AI is ready to become Santa’s little helper this holiday: MoneySense

“For years I always felt stressed about things like Christmas because I really wanted it to be great and I really wanted to buy great gifts, but it’s always so much work and time,” says Box, a Vancouver-based gaming manager. “This feels easier and I like it.”

The way Box shops is no exception. Consumers are increasingly turning to AI to recommend products, notify them of sales, help them make purchases and arrange deliveries. It is expected that the holidays will accelerate this behavior.

AI drives smarter holiday spending

A survey of 18,000 consumers and 7,500 business leaders commissioned by Shopify found that 64% will use AI for at least one shopping task this holiday season. In the coveted Generation Z demographic, which spans ages 18 to 24, a whopping 84% will adopt the technology.

While many shoppers have been using AI for purchases since ChatGPT’s release in November 2022 led to widespread adoption of the technology, the financial pressures of the holidays may encourage new users to give it a try. “The consumer is so price sensitive and it’s really a great tool for finding and comparing deals,” says JC Williams Group retail strategist Lisa Hutcheson. “This will be a year in which people realize that.”

Shoppers will also be inclined to use AI because they are “overwhelmed by choice,” says Jenna Jacobson, director of Toronto Metropolitan University’s Retail Leadership Institute. There have never been so many ways to shop and so much choice as there are now, but it takes time and energy that people don’t have on a good day, let alone during the busy holiday season.

“The problem with Black Friday and Cyber ​​Monday is that you’re dealing with a very short window and that’s why retailers like this. It creates the pressure of ‘Buy now or the sale is over,’” Jacobson said. AI helps customers “cut through the noise” because they can use it to track prices, be alerted about new product offers and even discover coupons or other promotions, she said.

These habits are reflected in data from consulting firm Accenture, which found that 59% of the 630 Canadians it surveyed in August and September planned to use the technology for product comparisons this holiday season. About 54% said they would rely on AI to help find purchasing locations and 47% would use it for gift ideas and inspiration.

AI guides the gift search, with some gaps

Jacobson says most people who use AI for holiday shopping think of it as a way to research and get gift recommendations, but smarter consumers rely on it to be strategic or save.

Box will be in both camps this Christmas, when he plans to use the technology to wade through Black Friday and Cyber ​​Monday sales to find gifts that have a personal feel. He’s confident the AI ​​will accomplish the task because when it came time to buy a birthday present for his rugby-loving son, ChatGPT didn’t just recommend a ball. It knew the family was Australian and suggested a ball used by the country’s rugby team. Similarly, when shopping for boots, Box recommended shoes that he had not found himself and that ended up being “much more suitable” for the occasions he had in mind.

But AI is not a solution in every retail situation, Caitlin Chua emphasizes. The Toronto-based account manager recently used ChatGPT to generate a list of features and differences between phones she was considering purchasing. When preparing for a trip to Croatia, she also asked the chatbot to find her a place to stay that met her desired specifications, budget and atmosphere. She was ultimately happy with what AI produced in those cases, but had less success when she asked Dupe.com – an AI tool that helps users find cheaper versions of items – to discover a copycat pair of Alo pants with a specific cutout that were consistently sold out.

The website returned “options that were similar, but… since none of these other options had that cutout, I ended up not purchasing anything,” she said. “This is where there are limitations to AI.” The lack of results satisfying Chua could mean that there were no similar products on the market, but it’s also possible that there were and the AI ​​just couldn’t find them.

After all, “AI is still in its infancy” and has glitches, Hutcheson said. It is prone to dredging up outdated and often incorrect information, and experts generally advise people not to view its results as infallible. Yet customers and retailers do not shy away from it. Chua will likely still use AI for price comparisons this holiday, as brands hope the technology will give them an edge.

Retailers are pushing AI, but hurdles remain

Shopify and online marketplace Etsy are so optimistic about its potential, they even partnered with OpenAI in September to let ChatGPT gradually present their sellers’ inventory — without links or redirects — for immediate purchase. Jacobson sees it as building on search engine optimization and social media marketing to meet the customer where they want to shop.

But not everyone is as advanced as Box. Brick-and-mortar retail still rules in Canada, and even those willing to try AI shopping don’t always realize or want to give up more personal data about themselves or their gift recipient to get better results.

“That’s probably going to be the biggest hurdle,” Hutcheson said. “So there may be some education needed, but I don’t think that’s going to happen this holiday season.”

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