korea's AI Basic Act compliance).

The payoff: faster pilots with fewer surprises - and a paper trail robust enough to satisfy regulators and reassure customers.

Area	Core actions
Governance	CPO, cross‑functional AI committee, domestic representative (if required)
Documentation	Impact assessments, pre‑deployment tests, legal‑basis records, retained safety logs
Technical controls	Pseudonymization, encryption, access controls, input/output filters, monitoring

Vendor management in South Korea must be more than procurement - it's a compliance and IP strategy: retailers should vet partners with a formal AI vendor questionnaire (ask about training data rights, model explainability, bias mitigation, and security), insist on transparent data‑use disclosures and audit rights, and contractually lock in IP and exit terms so proprietary formats or lock‑in tactics don't strand data or models; guides like OneTrust's readiness checklist and Squirro's vendor evaluation templates show how to map risk and operational controls, while vendor question banks such as Fairnow.ai's questionnaire supply the practical prompts to probe fairness, scalability and regulatory posture.

Contracts need clear allocations of liability, indemnities and caps that reflect South Korea's AI Basic Act enforcement (administrative fines up to KRW 30M are possible), plus domestic‑representative and local law compliance clauses for foreign providers.

Practical red flags from vendor due diligence include vague data provenance, missing DPAs or security certifications, and resistance to explainability or on‑site audits - any of which can convert a promising pilot into a compliance headache - so pair contractual safeguards with technical controls, documented testing, and a defined change‑management plan before signing on.

Area	Core action
Due diligence	Use AI vendor questionnaires (data, explainability, compliance)
Contracts & IP	Define data rights, IP ownership, exit/portability and anti‑lock‑in clauses
Liability & audits	Set indemnities, liability caps, audit rights and local law compliance
Operational readiness	Demand security certifications, SLA/support, and scalability guarantees
Regulatory fit	Include domestic representative, labeling and transparency obligations

Practical readiness for South Korea's fast‑moving, mobile‑first shoppers starts with a short, actionable checklist: map every AI touchpoint across ecommerce, apps and stores; run a prioritized risk review for any system that influences rights or money; treat data hygiene as a non‑negotiable first step.

Assess, standardize, validate and maintain records so models don't

choke

on duplicates or stale SKUs; bake in generative‑AI labeling and clear user notices for customer‑facing outputs; lock vendor contracts around data provenance, audit rights and domestic representation; and train frontline teams on promptcraft, exception handling and interpretability so humans remain the safety valve when models err.

Collate evidence of impact assessments, test results and mitigation plans to stay audit‑ready, use automated cleansing and stewardship workflows to keep partner and customer records accurate (see a practical data‑hygiene approach in Stibo Systems' Customer Data Hygiene guidance), and plan pilots that prioritize demand forecasting and dynamic pricing use cases where Korea's rapid AI adoption and mobile commerce growth promise the biggest ROI (background on those consumer trends is summarized in eMarketer's South Korea digital landscape).

Finally, make upskilling part of the rollout - programs like Nucamp AI Essentials for Work bootcamp registration (15 weeks) teach practical prompt writing and workplace AI skills so staff can run and govern systems safely while your pilots scale into production.

Bootcamp	Key details
AI Essentials for Work	15 Weeks - Practical AI skills for any workplace; early bird $3,582 / $3,942 afterwards; paid in 18 monthly payments; syllabus: AI Essentials for Work syllabus, register: AI Essentials for Work registration