Following COVID, the holiday season has been a far more volatile and unpredictable time for retailers. Supply chain disruptions, fluctuating consumer demand, and the ever-present threat of economic uncertainty are creating unprecedented challenges are hounding the arena to unprecedented heights. Surviving until we can shove Mariah Carey back in the freezer for 10 months depends not merely on corporate strategy, but on embracing cutting-edge technology. It is clear, the holiday arena is in desperate need of an AI makeover. From predictive analytics for inventory management, to sophisticated fraud detection systems, to AI-enhanced logistics optimization, this technology is posed to revolutionize retailer's operations. We must first dive into the very human situation the AI's are inheriting, and then see how they may help us this holiday season!

Who Wants What?

Retail can be highly lucrative and rewarding, but has never been described as stable nor predictable. The holiday season generally marks a peak sales season for retailers in general, but, especially in recent years, has manifested a minefield of uncertainty. The post-COVID world has upended the traditional rules of supply and demand, leaving businesses scrambling to navigate a landscape defined by intensely volatile consumer behavior, strained supply chains, and cutthroat competition. Among consumers: inflation, economic uncertainty, and rapidly-evolving preferences have fostered a level of unpredictability outdoing previous holiday seasons. For one, the bulk of the fight for consumer attention has transferred to the e-commerce arena. The National Retail Federation reports that 57% of consumer will be shopping online this year, and department stores are a fairly distanced runner-up, expected to draw in 46% of consumers. The average consumer will spend $902 on holiday-related purchases. $261 of this, or roughly 1/3, will go towards food, ambience, decorations, and the like. The remaining approximate $641 is what the average American shopper will put towards gifts. If the retail sales within a year were theoretically perfectly distributed, a corporation would transact 8.33% of its business per month. Enveloping both November and December, the holiday season would then equilaterally account for 16.7% of annual transactions. In reality, the holiday season is responsible for more than this across the board - and in some retail sectors, especially more than others:

Conventional consumer wisdom in America has long recognized the winter holiday as the most important season of the retail cycle, and the above chart from Statista illustrates just why! But this year, that wisdom is being tested like never before. Think about it: that $641 average gift spending is spread across a dizzying array of product categories, each with its own unique supply chain challenges. The resulting challenges are far from uniform. According to a SupplyChainBrain article from Oct. 2024, 64% of consumers this season anticipate cutting their nonessential spending, and furthermore, 52% of consumers are prioritizing deals and discounts above all other shopping criterion. This contractive response to ongoing inflation is not single-sided, 70% of retailers anticipate higher costs in the holiday season as well. Consequently, 70% of retailers are planning to offer increased sales and discounts, and even over a third of retailers are embracing flexible payment options.

We'll Find the Money Somewhere!

There are only 13% of Americans who are not stressed about holiday expenses, according to Bankrate's 2024 early holiday release. In fact, despite 58% of consumers planning to use debit cards in some capacity, consumers financing their gift hauls is at an all time high. Overlapping within that group are also people whose available money will not be sufficient, and a complex quagmire has resulted:

More than 1 in 4 shoppers (27 percent) plan to take on debt this season in the form of carrying a credit card balance or using a buy now, pay later service — an interesting contrast to the 7 percent who said they were willing to go into debt in a later question. Rossman points out that it might be a “do as I say, not as I do,” mentality.

There is such an apparent aversion from FOMO (fear of missing out) in the American zeitgeist, that a major portion of the population would prefer to assume debt. And of the unexpected, debt-accruing purchases, the vast majority were made on deals/discounts (at least perceived as being) "too good to pass up" (44%), and mainly for loved ones (38%). It is almost ironic, when we zoom out and analyze the intersectional relations that characterize what's happening, to see the purely human qualities commanding the cycle. Inflation's still up, people are anxious about their finances, and are choosing to prioritize a value deal above all else - as of course, they should. But this hunger for seemingly good deals, fueled by retailers' own efforts to clear inventory and stay competitive, is superseding the average American's good sense to live within their means — perhaps highlighting a growing concern about financial literacy in the country. This intense pressure on consumers is further exacerbated by the aggressive promotional strategies adopted by many retailers, many offering deals "too good to pass up" - a strategy, as it turns out, that works a little TOO well.

The result? A significant portion of holiday shoppers are willingly accruing debt to afford the very things that are supposed to bring joy to the season. And - as our excerpt illustrates - the vast majority have no plan getting into, or more importantly, out of, said debt. Which, of course, is famously the best way to enter a liability contract. The American shopper leaves happily - feeling that they've secured a steal - when regardless of the deal's true value, they are only deeper in the hole because of it. Sadly, this is not a difficult manipulation tactic to execute in a country where poor quality of education is a striking and growing issue. This intricate dance between supply/demand volatility, emotionally unpredictable consumer behavior, educational gaps, and fight for dominance within a simultaneously growing and transforming industry, highlights the unprecedented complexity of the current holiday retail landscape. Navigating this treacherous terrain demands more than traditional strategies, it necessitates a radical rethinking of how businesses predict, adapt, and respond to market forces.

The Breakneck Pace of Trends

The post-COVID holiday season isn't just about shifting consumer spending habits; it's about a fundamental societal shift and its ripple effect throughout the retail world. Trends are accelerating, driven by a confluence of technological advancements, social movements, and evolving cultural norms. For instance, in the recent highly-awaited TikTok 2024 Trend Report, we can see that the major social media platforms are no longer marketing enhancers, but absolute necessities. 41% of individuals claimed to trust brands more which had established TikTok presence, and an even stronger 50% said they have more trust for a brand that leaves their TikTok comments on! Regardless of a firm's field or niche, nothing is currently more "in" with consumers than open forum-style transparency and - not jokingly - latest meme literacy. The breakneck speed and volatility of "brain rot," Oxford's Word of the Year, and a firm's savviness to partake in internet culture, have become determinants of success. Gone are the days when long-term forecasting could effectively predict the demand for seasonal items. Gone are the days of predictable seasonal hires, and peak v. slow seasons. Retailers need real-time data, quick-response supply chains, a flexible social media advertising strategy, and... dank memes. I don't know what to tell you. They need sophisticated AI's helping them.

This rapid evolution of consumer behavior and the ever-shifting digital landscape demand a level of adaptability that traditional retail strategies simply can't provide. With AI, retailers attain the powerful tools they need to navigate this turbulent environment. In Snowflake's Data Trends 2024 Report, it's revealed that the usage of Python - the premier language for AI development - has skyrocketed by 478% in the Media & Advertising sector. This speaks directly to AI's exploding influence.  Snowflake highlights AI's primary application in optimizing ad content and reach, but its impact extends far beyond targeted marketing. AI is fundamentally reshaping core retail operations, impacting supply chain management, customer service, and even pricing strategies. In supply chain: AI-powered predictive analytics, leveraging historical sales data, real-time market trends, social media sentiment, and even weather patterns, forecast future demand with unprecedented accuracy. Ernst & Young reports that 40% of current supply chain organizations have incorporated Generative AI, and the figure continues to grow quickly. This allows retailers to optimize inventory levels, minimizing costly stockouts and avoiding wasteful overstocking. The speed and precision offered by AI represent a significant competitive advantage, especially during the rush. It's only a matter of time before we have ourselves an AI-automated holiday season!