Artificial intelligence and applications are reshaping global markets

The holiday season has long been a battleground for retailers seeking to capture the attention of shoppers, whether in New York, London or elsewhere. This year, however, companies aren’t just chasing human eyes — they’re targeting artificial intelligence to reach consumers.

Globally, online sales during the holiday season are expected to exceed hundreds of billions of dollars, with traditional website visits and search engine ads still dominating. However, AI production tools like OpenAI’s ChatGPT and Google’s Gemini are increasingly shaping the way people discover products and make purchasing decisions.

AI chatbots now provide product descriptions, compare prices, and even enable shopping through long language models. Retailers from the US to Europe are adapting strategies to ensure their offers appear in AI-generated recommendations, targeting tech-savvy consumers in cities such as Dubai, Singapore and London.

Brian Stempeck, CEO of Evertune.ai, which helps retailers optimize content for artificial intelligence, said brands are dramatically increasing content production. “We’ve seen brands that used to publish three or four new blog posts or articles a month, now they’re trying to do 100 or 200,” he explained.

Companies are building AI-specific websites designed exclusively for AI scrapers, automated tools that extract product information and feed it to chatbots. These platforms can recommend everything from holiday wear to electronics, helping brands appear in AI-powered shopping results.

Early evidence shows that the influence of artificial intelligence is growing. In November, AI-driven traffic to retail sites grew 830% year-over-year, according to Adobe Analytics, and those visitors were 30% more likely to purchase than those coming from conventional searches.

Despite this growth, AI referrals remain a small portion of overall traffic. ChatGPT links to major e-commerce platforms such as Amazon, Walmart and eBay accounted for less than 1% of visits in October. However, the high intent of these shoppers has encouraged retailers to invest in AI breakthrough.

Brands from Brooklinen in the US to tech companies across Europe and Asia are creating influencer campaigns and submitting products for awards to increase visibility. Voice and AI assistants are also reshaping commerce, with Amazon’s Alexa and Google Shopping AI tools guiding consumers to products based on recommendations.

Amazon CEO Andy Jassy said that users who interact with the company’s Rufus AI agent are 60% more likely to complete purchases.

Meanwhile, global retailers including Walmart and Target have announced apps that enable direct shopping via chatbots, signaling that AI is becoming a key channel in holiday retail.

For retailers, the season brings additional challenges. US President Donald Trump’s shift in tariffs on goods from China, a major supplier for many companies, has forced small companies like Loftie to choose between high tariffs or sourcing from more expensive overseas suppliers.

“It’s been very difficult to prepare. We’ve sold at extremely low inventory levels — we probably have about 10 percent of the inventory we need,” said Matt Hassett, founder of New York-based sleep wellness brand Loftie. Import tariffs have disrupted supply chains for items such as sunrise lamps and alarm clocks without phones.

November and December typically account for a third of U.S. retailers’ annual profits, adding to the pressure. Brooklyn-based Lo & Sons, which sells travel bags online, scouted eight factories across India and Cambodia before returning to its longtime Chinese supplier.

“In addition to costing us a ton in invoice payments, the uncertainty has prevented us from placing purchase orders,” said CEO Derek Lo. “We are now in a lower than ideal inventory.” Bulk retailers like Walmart and Costco can absorb supply concerns more easily than smaller businesses.

“For the first time since the pandemic, the average profit fell into negative territory, disproportionately affecting smaller companies that do not have the scale to absorb these pressures,” said James Gellert, executive chairman of RapidRatings. Some companies have placed large orders to beat the tariffs, risking unsold inventories amid fragile consumer confidence.

More than a dozen small U.S. retailers told Reuters they faced significant cost increases, prompting some to cut jobs or curtail offerings. Haus of Brilliance, a jewelry brand in New York, has moved production to Thailand and the US to offset the 50% tariffs in India, hoping stock will arrive in time for the holidays.

However, shortcomings are inevitable. Loftie’s Hassett expects a Black Friday shipment, but missed out on potential sales. “We could have done 50% more sales if we had enough inventory,” he said, highlighting how tariffs and global supply disruptions continue to squeeze smaller holiday retailers.