Retailers offer last-minute shoppers a Santa’s little helper: AI

Say your nephew needs a Christmas present and you vaguely know what he’s into these days. A new Gift Finder feature on the Best Buy app lets users ask questions like, “What can I get for a 10-year-old who loves Minecraft?”

The artificial intelligence-powered chatbot responds with a list of products like the latest versions of the game, Minecraft Legos and in-game currency.

And just like that, you’re still his favorite aunt or uncle.

Best Buy is one of several retailers touting new generative AI capabilities for the holiday season and year-round shopping, a critical tactic for staying relevant and making shopping hassle-free. They are all hoping, as the clock ticks on a short holiday shopping window, that last-minute shoppers have one less excuse for putting off their purchases.

“Customers can have an interactive exchange to help guide them to the perfect gift they might not have even considered or knew that Best Buy offered,” CEO Corie Barry said about the Gift Finder on last month’s earnings call.

Target launched its own version, the Bullseye Gift Finder, last week. With a few clicks, the tool will populate a list of gift ideas for kids or the whole family.

“Target set out to make it easy and fun to discover on-trend and affordable items, which led to the design of our Bullseye Gift Finder,” said Cara Sylvester, chief guest experience officer. “Guests are loving the time and money saved thanks to all the affordable options served up to them, and we’ll continue to build on this technology well beyond the holiday season.”

A Bain survey found more than half of consumers appreciate AI-enhanced recommendations when shopping online. The consulting firm said the approach will endure past the holidays and is “about building loyalty and market leadership that lasts into 2025 and beyond.”

“Winning retailers know that AI-powered personalization isn’t just another plug-and-play technology,” according to a recent Bain report. “It empowers a strategic shift—the ability to align every message and interaction with the retailer’s identity, voice, and unique value proposition.”

And Boston Consulting Group in its holiday analysis in October said retailers from Target to Walmart and department stores would have to win the weekly online battle as well as the weekend in-store race to come out ahead this season.

This week, many stores, including Target, extended shopping hours until Christmas Eve, all in an effort to allow customers to shop however they want this season.

But online purchases are expected this year to grow from 24% to 26% of overall holiday sales, and total $240.8 billion, according to Adobe Analytics research firm.

Walmart embedded generative AI in its main search bar earlier this year, letting customers ask questions like “What should I make for dinner tonight?” to find loads of recommendations. Amazon is also pointing users to its virtual shopping assistant, Rufus, a chatbot that can answer questions and offer up products.

“Rufus is designed to make shopping faster and easier, helping you narrow down Amazon’s wide selection and ultimately select the item that fits your needs,” the company wrote in a news release.

Retailers have worked swiftly to build out AI assistants this year as the technology becomes table stakes. Target is testing a beta version of its AI shopping assistant for certain items, while Barry said Best Buy’s virtual assistant “can help 60% of our chat users without the need for a live customer support person.”

Best Buy also launched an AI-enhanced package tracking tool earlier this year.

Consultants at Bain wrote that each retailer needs to consider its niche and how AI can serve their specific audience: “When retailers get this right, they make shoppers feel seen, valued, and engaged, which builds loyalty and sets a new bar for customer experience.”

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