As consumers prepare for the most wonderful — and often, most stressful — time of the year, many are turning to artificial intelligence technology to weather the holiday crunch. Early projections suggest more than $1 trillion in retail transactions will take place this holiday shopping season, with much of it happening online and likely guided by AI chatbots.
To better understand how AI technology could shift consumer behavior and affect retailers of all sizes — and get some tips on how to make chatbots and algorithms your holiday helpers this year — the News Blog tapped the expertise of YanLiu Huang, PhD, a professor of marketing and head of the Marketing Department in LeBow College of Business, whose research focuses on the integration of new technology in marketing.
How has the use of AI by consumers changed in the past year?
Over the past year, AI has moved from being mostly a behind-the-scenes tool, such as the recommendation engines on Amazon or Netflix, to becoming a mainstream assistant in everyday life. Many people now use generative AI to write emails, draft social media posts, search for information including image-based searches and brainstorm ideas for holidays and gift giving. AI tools also help with common shopping tasks, such as creating lists, comparing products, summarizing reviews, finding deals and suggesting items based on a shopper’s budget or preferences. As a result, many consumers say they feel more confident and less anxious when making purchase decisions.
At the same time, consumer attitudes toward AI are still mixed. While acceptance of generative AI is growing, trust in the information it provides varies. Some people respond positively to AI, especially when it looks or sounds more human, and are more willing to follow its recommendations. Others remain cautious, questioning the accuracy of AI-generated information and raising concerns about transparency and how retailers use AI in the shopping process.
What changes have companies made to adjust for this shift in consumer behavior?
Companies have made a number of adjustments to keep up with the growing use of AI and the way consumers now shop. On the customer-facing side, retailers are using AI to make shopping smoother and more personalized. Many now offer advanced chatbots that can answer questions, handle returns and provide product advice around the clock. AI also helps tailor recommendations, email offers and discounts, based on what each shopper browses or buys. Search tools are becoming more intuitive as well, allowing people to find products through images, visual cues or voice commands. One example of how quickly these tools are evolving is Walmart’s partnership with OpenAI, which lets customers browse and shop directly within the ChatGPT interface.
Behind the scenes, companies are using AI to improve speed and efficiency. AI systems help manage pricing, forecast demand and plan inventory, so retailers can respond quickly to holiday rushes, supply shifts or competitor moves. Brands also use generative AI to create ads, product descriptions and other digital content, lowering costs while improving the speed and targeting of their marketing.
At the same time, retailers are thinking more carefully about how much AI support customers actually want and how visible that support should be. To maintain trust, many companies keep human oversight for AI-generated content and set clear boundaries for what AI systems can produce.
Academic research offers guidance here as well: Consumers tend to view AI recommenders as more competent for practical, function-focused products but prefer human input for items tied to enjoyment or personal taste. Research also shows that people respond better to AI when an offer turns out worse than expected, but react more positively to a human representative when an offer exceeds expectations.
How might expanded AI use shift holiday shopping trends this year?
With the rapidly expanding use of AI, this holiday season could be considered the first true “AI holiday.” Consumers, especially younger generations, such as Gen Z and millennials, are likely to rely more heavily on AI for their holiday shopping. They may use AI to get gift ideas, find deals, check inventory, compare products and even overcome choice overload by simplifying decisions.
Many shoppers will also turn to AI chat assistants while browsing online. AI can help them discover niche or highly personalized presents, making their purchases more informed, faster and more efficient. Some consumers may even use AI to generate gifts themselves, such as custom artwork or poetry to pair with a physical gift.
Retailers, in turn, will use AI to predict shopping trends and demand, develop personalized deals, set optimal prices that remain attractive to customers and time promotions more precisely. Many will also rely on AI-powered tools for customer service.
How might small businesses be affected?
Small businesses face challenges as AI becomes more widely used. Large retailers have more resources to build powerful AI systems, which can make it harder for smaller shops to keep up with personalized recommendations, fast customer service and efficient operations. Many small business owners also struggle with limited time, money, or technical expertise to choose and set up the right AI tools. On top of that, consumers now expect AI to help them shop, which raises the bar for even the smallest retailers. AI-driven purchases can also come with higher return rates, which can be tough for small businesses that operate with tight margins. For small businesses that rely heavily on holiday sales, the pressure to keep up in this fast-changing environment is especially high.
That said, AI also creates meaningful advantages for small businesses when used wisely. Affordable AI tools can help them offer personalized products and experiences that big companies often can’t match, such as customized product suggestions, curated collections or even personalized notes based on past purchases.
AI can also automate time-consuming tasks, such as email marketing, social media posts, inventory planning and customer service, giving owners more time to focus on growing the business. Generative AI allows small retailers to produce professional-quality marketing materials, product descriptions and social content. And because AI can identify exactly who their ideal customers are, small businesses can make better use of their marketing dollars by targeting the right people.
With the right tools, AI can help small retailers compete more effectively, work more efficiently and offer satisfying shopping experiences that compare well with much larger competitors.
What are some good AI tools or applications that you’ve seen, or used yourself, to help consumers navigate the stresses of the holiday shopping season?
Some of the most helpful AI tools I’ve used or seen for navigating holiday shopping stress are chat-based assistants like ChatGPT, Google Gemini and Microsoft Bing Chat. These tools can brainstorm gift ideas, compare products, find alternatives within a budget and even draft messages or wish-list emails. Visual discovery tools, such as Pinterest, also use AI to help shoppers explore styles, gifts and inspiration boards quickly and easily.
AI tools that save money and simplify deal-hunting are especially useful during the holidays. Browser extensions, like Honey, automatically search for coupon codes and track price drops, while Google Shopping and CamelCamelCamel help compare prices across retailers or monitor price history on Amazon. For planning and organizing, voice assistants, like Google Assistant and Alexa, can set reminders for sales, build shopping lists, and manage tasks. Tools such as Microsoft Copilot can also help consumers organize gift lists, track budgets and stay on schedule.
For personalized gifts, platforms like Canva have AI features that make it easy to design custom cards, calendars, or photo gifts and generative-image tools, like DALL·E, can create unique artwork to accompany presents. Together, these common AI tools help shoppers reduce stress, save time and make more thoughtful and efficient holiday decisions.
Reporters interested in speaking with Huang should contact Britt Faulstick, executive director of News & Media Relations, bef29@drexel.edu or 215.895.2617.
