The holiday season is just around the corner, and retailers are gearing up for a surge in online sales, thanks to the power of Artificial Intelligence (AI). According to the Salesforce Shopping Index, which analyzes data from over 1.5 billion global retail consumers, the holiday shopping season is expected to reach a staggering $1.19 trillion in online sales.
Holiday Shopping Rebound
Following a lackluster first half of the year for the retail industry, holiday shopping is poised to rebound and match last year’s figures. The report’s estimates suggest a year-on-year growth of 4 percent in digital sales worldwide, with a significant portion, 60 percent (equivalent to $714 billion), being influenced by in-store employees through a combination of demand generation and online orders with in-store pickups.
The AI Advantage
One of the key drivers behind this expected surge in online holiday spending is the use of Artificial Intelligence, both in predictive and generative capacities. AI is set to help retailers generate an astounding $194 billion in global online holiday spending. It will achieve this through personalized customer service, marketing promotions, and enhanced shopping experiences.
Early Discounts and Promotions
The report also highlights that discounts are expected to come early this year. Shoppers’ concern for prices is driving them to seek discounts, prompting retailers to launch promotions ahead of schedule to stimulate demand. Shoppers can anticipate a barrage of promotional events starting from early October, capitalizing on the momentum generated by Amazon’s Prime Day on October 10 and 11. This will be followed by aggressive discounts during Black Friday on November 24 and the subsequent weeks.
Global discount rates are projected to rise to 19 percent in October, reaching a peak of 29 percent during Black Friday and the days that follow. However, forecasts also suggest that consumers may hold out for the best and final deals towards the end of the season. Additionally, 25 percent of all digital holiday sales are expected to occur during the week following Black Friday.
Returns Policy Scrutiny
On the flip side, retailers will be taking a closer look at their returns policies. A substantial 88 percent of retailers intend to tighten their return policies before the holiday season, which poses a risk as it could slow down the start of holiday sales.
Based on historical data, Salesforce predicts that retailers with return periods of 30 days or less may witness a 7 percent decrease in online sales in October and November.
Furthermore, subpar return experiences, which lack clarity, ease, and fairness, could jeopardize 21 percent of online orders during this holiday season.
As the holiday season approaches, retailers are harnessing the potential of AI to enhance the shopping experience and drive sales. Early discounts and a focus on returns policies will play a crucial role in shaping this year’s holiday retail landscape. Shoppers can expect a mix of enticing promotions and the seamless integration of AI-driven services as they embark on their holiday shopping journey.