By Munil Shah, Chief Technology Officer at Talkdesk. Talkdesk won the ‘Best Use of AI in Customer Service‘ category at The 2024 A.I. Awards, and the ‘Best SaaS Product for Customer Service / CRM‘ category at The 2024 SaaS Awards. They were also finalists in the ‘Best Use of AI in Retail or eCommerce‘ and ‘Best Use of AI in Healthcare‘ categories at The 2024 A.I. Awards. 

The days of making a list and checking it twice are over. Santa’s got a new helper this year – artificial intelligence (AI).

AI is proving to be the competitive edge retailers need and the shopping companion consumers want this holiday season. According to recent research my company commissioned, nearly all shoppers (90%) plan to embrace AI for their holiday shopping, signaling a shift from traditional browsing to AI-powered personalization that promises to make this season’s shopping smarter, smoother and more successful.

The addition of AI to retailers’ customer experience is just the latest in the long evolution of holiday shopping. For older generations, memories of dog-earing pages in the massive (and eagerly awaited) Sears or Montgomery Ward holiday catalogs bring nostalgic feelings of anticipation and excitement. As the years passed, that gave way to the internet and Web shopping. Today, AI represents the next frontier, offering personalized recommendations and seamless shopping experiences that continue transforming how we celebrate and prepare for the holidays.

This technological leap is changing not just how we shop but also how we approach gift-giving. Gone are the days of wandering through crowded stores, hoping for inspiration to strike. Now, AI acts as a personal shopping assistant, helping consumers navigate the vast sea of options with precision and ease. The survey found that 62% of consumers are excited about using AI-powered recommendations to find the perfect presents for their loved ones, demonstrating a growing trust in technology to understand and cater to individual preferences.

Many retailers are heeding the call. 61% of retailers currently implementing AI say they will use predictive analytics to anticipate customer trends. Additionally, 51% are rolling out systems to customize product pages and promotions based on analytics, ensuring every shopper feels like they’re getting the VIP treatment.

AI’s Impact on Holiday CX

The impact of AI on holiday shopping goes beyond just finding the right gifts. It’s transforming the entire retail customer experience:

• Fewer returns, more return on investment. Thanks to AI-guided purchases, 69% of consumers expect to return fewer products. That means less time standing in return lines for consumers and a significant cost reduction for retailers.
• Stress-free shopping. 60% of respondents anticipate reduced anxiety over gift-giving due to AI-powered recommendations. Interestingly, while Gen Z (59%) experiences the most holiday shopping stress, Baby Boomers (66%) and Gen Z (64%) are the most optimistic about AI alleviating their stress.
• Savings that jingle. Three-quarters (74%) of consumers expect to save money through AI-powered deal-finding resources. Baby Boomers are the most enthusiastic bargain hunters, with 81% believing in AI’s ability to find the best deals.
• Personalized experiences. Half (51%) of retailers currently using AI are rolling out systems to personalize product pages and promotions, with just about as many (49%) implementing AI-generated product listings or images.

Not All Retailers See AI as a Gift

Despite the clear benefits, some retailers are taking a “Bah, humbug!” attitude toward AI’s implementation. The survey revealed that 39% of non-AI-adopting retailers are unconcerned about potentially offering a lower-quality shopping experience compared to their AI-embracing competitors, while 41% of the non-AI-adopting retailers are not worried about missing out on sales opportunities or losing market share.

This reluctance, however, could prove costly as the holiday season progresses. AI-adopting retailers are not only deploying chatbots to enhance customer service (58%) and support the shopping experience (59%), they also are expanding their use of technology to boost sales (55%) and foster brand loyalty (47%). As these tech-savvy retailers continue to leverage AI, the gap between adopters and non-adopters could widen, potentially leaving the latter at a competitive disadvantage.

As we look toward the future, it’s clear that AI isn’t just a passing holiday trend—it’s becoming as essential to the shopping experience as the joy of gift-giving. For retailers looking to stay competitive, implementing AI solutions isn’t just about keeping up with the Joneses (or the Clauses?); it’s about creating magical shopping experiences that keep customers coming back long after the holiday decorations have been packed away.

The primary hurdles these retailers say they face in considering AI implementation include a lack of worker experience (57%), data privacy concerns (55%) and discomfort with AI (52%). But it’s possible to embrace AI-powered chatbots, personalized recommendations and predictive analytics in a fast, easy way that doesn’t require technical skills.

Retailers must ensure they are giving their customers the gift they really want this holiday season: a shopping experience that’s as unique as they are. As we head into this AI-enhanced holiday season, one thing is sure: the future of shopping is looking merry and bright.