The 2024 holiday shopping season is expected to be challenging for retailers. Not only is the Thanksgiving-to-Christmas period shorter than usual, but market analysts are also forecasting modest sales growth during this time.
For instance, Salesforce predicts a 2% year-over-year global sales growth for November and December, totaling $1.19 trillion, with U.S. sales reaching $277 billion—up 2% from last year. In contrast, 2023 saw a 3% global sales increase, reaching $1.17 trillion.
One potential bright spot, however, is the growing role of artificial intelligence in optimizing retail performance and enhancing customer satisfaction during the busy holiday season.
“With Thanksgiving falling on November 28, the 2024 holiday shopping season will be shorter than usual, affecting inventory, pricing, and promotional strategies. The last time the season was this short was in 2019, before the pandemic, and past demand patterns are no longer reliable for predicting this year’s trends,” explained Martin Ryan, vice president of retail at EPAM Systems, a Newtown, Pa.-based software engineering and digital product design firm.
“Retailers must adjust their demand forecasting strategies to avoid both stockouts and overstocking,” Ryan told the E-Commerce Times. “AI tools can offer more precise and adaptable predictions by analyzing historical and current data from multiple sources.”
“Additionally, social listening tools can capture real-time consumer preferences, which tend to convert more quickly into purchases during the holiday season when decision-making time is compressed,” he added.
How AI Gift Suggestions Enhance Holiday Shopping
Keri McGhee, CMO of Attentive, a global customer relationship management company, highlighted that holiday shopping has increasingly begun earlier in recent years. “This year is no different,” she told E-Commerce Times.
McGhee referenced Forrester research, which found that nearly 25% of U.S. online adults started their holiday shopping in October or earlier in 2023. “This year, we expect an early start again due to the shorter window between Thanksgiving and Christmas,” she explained.
“Brands leveraging AI tools early can effectively engage these customers for higher conversions, instead of waiting for the traditional Black Friday-Cyber Monday rush,” she added. “AI can bring BFCM promotions and updates directly to customers early, boosting sales throughout the season with exclusive or limited-time offers via SMS or email.”
One way retailers are using AI to engage shoppers is through personalized gift recommendations. For instance, Amazon uses “Rufus,” a generative AI-powered shopping assistant that helps users find deals, select gifts, and answer shopping questions.
“Intelligent virtual assistants can guide shoppers to the perfect gift by analyzing the recipient’s preferences, whether it’s clothing, tech, or hobbies,” said Gopi Polavarapu, CSO of Kore.ai, a generative AI solutions provider in Orlando, Fla.
“This removes the guesswork from gift-giving, saving time and reducing stress, especially during the holidays,” he told E-Commerce Times. “For retailers, this results in happier customers who are more likely to return, as the experience feels more personalized.”
Gifts That Resonate
The average person spends $71 on gifts that aren’t appreciated, noted Tina Wung, global vice president of marketing at Nisum, a technology consulting firm based in Silicon Valley. “Retailers need to help their shoppers bridge this gap,” she said.
“AI, with its vast data on customer behavior, can more accurately predict which products suit specific individuals,” she continued. “This allows large language models to fine-tune gift recommendations. AI-powered ‘gift assistants’ can ask shoppers tailored questions to capture details about the recipient, guiding them to the ideal gift.”
“AI and consumer data are more critical than ever for retailers,” she added. “AI’s ability to deeply understand customers enables highly targeted shopping assistance. Consumers are 91% more likely to shop with brands that offer relevant recommendations, and 80% are more inclined to purchase when offered personalized experiences.”
Boosting Purchase Confidence with AI Personalization
Jorge Argota, a digital marketing and SEO expert from Miami, shared how AI has transformed the gift-buying experience for his customers.
“Personalized recommendations have become a key feature of our online store,” he told E-Commerce Times. “By analyzing individual preferences and shopping behavior, AI suggests gifts that resonate with each customer. Personalization not only makes shopping more enjoyable but also helps customers find meaningful gifts with less stress.”
He also pointed out that technologies like visual search and augmented reality (AR) have added an interactive dimension to gift shopping. “Customers can upload an image to find similar products in our inventory, or use AR to visualize how a product will look in their home or on themselves,” he explained. “These tools not only make shopping more fun but also reduce uncertainty, helping customers feel more confident about their purchases.”
AI can also personalize gifts in deeper ways. “By using natural language processing, AI can analyze conversations or social media activity to gauge the sentimental or emotional value of gifts,” said Mark N. Vena, president and principal analyst at SmartTech Research in Las Vegas. “This level of personalization could make the gift selection process more efficient and meaningful, allowing people to choose thoughtful gifts with minimal effort.”
Challenges in Implementing AI for Retail Gift Shopping
AI now tracks customers’ browsing history, purchase patterns, and even social media activity, which could lead to personalized gift suggestions. “We’re not quite there yet,” said Blake Ellis, CTO of CommerceV3, an e-commerce platform based in Minneola, Fla. “But the potential is huge. AI could revolutionize the gift-giving process, making it smoother and more meaningful.”
However, implementing AI-assisted gift shopping isn’t a guaranteed success for retailers. “AI can significantly boost consideration and conversion rates, but only if it’s implemented correctly,” warned Rob Enderle, president and principal analyst of the Enderle Group, a research firm in Bend, Ore. “Too many companies still don’t know how to implement it effectively.”
He added, “Where AI works, it will push customers toward products they might not have considered and away from items they would have bought. Once it reaches scale, companies that have figured it out will see a massive benefit, while those that haven’t will suffer.”
Kassi Socha, a consumer and culture analyst at Gartner, also cautioned brands about using AI tools that don’t directly improve the gift-giving experience. “Brands rolling out gimmicky AI-powered gift generators or digital holiday card creators that aren’t closely tied to the gift-buying process could face low user engagement,” she told E-Commerce Times.
“Moreover,” she continued, “tools rushed to market for a marketing campaign, rather than integrated into the core shopping experience, are more likely to produce inaccurate results that don’t match the shopper’s needs. This could harm a brand’s reputation.”
AI-Powered Demand Forecasting for Holiday Sales
AI is poised to play a major role in holiday sales by enhancing demand forecasting. Amazon, which has been integrating AI into its operations since 2020, relies on a suite of technologies known as SCOT (Supply Chain Optimization Technologies) to make daily predictions, recommendations, and decisions.
“By deploying innovative predictive and generative techniques, our SCOT team has improved our long-term forecasts by 10%,” shared Amazon spokesperson Maxine Tagay with E-Commerce Times.
Demand forecasting powered by AI is a game-changer, according to Blake Ellis, CTO of CommerceV3. “AI takes accuracy to the next level in predicting which products will fly off the shelves,” he explained. “Machine learning algorithms analyze vast amounts of data—such as past sales, social media trends, and even weather patterns—giving retailers a near-perfect tool for inventory planning. There’s no more guesswork or overstocking. It’s all about placing the right products in the right locations at the right time.”
Dynamic Inventory Management
“As an agency owner, I’ve seen how AI has revolutionized our demand forecasting,” said Jorge Argota. “In the past, we would rely on educated guesses and last year’s sales data to predict which items would be hot sellers. Now, AI algorithms take into account historical sales, market trends, economic indicators, and seasonal patterns, giving us accurate forecasts that help with inventory and resource allocation.”
He also highlighted the real-time data processing power of AI. “Consumer behavior can change instantly during the holidays, driven by promotions or viral trends,” he noted. “With AI, we can adjust our strategies in real-time to keep up with these shifts. We no longer get caught off guard by sudden demand changes, which is crucial for customer satisfaction and operational efficiency.”
Moreover, AI has significantly reduced both overstocking and stockouts. “By predicting demand accurately, we can maintain just the right amount of inventory,” Argota explained. “This helps lower holding costs while ensuring popular items are always available when customers want them. Achieving that balance is much easier with AI.”
He also pointed out that AI helps retailers stay ahead of emerging trends. “By analyzing social media, search queries, and sales data, AI tools help us spot trending items early,” he added. “This insight allows us to stock up on high-demand products, ensuring we’re ready for the holiday rush.”
Balancing AI Innovation with Consumer Trust
As retailers rush to integrate AI, they must proceed with caution, warns Lija Hogan, Principal of Experience Research Strategy at UserTesting, a customer experience research company. “Retailers need to strike a balance between personalizing the shopping experience and avoiding the perception that they know too much about their customers,” she told E-Commerce Times.
“The success of AI integration hinges on a retailer’s ability to prioritize customer trust and transparency,” Hogan explained. “Using AI effectively means constantly evaluating the consumer experience, addressing privacy concerns, and keeping customers informed about how their data is being used while also understanding their views on AI tools.”
She emphasized, “Retail leaders who actively refine their shopping experience based on customer feedback will be best positioned to thrive in today’s fast-evolving market.”
