AI Boosts Christmas Sales

The sudden rise of generative AI and the use of ChatGPT have inspired more retailers and holiday shoppers to experiment with technology this holiday season.

Artificial intelligence is expected to influence $194 billion in global online spending during November and December holiday season, according to an estimate by Salesforce
CRM
. The software company, which tracks shopping trends, said that AI influenced $5.1 billion of online sales during Cyber Week (that’s the seven-day period from Tuesday November 21 through November 27). The period includes Thanksgiving and ends Cyber Monday.

“We are still in the early days” says Rob Garf, vice president and general manager of retail and consumer goods for Salesforce. “Retailers are testing and learning, and it is only a leading indicator of what is to come.”

There are already many examples of how Walmart
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, Target
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, Nordstrom, and other stores are using AI. At the same time, AI has also inspired gift generators and become a feature of some consumer electronics. But for now, the technology’s influences come in ways consumers won’t see as truly new. For the most part, most of the AI applications currently in use are helping retailers more effectively deliver the shopping experience customers already expect. Most of the AI influences come through features shoppers already know.

AI is helping retailers behind the scenes as a time-saving and efficient tool. For instance, if you were surprised to find a popular toy in stock at a local store, you may have AI to thank. Making sure the right inventory is on the shelves, crafting more relevant marketing emails, or writing detailed product descriptions for a website are a few ways that AI (and ChatGPT) is making it easier for retailers to service customers and streamline the shopping experience.

Here are some company specific examples:

Target is using AI to forecast demand at different stores and predict out-of-stock items, so that employees replenish a shelf before it is empty and avoid the risk of losing a sale.

Nordstrom is focused on how to use AI to both get orders efficiently and quickly to customers and to better understand just how shoppers define a product when searching for a specific item on the website. It is trying to understand language so that a request for a “romantic flowery dress” leads to the right item.

Walmart, in late August, launched its own internal spin on ChatGPT called My Assistant. Now 50,000 corporate associates can use it, and their actions will help Walmart optimize AI to improve productivity, reduce the number of workers they need for any particular task, and free up employees’ time to take on other tasks.

Amazon

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debuted new timesaving features this past fall for sellers and advertisers that utilize AI. Instead of getting bogged down with crafting product descriptions, third party sellers can put in just a few words and sentences and let generative AI do the heavy work. Advertisers can also lean on the new tool to generate visually appealing images to accompany a product.

Kohl’s introduced this holiday season an AI powered tool called” Storybook Magic” that can create a personalized poem and give customers gift suggestions.

What additional AI applications to expect soon:

A personal shopper: One of the biggest changes will be when a customer will have instant access to a personal assistant who can select the perfect holiday gift for Aunt Minni or put together a stunning outfit for a job interview. That day has not come yet, but there are glimmers of potential.

Simulated clothing try-ons: Instead of heading into stores, shoppers will be able to use a growing number of tech tools to see how clothes may look on their body type and skin tone. Google’s Bard, a competitor to the OpenAI and part Microsoft
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-owned ChatGPT, already introduced a virtual try-on feature this summer. Walmart has a similar tool to see how clothes may look without entering a store. We can expect more such tools to be offered soon.

POSTSCRIPT: There are many ways for retailers to take advantage of AI (as mentioned above), and ideas will continue to evolve as stores look to have more personalized relationships with customers. While fear of errors continues to haunt the users, there is evidence that AI can be a quick, helpful assistant and that will build confidence in its use. We can now talk about positive steps that may lead to dual benefits – greater productivity and better conversations with customers. Both will generate more profitable sales.