The First Fully AI-Enabled Holiday Shopping Season Is Here

As the holiday season nears its peak, retailers are leveraging artificial intelligence (AI) like never before to manage inventory, personalize customer experiences, and optimize operations during the final weeks of holiday shopping. This year marks a pivotal shift where consumers benefit directly from these AI-driven innovations, resulting in smoother, more efficient, and tailored shopping experiences. For younger consumers, the appeal is especially strong: according to McKinsey & Company, nearly 70% of Gen-Z and Millennials plan to indulge in holiday purchases, driven by a “treat yourself” mindset. A recent Prosper Insights & Analytics survey also shows that 56.7% of adults plan to shop online this season, a popular preference that jumps to 60.9% for those earning over $50,000.

Handling Holiday Demand with AI Automation

Meeting the demands of the holiday season is no small feat, especially during the final rush before Christmas. AI-driven tools have been essential in helping retailers stay prepared and nimble. This season, businesses doubled their median inventory value over recent weeks, according to 2024 Katana Cloud Inventory data, far exceeding last year’s 33% increase during the same period, reflecting strong demand anticipation. Prosper Insights & Analytics data also highlights that adults are on the hunt for discounts this year with over two thirds (65.8%) noting sales or price discounts as the most important factors in their decision making this holiday season.

Kristjan Vilosius, Co-CEO and founder of Katana, highlights: “For retailers, especially small to mid-sized businesses, connected tools that can be enhanced by AI and enable real-time tracking and predictive forecasting are crucial for navigating the holiday season’s complexities, such as special deals. AI helps retailers prepare in advance, reduces the risk of stockouts and enables smoother, faster order fulfillment.” By automating repetitive tasks, businesses free up time and resources to focus on enhancing customer experiences.

Delivering Hyper-Personalized and Hyper-Localized Shopping Experiences

AI is also instrumental in hyper-personalizing and localizing shopping, helping retailers present consumers with more tailored gift ideas that resonate with each individual. By analyzing browsing behavior, purchase history, and local trends, AI enables retailers to offer more personalized recommendations, giving consumers options that feel unique and relevant.

“As AI enhances personalized shopping, consumers feel more connected and engaged in the experience,” adds Ben Hussey, Co-CEO at Katana. “Beyond convenience, AI fosters a sense of being seen and valued, which is what the modern holiday shopper increasingly desires, and preferences are now more varied and unique than ever.”

Smarter Inventory Management with On-Demand Forecasting

Effective inventory management is critical in the final stretch of the holiday season, and AI allows for a proactive, on-demand approach. This season, retailers have turned to AI to forecast demand with greater precision, allowing them to know exactly when to order materials and restock, minimizing “out of stock” messages.

According to Katana’s 2024 data, operational readiness has risen in tandem with task completion rates in shop floor apps up 10% and stock adjustments increasing by 11%. These improvements show that retailers have not only expanded their inventory, but also refined their workflow. Mehdi Daoudi, CEO of Catchpoint, an Internet Performance Monitoring company, notes, “AI-powered monitoring is especially valuable during these high-stakes weeks. Retailers can anticipate and respond to potential outages and customer service bottlenecks before they impact shoppers. Speed and reliability even with internet and AI-powered platforms are no longer optional; they’re essential.”

Preventing Stockouts and Outages for Seamless Last-Minute Shopping

For many consumers, the last-minute holiday rush is part of the tradition, and AI is proving invaluable for preventing stockouts and outages, ensuring that retailers can reliably deliver even as the countdown to the holidays tightens. Predictive maintenance and data-driven alerts allow retailers to solve issues before they arise, minimizing delays and ensuring quick access to products.

By using AI-powered systems, retailers can offer consumers fast shipping, real-time availability, and access to various product combinations—making the holiday shopping experience more reliable, enjoyable, and more affordable. Prosper Insights & Analytics data found that 89.3% of adults plan to take advantage of free shipping with less than half of adults planning to consider buying online to pick up in store or ship to the store. Again, deals and free perks seem to be a major theme this year.

The Takeaway: AI is Reshaping Holiday Shopping

This season, AI’s role in holiday retail has set a new standard for customer experience. The heightened operational efficiency, increased inventory levels, and seamless shopping experiences reflect an industry-wide shift toward using AI to fulfill, and even exceed, customer expectations. AI is not only transforming logistics and inventory, but also changing the way marketing campaigns connect with customers. Prosper Insights & Analytics data reveals that one in four adults plan to use social media to influence their purchases.

As brands seek to convert audiences, avoiding the pitfalls of low-cost creator marketplaces is crucial for preserving brand integrity at this time. Xavier de Baillenx, CEO and Co-founder of Ramdam, an AI-powered platform that streamlines user-generated content (UGC) production, notes, “Brands need to elevate their UGC strategies with AI tools that match creators among millions, ensuring content resonates with consumers in an authentic way. AI’s ability to pair creators with brand vision allows for deeper engagement and loyalty.”

AI’s impact on holiday retail doesn’t simply address logistical challenges; it adds value to the shopping journey itself, creating more personalized and locally relevant interactions. This season, as AI reshapes how retailers operate, the result is a holiday shopping experience that is faster, more reliable, and far more in tune with the individual shopper’s needs. Now, we wait for the promising results.