How gen AI is joining the holiday shopping season

Retailers are pushing their customer service and supply chain systems to new limits in anticipation of record spending this holiday season. Increasingly, they’re relying on generative AI to help them deliver on rising demand. 

Just a year after the release of ChatGPT, gen AI is generating value in many different industries, including retail. Salesforce predicts gen AI will account for $194 billion in global online spend during this holiday season. A recent Deloitte study found that retailers expect gen AI to play a significant role in several areas, including: 

• Chatbots/customer service:   33%
• Search engine optimization:   24%
• Supply chain management:    14%
• Price setting/matching:          10%

Retailers can leverage tools like ChatGPT and DALL-E “to gain deeper insights into consumer preferences, behaviors, and purchase patterns to tailor ground-breaking shopping experiences,” the Deloitte report notes. They can analyze natural-language conversations managed by chatbots built with the ChatGPT API to better understand customer preferences or problems related to products, transactions, or service.

“Every retail brand has embraced gen AI,” says Nelson Haung, senior director, product marketing at Freshworks. “Every part of the industry needs to figure out how to apply gen AI to their distribution models and their shopping experiences. What you will see this holiday season is the scale-up of personalization for customers.”

Here are three business functions in retail where gen AI will have a notable impact this shopping season.

Customer support and service: Retailers are taking the chatbot experience to new levels by using gen AI to answer customer questions and guide them through the shopping experience in a more conversational and personalized manner than traditional bots. Faster resolution times can save retailers time and costs. In a 2023 Freshworks Benchmark Report, 42.7% of B2C customers voted for Automation and AI as the top feature of support software.  

Gen AI can also help retailers deliver better experiences and scale their contact centers during the holidays without hiring seasonal help. “In addition to smoothing out the shopping experience, gen AI can help reduce some of the costs retailers generally have to pay,” says Haung.

Cross-selling and upselling: Gen AI can look at customers’ past buying behavior and recommend cross-sell or upsell opportunities, Haung says. Gen AI’s ability to process and learn from customer interactions enables retailers to create more targeted “in-the-moment” customizations at a level of speed and scale that surpasses traditional CRM and analytics tools. Gen AI-enabled “conversational commerce” can create new revenue opportunities at different points during the entire buyer journey. 

Supply chain efficiencies:  With the complexity of today’s supply chains, manufacturers who rely on something like a product going viral on social, risk losing out on explosive customer demand. By the time demand for a hot holiday item like a Stanley Tumbler makes its way back to Stanley and more are made, the market has already moved on. “AI can be used to anticipate trends before they happen, helping retailers and brands avoid missed opportunities and disruptions,” predicts Dvavrat Shah, author and founder of Ikigai Labs.

Gen AI has also helped to level the playing field for smaller retailers. Gen AI makes advanced analytics and content creation capabilities much more accessible to companies that don’t have the staff or the budget to invest in traditional, resource-intensive AI initiatives. 

“Smaller brands are now able to tap into technologies that used to be exclusive to large companies,” says Haung. “Gen AI helps retailers provide a more personalized approach across the entire customer lifecycle.”

To learn more about how business leaders can maximize the value of AI and other technology investments, visit The Works.