Holiday shopping has often felt like a “chore” for Amrita Bhasin, a 24-year-old retail tech CEO. She used to spend over 15 hours annually deciding what to buy, comparing prices, and checking reviews, which drained the joy from gift-giving. This year, she completed all her shopping much faster and even enjoyed it, thanks to her new personal assistant: ChatGPT. Bhasin likens the AI to a helpful store associate providing better recommendations, boosting her likelihood to purchase. She represents many shoppers turning to AI platforms like OpenAI’s ChatGPT, Google’s Gemini, and Perplexity this holiday season for gift ideas and price comparisons. These tools are expected to transform the shopping experience and influence billions in holiday revenue, as traditional search platforms become less effective for discovery. According to Salesforce’s recent report, AI is projected to drive $263 billion in global online holiday sales this year, accounting for 21% of all holiday orders. Surveys by Visa, Zeta Global, and others indicate 40% to 83% of consumers plan to use AI for shopping, while Adobe found AI-driven traffic to U. S. retail sites surged 760% between Nov. 1 and Dec. 1. Although still in early adoption phases, AI shopping is proving advantageous for retailers. Adobe reports shoppers arriving via generative AI platforms are 30% more likely to purchase and 14% more engaged, spending longer on sites with 8% higher revenue per session compared to non-AI referrals. AI also helps consumers find deals and introduces them to lesser-known brands—half of Bhasin’s gifts came from brands she hadn’t previously shopped with. Kimberly Shenk, CEO of Novi—a firm helping brands adapt—explains consumers ask AI nuanced questions about gifts matching specific criteria, making AI a natural discovery method. This AI surge is prompting retailers to adapt strategies. Walmart and Amazon have launched proprietary AI shopping assistants, while Walmart, Target, and Etsy have partnered with OpenAI for seamless product search and purchases within ChatGPT. For example, PacSun is reformatting its teen-focused site to enhance AI visibility. Meanwhile, many brands are reallocating budgets from traditional SEO (search engine optimization) towards AEO (answer engine optimization), hiring consultants to navigate this transition. Shenk notes a major decline in traffic from social media ads and search engines, pushing brands urgently to boost their AI visibility amid uncertain search dynamics. Retailers face the challenge of catering both to AI-driven discovery and traditional shoppers. Despite heavy investments in AI chatbot experiences, some consumers feel AI still falls short compared to manual browsing.

Major retailers’ approaches vary: Walmart is integrating AI via Sparky, a chatbot for product recommendations; Target offers its Gift Finder within ChatGPT; Etsy and Shopify merchants have adopted OpenAI’s Instant Checkout for direct purchases. Conversely, Amazon is blocking external AI bots from accessing its product listings and has issued legal action against Perplexity AI, citing concerns over unauthorized use. Amazon also has its own chatbot, Rufus. Walmart CEO Doug McMillon highlighted agentic AI as a key growth driver, envisioning it helping customers save time and enjoy shopping more. Sparky offers features like party shopping lists and future reorder reminders. Target reports thousands using Gift Finder, with popular searches in sports, beauty, and apparel, noting an increase in descriptive, conversational search queries over keyword-based ones. The rise of AI shopping is overhauling digital marketing strategies. Traditional SEO involved keyword optimization to rank high in search engines like Google. However, AI platforms evaluate queries by context, preferences, and credibility, using data beyond keywords—including reviews and real-time inventory—to rank results. Partner retailers provide direct product feeds for accuracy and features like Instant Checkout within AI chats. ChatGPT ranks sellers based on factors such as availability, price, quality, primary seller status, and checkout options. Brands are reshaping content and e-commerce approaches to align with AI. PacSun improved site readability for AI by adding detailed gift and style guides with product specs and customer feedback. Target enriches descriptions to highlight unique attributes like sustainable fabrics and trends. Michael Wieder of baby goods retailer Lalo focuses on answering practical questions customers might have, such as suitability for small spaces or specific age groups, instead of simple keyword lists. Ethique Beauty revamped its search strategy by addressing customers’ underlying needs like scalp health, incorporating detailed info, certifications, and supply chain transparency into listings. They also produce rich blog content answering common questions, tying back to their products. This investment has driven a 90% increase in AI-driven traffic and boosted sales, reflecting a more educated customer base ready to shop rather than research. Despite AI’s benefits, some tools still underperform. Target’s Gift Finder, for instance, sometimes repeats broad gift guides instead of delivering precise product recommendations, though Target continues refining the algorithm. Some shoppers prefer the traditional experience; Diana Tan, a Seattle startup founder, shared frustration with ChatGPT’s capsule wardrobe suggestions, which repeatedly offered uninspired, generic basics, making her abandon the AI approach in favor of browsing stores herself, which she finds more enjoyable. In summary, AI-powered shopping assistants are revolutionizing holiday shopping by saving time and increasing engagement. Retailers are adjusting their digital strategies and partnerships to capture this growing market, yet the technology remains imperfect for some users who still enjoy traditional browsing. As AI shopping platforms evolve, they promise to significantly influence consumer habits and retail revenues in the coming years.