The holiday season has always been a fiercely competitive period for retailers aiming to capture consumer attention across cities like New York, London, and beyond. This year, however, the battle for shoppers’ eyes is expanding beyond humans, as companies increasingly target artificial intelligence to reach potential buyers. Online sales during festive periods are expected to surpass hundreds of billions of dollars globally, with traditional website visits and search engine advertising still dominant. Yet generative AI tools, including OpenAI’s ChatGPT and Google’s Gemini, are now playing a growing role in how consumers discover products and make purchasing decisions.
AI chatbots can generate product descriptions, compare prices, and even facilitate purchases through large-language models, prompting retailers worldwide to optimize their presence for AI-driven recommendations. From Dubai to Singapore and London, brands are adjusting their marketing strategies to ensure their offerings appear in AI-generated shopping results, targeting tech-savvy audiences. Brian Stempeck, CEO of Evertune.ai, which assists retailers in optimizing content for AI, noted that brands are dramatically increasing content production. Companies that previously published only a few blog posts or articles per month are now producing hundreds of pieces to enhance AI visibility.
Some retailers are creating AI-specific websites designed solely for scraping by automated tools, which feed product information to chatbots. These platforms guide consumers toward everything from electronics to holiday apparel, increasing the likelihood of AI-driven sales. Early analytics suggest AI’s influence is expanding rapidly. In November, AI-driven traffic to retail websites surged 830 percent year-over-year, with visitors showing 30 percent higher purchase intent than conventional search users.
Despite this growth, AI referrals still account for a small portion of overall traffic. ChatGPT links to major e-commerce platforms, including Amazon, Walmart, and eBay, contributed to less than 1 percent of visits in October. However, the high purchase intent of AI-driven shoppers has motivated retailers to invest heavily in AI discoverability. Brands ranging from Brooklinen in the United States to tech firms across Europe and Asia are leveraging influencer campaigns and product award submissions to increase visibility. Voice and AI assistants, such as Amazon’s Alexa and Google Shopping AI, are also shaping the way consumers shop, recommending products based on user preferences and prior interactions. Amazon CEO Andy Jassy highlighted that users engaging with the company’s Rufus AI agent are 60 percent more likely to complete purchases.
Retailers are also exploring direct chatbot shopping applications, with global giants such as Walmart and Target introducing tools that allow consumers to buy products through AI assistants, signaling that artificial intelligence is becoming a crucial channel in holiday commerce.
At the same time, retailers face mounting challenges due to supply chain disruptions and fluctuating tariffs. In the United States, President Donald Trump’s changes to tariffs on Chinese goods have forced smaller businesses to either absorb steep levies or source from more expensive suppliers elsewhere. Matt Hassett, founder of New York-based sleep wellness brand Loftie, said the uncertainty has left his inventory at only about 10 percent of what is needed, impacting products like sunrise lamps and phone-free alarm clocks.
The holiday season, particularly November and December, typically generates around a third of annual profits for US retailers, intensifying the pressure on smaller businesses. Brooklyn-based Lo & Sons, an online travel bag seller, had to scout multiple factories across India and Cambodia before returning to their traditional Chinese supplier, citing both cost and supply reliability. CEO Derek Lo explained that uncertainty over tariffs prevented timely purchase orders, leaving the company with lower-than-ideal inventory levels. Large retailers such as Walmart and Costco have greater capacity to absorb these challenges, while smaller companies are more exposed.
According to James Gellert, executive chairman of RapidRatings, some small retailers are experiencing negative average profits for the first time since the pandemic, as they struggle with rising costs and fragile consumer demand. Many have responded by placing bulk orders to avoid tariffs, risking unsold inventory. Over a dozen small US retailers told Reuters that increased costs have led them to cut jobs or reduce product offerings. For example, New York jewellery brand Haus of Brilliance shifted production to Thailand and the US to offset 50 percent tariffs on goods from India, aiming to maintain timely holiday inventory.
Despite these measures, shortages remain unavoidable. Loftie’s Hassett said that shipments expected for Black Friday arrived too late to capture potential sales, noting that the company could have generated 50 percent more revenue with sufficient inventory. These challenges highlight how tariffs, global supply chain disruptions, and AI-driven shifts in shopping behavior are reshaping the holiday retail landscape, creating both opportunities and obstacles for businesses of all sizes.
