AI to Transform Holiday Shopping for Buyers, Retailers

Artificial intelligence is poised to shape this year’s holiday shopping season, with both consumers and merchants increasingly relying on it.

According to data from PayPal, more than three-quarters of consumers plan to use AI as a shopping assistant this holiday season. Already, 40% of respondents have used AI for purchases in the past year, with half of them doing so regularly.

The numbers are even higher among younger cohorts: more than half of Gen Z and millennial shoppers have used AI to help with shopping over the past year.

There isn’t a single way that shoppers are using AI. Holiday shoppers report using it for finding the best deals, comparing products, and discovering gift ideas or recommendations—but none of these activities were cited by even half of respondents.

Separate data from American Express confirms that small businesses are accelerating their adoption of AI, with younger generations once again leading the way. In fact, 72% of Gen Z and millennial small business owners are using AI, compared to 59% of Gen X and baby boomer owners.

Interestingly, older generations are starting to catch up.

Among small businesses that began using AI in the past year, more were Gen X and Baby Boomers than Gen Z and millennials.

Over nine in 10 small businesses say that AI helps them make more confident decisions, and a similar proportion report that it improves how they organize data and insights. Nearly three-quarters of small business owners report a positive ROI from their AI investments, with the most common benefits coming from increased employee productivity and reduced errors.

“To the extent that consumer behavior is shifting towards a willingness to use AI as a payment entity, that constitutes a capability challenge that you have to meet,” said Christopher Miller, Lead Analyst of Emerging Payments at Javelin Strategy & Research. “If you are not changing your technical and business capabilities to recognize that reality, you will lose out.”