On the first day of Christmas, my true love sent to me: something they found using an AI-powered chatbot, and which they probably searched for free.

AI is rapidly reshaping how people plan and purchase their Christmas presents, marking what analysts describe as the first truly AI-driven holiday shopping season.

As consumers turn to chatbots for inspiration, retailers are racing to adapt to a landscape in which algorithms increasingly mediate the relationship between brands and buyers.

Gift ideas

The BBC reports that when Rachael Dunfell began searching for a Christmas gift for her husband’s 21-year-old cousin, she knew only that he liked specialised racing bikes and had an interest in Vikings. Traditional browsing didn’t get her far, so she turned to Copilot, the Microsoft-owned chatbot. By entering a few basic details, she was led to a specialist retailer selling Viking-themed metal bike parts.

“It’s just something that I really would never have known existed,” she said, “but it was perfect.”

Her experience reflects a broader shift. Shoppers are increasingly leaning on AI tools such as Copilot, ChatGPT, and Google’s Gemini for personalised suggestions, price comparisons, and product discovery. This automation is altering not only how people search for gifts, but how retailers think about visibility, competition, and consumer behaviour.

Data shows momentum

Although precise data on AI-driven spending remains limited, early indicators suggest substantial influence. Salesforce estimates that AI will drive 21% of all global holiday orders this year, amounting to $263 billion (£197 billion) in sales. A Coresight Research survey found that more than half of US consumers would probably or definitely use AI in their holiday shopping.

In the UK and Ireland, 61% of 2,000 surveyed shoppers said they had used AI tools while shopping, typically to locate the best price or find out where to purchase an item. Yet more than two-thirds struggled to recall an AI-powered retail experience that meaningfully impressed them. This mismatch highlights a key challenge: while consumer interest is strong, many interactions still feel early-stage or inconsistent.

Retailers race to keep up

Businesses are increasingly aware that AI plays a growing role in shaping customer decisions. Melanie Nuce-Hilton, senior vice president of customer success at GS1 US, said retailers feel a new urgency to update and standardise their product information.

“Retailers feel the urgency because AI is already shaping what people buy,” she said. “If the product information the model learned from is outdated or inconsistent, the recommendation can miss the mark, and it’s often small brands that lose visibility when that happens.”

For smaller companies, appearing in an AI-generated suggestion list can mean the difference between being discovered or overlooked entirely. As models ingest and interpret vast catalogues of online information, any gaps or inaccuracies can directly influence which brands surface for shoppers.

AI firms control the gateways

The role of major AI companies is expanding beyond recommending products to facilitating purchases. OpenAI recently introduced an Instant Checkout feature, allowing users to buy items without leaving the ChatGPT interface. Since then, major marketplaces including Etsy, Shopify, Walmart, Salesforce, and Target have begun listing products directly within the chatbot.

Walmart said the collaboration “allows customers and Sam’s Club members to plan meals, restock essentials, or discover new products simply by chatting”.

However, this new shopping pathway is still experimental. Not all retailers are approved to sell through ChatGPT, and analysts warn that access is tightly controlled.

“It’s OpenAI’s game. They’re in control of who is listed and how long it takes,” said John Harmon, a senior technology analyst at Coresight. Smaller retailers may struggle to secure a place until they can standardise their data and navigate approval processes, potentially widening the gap between large and small brands.

Partnerships and brand repositioning

Some experts believe AI partnerships will become a key competitive tool. Marketing professor Yanliu Huang said such collaborations can influence how consumers perceive a brand. She highlighted Walmart as an example of a retailer known for affordability but seeking to appeal to younger, more highly educated customers who are more likely to engage with AI tools.

She predicts more large retailers like Costco, as well as smaller brands, will join the trend.

Burlap & Barrel, a US-based spice company, already sees tangible benefits. Co-founder Ori Zohar said the firm’s strong online presence feeds “really, really good content” into AI models. He credits some recent customer growth to AI searches that guide users to its website, although the company is not currently seeking direct partnerships with AI firms.

Opportunities and risks for consumers

For shoppers such as Allan Binder, a teacher and sound engineer in Hanoi, AI has become a natural extension of existing research habits. Since last year, he has used AI to generate tailored gift ideas ranging from artisan scissors to Indonesian pottery.

“[Chatbots] have the potential to connect very targeted products with their audience,” he said.

But Binder also sees risks. As AI-generated recommendations grow more influential, inexperienced shoppers may rely too heavily on suggestions without independently verifying prices, product quality or alternatives.

“I think AI shopping will help informed consumers become more informed,” he said, “while making it easier for uninformed consumers to buy without much thought.”

The rise of AI-mediated shopping signals a long-term transformation. While the technology is still maturing, its growing presence in holiday shopping suggests a future in which browsing, comparing and purchasing may increasingly happen through conversational interfaces rather than traditional websites.

Google is launching a holiday wave of free AI training, offering courses to help millions of workers build critical skills quickly.