How Inflation, Online Shopping and Artificial Intelligence Will Impact This Holiday Shopping Season

Tis’ the season for twinkling lights, turkey dinners and a touch of retail therapy. According to a 2023 Deloitte survey, American consumers plan to spend an average of $1,652 this holiday season, surpassing pre-pandemic levels for the first time.

However, not everything is merry and bright. While expected spending is up from 2019, the four-year compounded annual growth rate is only 2.5%, meaning consumers will still feel the effects of inflation and pay closer attention to good deals, according to Saint Joseph’s experts. With in-store shopping on the decline and artificial intelligence revolutionizing retail, this year’s holiday shopping season presents a unique set of challenges and opportunities for consumers and businesses.

“There is going to be a focus on value,” says Ernest Baskin, PhD, associate professor of food marketing. “I think people will still do celebrations, but they may be smaller.”

These smaller celebrations will impact everything from purchasing gifts and traveling to buying food. Over the years, Baskin has noticed a significant change in how Americans shop.

“For example, in years past, people would go to one store for their groceries,” says Baskin. “Now, they are going to more stores. Americans are trying to take advantage of as many discounts as they can.”

Nothing screams discounts like Black Friday and Cyber Monday. A survey by Drive Research projects that a whopping 68% of consumers will choose to shop online for holiday deals. However, Baskin believes there is still a place for brick and mortar stores.

“Brick and mortar stores still have a lot to offer in terms of trying certain products and comparing them on a tactile basis,” says Baskin. “That experience is not something people get from an online platform. The advantages to online shopping are convenience and ease of use.”

Gone are the days of waiting weeks to receive a product in the mail. With the proliferation of companies like Amazon, next-day delivery is now commonplace. This convenience and speed can partly be attributed to artificial intelligence (AI).

Marcello Balduccini, PhD, associate professor of decision and system sciences, believes AI will have a major impact on the supply chain and all activities related to the holiday shopping season.

“Now, everything is controlled by computers,” says Balduccini. “Machine learning is driving which items are pushed on us when ordering holiday gifts. It is used to anticipate demand.”

Not only is machine learning playing a role, but robots are too.

“For example, the involvement of humans in Amazon warehouses is relatively limited,” says Balduccini. “There are robots that move around the warehouse and can pick up some of the items you ordered. They have figured out the most efficient way to roam around the warehouse, work around other robots and move around obstacles.”

Balduccini believes this is only the beginning of AI’s role in retail. In September 2023, the Federal Aviation Administration granted approvals to multiple retail companies to begin delivering goods via unmanned aircraft.

Since robotic assistants are not fully operational yet, consumers are not off the hook from buying gifts and delivering them in person. Baskin recently conducted research on gift-giving. He says there is a disconnect between desirability versus feasibility.

“When you are a giver, you often want to give something that is desirable,” says Baskin. “You don’t often think about what the receiver wants and how they are going to use the gift. I’ve found through my research that receivers often prefer things that are practical.”

Before heading out to the store or going shopping online, Baskin says gift-givers should ask themselves, “Is this a gift that I would use myself?” Amid a holiday season marked by increased spending, evolving shopping behaviors and the growing influence of AI, gift-givers should keep practicality top of mind.