Happy Christmas, generative AI! What’s in store for its first Holiday season?

We’ve seen incredible development, new applications, and growing pains over the last 12 months. But perhaps the biggest milestone comes now, as gen AI makes its holiday debut.

Over the past year, many retailers have explored AI tools and found new ways to integrate the technology, while giant tech companies race to make their mark. In that time, the conversation has shifted from content creation, creativity, and copyrights to efficiency, personalization, service, and experience. Consumers and retailers alike have expanded their view of what gen AI can do and its long-term impact.

Gen AI has the potential to transform the total experience, impacting everything from how efficiently employees do their jobs to how products are personalized and how digital and in-person experiences are tailored to customers.

Meanwhile, customer expectations have also increased. Customers have seen how the potential of gen AI has grown throughout 2023. What they expect from their shopping this holiday season is vastly different than years past, because they know AI can level up their experience. It’s up to retailers to integrate gen AI into their customer experience strategies to meet those expectations and deliver smarter support, chats, and service.

Gen AI creates a smoother experience for customers and employees

The incredible potential of gen AI comes down to its wide variety of applications, allowing it to touch and improve every aspect of the total experience. Gen AI can empower and engage employees by arming them with the latest curated content to remove obstacles and better serve customers. Employees can quickly get up to speed with new changes, products, or policies – a potential game-changer for temporary and seasonal employees to offer consistent service levels.

For customers, gen AI can deliver hyper-personalized product recommendations, even for those people who are notoriously hard to shop for. Gen AI can also streamline returns for a faster and frictionless experience, improve targeted cross-sell and up-sell opportunities, and enable self-service options for customers. The possibilities are almost endless.

Will retailers get a bye in 2023?

Building a gen AI-centric strategy can seem daunting, especially as retailers face market challenges and other obstacles. But those challenges may actually work in retailers’ favor this season and earn them a longer grace period to adopt gen AI.

Although customer expectations are at an all-time high when it comes to proactive service, personalization, and connected digital experiences, there’s a chance that less intelligent service will get a pass this year. With rising inflation, many consumers are more concerned with deals and bargains than ever before. In fact, most shoppers started early to spread out their budget and are on the hunt for deals this holiday season – meaning they may tolerate “dumb” bots or sub-par service in the name of saving money. This year is the time for retailers to experiment and test the gen AI waters while they have a (slight) pass from customers.

Gen AI in 2023 and beyond

Today’s customers are savvy, especially now that they’ve seen the potential for gen AI-powered bots and services. Ignoring gen AI (or discounting it as a fleeting trend) is no longer an option; retailers must find ways to integrate gen AI into their strategies to create more forward-focused experiences that meet or exceed customers’ increasing demands. This principle is vital year-round, especially during the busy holiday shopping season.

But there’s also a danger in rushing gen AI adoption. A faulty or disconnected approach can be a turnoff for customers and lead retailers to some of the challenges we saw earlier in 2023 when brands rushed into AI without the correct information or data to make informed decisions. If a retailer launches a cumbersome or ineffective AI tool this holiday season, it could drive customers away and undermine future advancements.

It doesn’t need to be an all-or-nothing approach. This holiday season is an excellent opportunity to find the best and most impactful applications for gen AI, such as self-service returns or support chatbots. Applications like these have the greatest impact and lasting impression on the overall experience and can set the stage for future business growth. Retailers can apply gen AI correctly by removing key customer pain points and focusing on the quality of their applications, rather than the quantity.

The next few months will reveal much about how customer demands and gen AI will truly impact service expectations this holiday season. As it all unfolds, there will be no shortage of wins and learning opportunities. The real risk is not prioritizing the total experience and leveraging powerful gen AI tools to improve the experience for employees and customers. 2023 is gen AI’s inaugural holiday season and will be a defining moment for the future of retail and the total experience.