To meet growing demand over the Christmas peak, retailers have been leveraging AI and advanced technology to enhance the customer experience and streamline operations. Retail Systems senior reporter Silvia Iacovcich speaks with retailers and industry experts to find out which tools and techniques the market has been rolling out this year.

AI boosted personalisation

AI has been a growing trend throughout the year and, perhaps unsurprisingly, it will continue to play a role during the peak season.

“I think the biggest development on AI that you'll see over Christmas is the use of AI for hyper- personalisation,” says Asam Malik, head of technology and digital practice at IT advisory firm Forvis Mazars.

Retailers will make particular use of personalised sale and marketing content tailored specifically to each individual customer according to its unique profile and behaviour.

“Especially around major shopping events like Christmas, AI will allow retailers to provide highly personalised content and product recommendations to customers, rather than generic marketing messages,” Malik explains.

AI-powered hyper-personalisation tools analyse customer buying history preferences and price sensitivity to determine which products customers are most likely to want and can afford. By analysing large amounts of customer data to tailor the experience for everyone, these tools provide customers with content and offers that are appealing to them personally, rather than generic promotions.

“What’s better is that AI models are ‘learning models’ meaning they get better and better at personalisation as the customer engages or doesn’t with the retailer’s content and offerings, providing an anticipatory shopping experience,” Malik adds.

VR and AR in-store and online

According to Malik, retailers are also boosting augmented reality (AR) and virtual reality (VR) experiences for customers both in-store and online.

“With the increasing adoption of virtual reality (VR) devices, retailers will be able to provide more virtual and digital store experiences,” he continues.

Virtual stores, for example, enable customers to browse and view a whole range of products within a virtual environment from the comfort of their homes.

Many retailers are also implementing AR and VR to enable customers to try products on virtually.

“The integration of AI with these immersive technologies allows for more dynamic, personalised, and interactive shopping experiences for customers,” Malik explains.

In-store connectivity

When it comes to operational efficiency, Midcounties Co-op emphasises the importance of software platforms as essential tools during this Christmas season, particularly when it comes to internal communications.

Chris Chandler, head of store support at the grocery chain said that in the four weeks leading up to Christmas, it is an intense time for frontline retail workers, with many key messages and communications that need to be shared.

To manage increased workload and operational efforts, the retailer will leverage technology to prioritise and streamline core communications, ensuring critical information is clear for the frontline staff during the busiest time of the year.

“Software tools can effectively manage and deliver the high volume of important communications and task related information to their frontline staff during the busy Christmas period, when clear and concise messaging is essential,” continues Chandler.

Similarly, self-checkout will also play a big role. Midcounties-Co-op, for example, has replaced some of it traditional manned checkout tills with between four and six self-checkout stations.

“This creates more tools for customers to use, which can improve efficiency if managed well,” adds the head of store support.

He says that that the retailer has also invested quite heavily in training for the improved versions of its self-checkouts to boost the end-to-end customer experience.

Aaron Spicer, head of retail activity and communications at Marks and Spencer (M&S), agrees that connectivity is vital.

“Our tilling technology is more intuitive than it used to be,” continues Spicer. “We used to spend two days training people, and we don’t that anymore as tills are quite intuitive, that kind of technology has become really important.

He also stresses the importance headsets over the Christmas period.

“That type of connectivity, particularly when the store is so busy and there's so many people in there, can really help in this time of year where everything is super quick,” Spicer explains.

Midcounties Co-op's Chris Chandler described electronic shelf edge during the peak season as a game-changer.

“This connectivity and ability to quickly get assistance is crucial during the hectic holiday season, when customers need fast and responsive service,” Chandler says. “During the Christmas period, there are often more price fluctuations and clearance activities happening in stores and with electronic shelf labels, the Co-op can quickly and easily change prices across the stores, without having to manually change hundreds of physical price labels.”

Marketing strategies

Michele Fitzpatrick, vice President, enterprise strategy and services at marketing consultancy Marigold says AI and technology plays a role in marketing strategies for many retailers during the Christmas season.

According to the expert, AI and ML can help marketers address challenges like proving ROI and personalisation.

“AI can be used for time optimisation, content suggestions, and dynamic templates, improving campaign performance,” she says.

Brands that focus on tailoring their offerings and messaging to each individual consumer can also benefit from leveraging the right social media outlets for their different audience segments, Fitzpatrick explains.

She adds that once a retailer has a strong understanding of the customer, they can then evaluate which social media channels are best suited to influence, inform, and ultimately activate that customer segment.

“There is no "one size fits all" approach when it comes to social media marketing,” she adds. “Brands need to understand which social media platforms are most effective for reaching and engaging with their specific target audiences.”

Dynamic pricing

AI also gives retailers the ability to execute sales much more effectively than before, for example through dynamic pricing during the festive period.

“We will see much more prices being adjusted real- time, based upon demand and customers’ interest,” Asam Malik says.

With dynamic pricing, prices can be personalised for each individual customer, based on what they can afford or are willing to pay, or by external factors, like if a product becomes popular due to an influencer, movie, or TV appearance, Malik explains.

The risks of AI

Despite the success of AI during the Christmas holidays, some risks regarding its use remain.

According to Malik, data can quickly turn into a problem if it’s not the right type of data, particularly during peak times.

Outdated or incomplete data, for example, could lead to the technology making poor decisions and providing irrelevant information to the customer, which can negatively impact the consumer experience.

“And if retailers send the wrong information, they risk getting a completely opposite reaction – with customers ignoring or even blocking the retailer,” says Malik.

Marigold’s Michele Fitzpatrick also says that there should be a limit to the amount of AI used for marketing purposes, with too much causing the opposite desired effect.

She says it is important for retailers to understand the differences in attitudes towards AI marketing campaigns based on age cohorts.

“Our research shows that across all demographics and countries that the study was executed in, one in two people are really nervous about AI- generated content,” she warns.

Fitzpatrick adds that consumer attitudes towards personalisation and data usage can vary, often being perceived as ‘creepy’, which can put customers off.

“AI should be used to discover actionable insights, so to be a strategic advisor to a marketer or to amplify productivity, but not for the creative output, but for to gather data,” she explains.

In the run up to Christmas, retailers have implemented a range of technologies, from genAI and VR to automation, in a bid to create unique experiences for their customers and boost efficiency as the UK looks to reach a record £88 billion in consumer spending over the festive period, according to data published by Statista.

But the technology roll outs won’t end with the peak season, with retailers increasingly exploring advanced technology to facilitate hyperpersonalised experiences in an increasingly competitive market throughout the year. 2025 looks to be an exciting time for the industry, with genAI use cases continuing to expand and advance. Watch this space!

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