How AI is Reshaping Holiday Retail Shopping

Holiday retail landscape shifts: Retailers are adapting their strategies to cater to Gen Z shoppers and navigate economic challenges as the 2024 holiday season approaches.

AI and social media take center stage: Retailers are increasingly investing in artificial intelligence and social media to optimize operations and reach younger consumers.

• 70% of surveyed retailers are integrating AI to streamline their operations and enhance customer experiences.
• 39% are boosting their social media presence through paid advertising campaigns.
• 35% are leveraging influencer marketing to connect with younger audiences.

Economic concerns and competitive landscape: Inflation remains a top concern for retailers, while smaller businesses seem less worried about competition from e-commerce giants.

• 48% of retailers cite inflation as their primary challenge for the holiday season.
• 53% of smaller businesses do not view competition from large e-commerce platforms like Amazon as a major threat.

Staffing solutions and freelancer hiring: Retailers are turning to freelancers to address staffing shortages and maintain business continuity during the busy holiday period.

• One-third of retailers report staffing shortages ahead of the holiday season.
• Similarly, one-third of retail and e-commerce businesses are hiring freelancers to support their operations.

Gen Z spending trends and preferences: Gen Z consumers are expected to increase their holiday spending, with a focus on discounts and social media-driven shopping experiences.

• 43% of Gen Z respondents plan to spend more this holiday season, compared to 37% of millennials.
• More than 80% of businesses are offering discounts to attract deal-seeking consumers, up from 55% last year.
• 54% of U.S. Gen Z shoppers use TikTok Shop to find gifts, highlighting the platform’s growing influence.

Early shopping and consumer priorities: Consumers are starting their holiday shopping earlier and prioritizing deals, free shipping, and product quality.

• 52% of consumers begin buying presents in October and November.
• 42% of consumers prioritize finding good deals, 32% value free shipping, and 30% focus on product quality.

Retailers’ AI integration and customization efforts: Businesses are leveraging AI to improve efficiency and offer personalized customer experiences throughout the shopping journey.

• 41% of retailers plan to invest in AI tools to expedite work.
• 35% aim to incorporate AI throughout the customer journey using chatbots, personalized marketing, and customer engagement tools.
• Over 54% of Gen Z consumers use AI to assist in their holiday shopping, including finding the best prices and generating gift ideas.

Broader implications for the retail industry: The shift towards AI-driven, social media-centric holiday shopping strategies reflects a larger trend in retail evolution.

As retailers adapt to changing consumer behaviors and technological advancements, the line between traditional and digital shopping experiences continues to blur. This transformation may lead to more personalized, efficient, and engaging holiday shopping experiences for consumers, while also presenting challenges for retailers to keep pace with rapidly evolving technologies and consumer expectations.