Will AI Be a Gift-Giving Hero or Retail Headache? | Reimagining Retail

Suzy Davidkhanian (0:00)

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Hi, everyone. Today is Wednesday, September 16th. Welcome to EMARKETER's weekly retail show, Reimagining Retail, an EMARKETER Podcast made possible by Verve. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Suzy Davidkhanian. And on today's episode, we're talking about what has changed heading into the holiday season, and whether AI could ease one of retail's biggest margin challenges or make it worse. Joining me are podcast regulars, Principal Analyst, Sky Canaves. Hey, Sky.

Sky Canaves (0:52)

Hey, Suzy.

Suzy Davidkhanian (0:53)

And Senior Analyst, joining me in studio, Arielle Feger.

Arielle Feger (0:56)

Hey, Arielle. Hi, Suzy. I'm Holly Jolly. Happy to be here today.

Suzy Davidkhanian (1:04)

Thanks for bringing that on. I can't wait for this discussion. This summer, we forecast that US retail sales will surpass $1.4 trillion, growing about 4% over last year. And we've already started to see some holiday merchandise showing up in stores. We're moving from planning to really truly execution. And the holidays really is a unique time because people are buying products for others instead of for themselves, which inevitably contributes to a wave of returns throughout the season and well into January. So today, we're going to talk a little bit more about how AI could help shoppers make better decisions and mitigate some of the risk for retailers and anxiety for gift givers. The holidays are unique because the person buying the product often isn't the person using it, which contributes to a wave of returns throughout the season and into January.

Yes, AI could help shoppers make better gift decisions and even mitigate some of that risk for retailers as well as anxiety for gift givers, or it could make comp shopping and deal hunting that much easier, leaving retailers with the worst of both worlds, selling an item on the cheapest in December and still taking it back in January. So today, we'll look at what Back to School tells us about the holiday shopper, who's really winning with AI and the one move retailers still have time to make. But before we get started, I want to ask you each, have you noticed any holiday decoration or merch out in the wild?

I'm going to start with me because you guys don't ever know this question ahead of time.

I actually went to a suburban Costco and there were aisles in the middle, which is the impulse section, of both Halloween and holiday stuff. And I was surprised, one on top of the other. Sky, have you noticed anything or not yet?

Sky Canaves (2:53)

Oh yeah, well, I live in suburban Costco land, so I go to several Costcos, and I'm almost inured to it. And I think I was somewhere else with my daughter. And yes, there was Halloween on top of Christmas or vice versa. It's all become very normalized now.

Suzy Davidkhanian (3:09)

I'm not usually in a Costco, so I was shocked. Arielle, have you seen anything in the city?

Arielle Feger (3:14)

I haven't. I don't shop at a lot of very large retailers. It's a lot of smaller New York City grocery stores and pharmacies. So not as much yet. But it doesn't shock me that they're rolling it all out together.

Suzy Davidkhanian (3:27)

The holiday creep is creeping even more in.

Arielle Feger (3:31)

It kind of makes sense to me. If you're going to decorate your house for Halloween, you're probably going to decorate your house for Christmas. So it's likely to get it all at once.

Suzy Davidkhanian (3:39)

That's true. Sky, since you did your report in July on the holidays, a lot has happened and the holidays is the number one volume driving season for retailers. So I thought instead of asking you guys lots of questions, we could do a segment and we can start with, if you were CEO for the day, we're at this interesting point right now in the calendar in terms of the merchandise is starting to trickle in, but retailers still have a little bit of time to adjust some of their marketing, especially digital and even their promotional plans. So at this moment, we're kind of like pre-season sort of, what's the one thing keeping each of you up at night for this holiday season? Sky, I'm starting with you.

Sky Canaves (4:18)

So one of the wrinkles that's emerged since I published my report a few weeks ago, is listening to the retailer earnings calls the past few weeks, and they're all talking about these tariff refunds that they received. And some of the big ones like Walmart got $2.7 billion. So it's got this enormous tariff refund war chest. And a lot of these retailers have made very clear that they're going to use this money to lower prices for consumers that are under increasing stress, which is one of the trends that we had noted in our report, that the holiday season sales are likely to not accelerate at all for many categories.