This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.
| 4 minutes read

How AI is revolutionizing holiday shopping

Navigating the holiday shopping journey is often a daunting, frustrating task. The quest for the perfect gift leads consumers to compare products and features across retailers and platforms, monitoring prices that constantly fluctuate. There are so many options and factors to consider, yet so little time. 

AI can help alleviate the holiday shopping stress. We recently appeared on NBC’s “The Today Show” to discuss how AI can analyze millions of data points spanning multiple years to unearth trends and predictions. Shoppers can use these pricing pattern insights to not just find the perfect gift, but also get the best deal. Open, free-to-use AI platforms such as Google’s Bard can easily compare product features across retailers—and even find the right product solely from a picture on your phone. Cross-shopping has never been easier, as our Head of AI Angela Zutavern explained to NBC News Senior Consumer Investigative Correspondent Vicky Nguyen:
 


Using AI to find trends through social media

Working with our partner NAX, a leading AI software company, we identified the top-trending products on social media across fashion and toys—likely to be some of the hottest gifts this holiday season.

NAX’s proprietary, AI-powered software pioneers innovative methods of leveraging data, making it easier to engage with customers in ways that actually matter and create impact. Leveraging this platform, we could expedite the discovery of signals and trends related to holiday deals, while also providing actionable insights for consumers to understand the context behind the findings.

Within the fashion category, the trendy items of the season will be:

  • Biker boots and ballet flats
  • Silver and red handbags
  • Oversized blazers, white button downs, and black loafers that meet the “power dressing” trend
  • Cashmere and wool knitwear
  • Statement outerwear, such as leather trench coats, shearling jackets, and other types of chic, tailored coats

The most popular toys by age segment this holiday season will be:

  • 1-3 years old: creative toys that foster imagination (such as a magnetic drawing board), pop culture toys (such as a Bluey and Friends figurine set), and toys that help develop motor skills (such as National Geographic stepping stones for kids)
  • 4-8 years old: Legos, Barbies, and Squishmallows
  • 9-13 years old: Tech and video games for boys, and beauty, fashion, and accessories for girls
     

Using AI to recognize pricing, promotion, and assortment shifts

We relied on a variety of data sources to study movement here. Alongside purchasing data and our own data, we utilized a retail intelligence platform called EDITED, which offers robust, real-time competitive market data across pricing, promotions, and assortment. We also rely on EDITED’s third-party data for our client engagements and everyday work.

EDITED’s unique data set goes beyond standard metrics to provide detailed in-stock and out-of-stock rates, assortment overviews across different retailers and sectors within retail, and innovative pricing breakdowns. The company’s retailer list includes Target, Walmart, Macy’s, Kohl’s, Nordstrom, Bloomingdale’s, Neiman Marcus, and more, ensuring the thoroughness of our research and analysis.  
 

Our AI-powered holiday pricing trends

With the help of NAX and data from EDITED, we dove into our holiday shopping research this year with extra muscle. We looked through two million social media posts over the last month across TikTok, Instagram, YouTube, Facebook and X, as well as pricing histories for the top 10 products in each category on Amazon. We also analyzed product and price data across jewelry, shoes, cooking, and more from a comprehensive set of retailers.

In general, retailers over the past two years have been consistent in how they discount across categories, and even how they discount specific products. Our AI-backed research indicates that the big savings we saw across entire categories for Black Friday will continue during the entire holiday season. Not surprisingly, we found the holiday shopping season has the best deals of the year; Amazon features the most discounts across all product categories in November and December. With that said, a few product categories have their best discounts in other months—such as tools and home improvement, with discounts up to 85% in April and May, and health and personal care, with 50% discounts in May. Kitchen and dining sees consistent discounts throughout the year.

As a rule of thumb, high-end, luxury retailers do not tend to discount heavily or for very long during the holiday season, so consumers should take advantage of any good discounts they find. For mid-tier and bargain retailers, it pays to pay attention to when discounts start. If a category is not discounted before Black Friday, it likely will be when the shopping holiday rolls around. But categories already at a discount are not likely to drop much further.    


What retailers need to know

Despite a strong Black Friday, holiday sales are still expected to be underwhelming as economic headwinds continue to swirl. As we discuss in our annual AlixPartners Holiday Outlook Survey, consumers will face difficult budgeting decisions when it comes to holiday gifting and spend. They will be extra selective around how and what they buy, so a strong focus on promotional activity can entice shoppers who feel they are getting a worthy deal.

Given the inflationary environment, retailers will likely see a decline in units sold as spending declines—so any leg up on the competition is crucial. Consumers can use websites like camelcamelcamel to access Amazon marketplace data as a proxy for pricing trends. Retailers must answer with predictive analytics of their own to ensure their offerings are “value-right,” providing strong value-for-money across categories, especially those where shoppers are targeting cutbacks. 

Our AI capabilities can help. The better retailers get ahead of the curve on pricing strategy, the more likely they’ll find gifts under the tree rather than coal in their stockings.

Tags

article, artificial intelligence, digital, retail, retailind, dig ai, dig, english us