5 Things Your Customers Are Expecting During the Holidays – and How AI Can Make Them Happen

With elevated non-discretionary costs and high inflation affecting customers’ ability to buy, it is no wonder Bain & Company forecasts there will be a modest 3% nominal growth in US retail sales during the holidays, the lowest since 2018.  

However, a successful holiday season is still within reach. Retailers must take care to show their customers that they understand their product and pricing needs and, more importantly, can consistently deliver on them.  

Acting fast on artificial intelligence (AI) to personalize offerings and improve customer service is a key strategy for combatting a slow shopping season. This blog will provide an overview of the 5 things your customers are expecting this holiday season, and how you can make them happen with AI.

1. The Right Product Solutions

Your customers aren’t just buying items, they’re buying a solution for their holiday needs. Whether that be the fixings for a holiday meal or gifts for under the Christmas tree, your customers are looking to you to make these solutions possible. For a successful holiday shopping season, retailers must be able to reliably deliver the right mix of products across all channels.

Because customers buy solutions, not items, relationships form between products. For example, a customer purchasing a turkey will also purchase stuffing, cranberry sauce, and gravy. We call this the Halo Effect. Understanding and leveraging Halo relationships is key to delivering a mix of products that will fulfil your customers’ product solutions.

Since Halo relationships are numerous, using AI will help retailers identify the products that drive the Halo and appeal to their customers at each holiday. What's more, AI can analyze historical transaction data to forecast demand and optimize inventory levels. This means products will not only be right, but available at the right time.

2. Product Range

During the holiday season, we often see promotional channels full of discounts on holiday themed goods. While it is understandable that retailers want to showcase seasonal products on offer, over-theming promotions means missing out on opportunities to connect with customer segments that observe different holidays or aren’t celebrating at all.

Retailers that target multiple customer segments with a non-overlapping range of Halo driving items will win with increased reach. AI can leverage customer purchase history, browsing behavior, and preferences to help retailers identify the optimal Halo driving items that appeal to each customer group. In turn, retailers can expect to increase consumer interest and generate more (and larger) transactions.

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3. Competitive Pricing

Customers already expect large retailers to offer competitive prices, discounts, and promotions, particularly during major shopping events like Black Friday and Cyber Monday. Factor in inflation and the rising cost of living, and offering low pricing becomes more critical – and even more of a challenge.  

Applying AI will help retailers capture the attention of consumers with low prices on the products they care about without sacrificing already razor-thin margins. AI will identify the products that generate large baskets (i.e., Halo drivers). By deeply discounting these key items, retailers will satisfy price conscious consumers with highly competitive pricing while recouping margin on the items in the basket at regular price.
  

4. Personalization

In a highly competitive market, personalization is a key differentiator that is critical to standing out. Providing your customers with a tailored experience fosters loyalty by showing your customers you value them. What’s more, customers are more likely to make purchases from retailers who understand their preferences and can provide them with relevant recommendations.

Ultimately, AI plays a crucial role in enabling personalization. By analyzing customer data, AI can segment customers based on their purchasing behaviors and preferences. This helps retailers generate highly targeted promotions and marketing campaigns that consistently reach the right audience. 

5. Seamless Omnichannel Shopping Experience

Your customers expect you to provide a seamless and hassle-free shopping experience across all channels. This is especially true during the holiday season when customers are rushed to find what they are looking for. For retailers, this means delivering fast and user-friendly ecommerce sites and easy navigation in brick-and-mortar stores. 

AI systems can analyze in-store and online customer traffic patterns and behaviors. By understanding how customers are moving through a space, retailers can optimize layouts to highlight popular products, improve navigation, and direct traffic to key areas. AI-based space planning also enables the strategic placement of popular products or promotions. This means customers who enter a store or website will always leave with what they were looking for.

In the face of modest growth predictions for US retail sales this holiday season, retailers must turn to AI technologies to weather the storm. Creating a positive customer experience with AI is the leading strategy to combat the challenges posed by today’s complex retail environment. 

Whether it be satisfying customers with a diverse range of products and competitive pricing, or personalization and a seamless omnichannel shopping experience, AI emerges as the essential tool for retailers navigating the challenges of the holiday season.