What: AI-powered shopping assistants and generative AI are transforming how consumers discover and purchase products, with major retailers and tech companies competing to shape the future of retail.

Why it is important: The development underscores the need for brands to optimize for AI-driven discovery, maintain trust as advertising and marketing strategies evolve… and invest in stores!

AI-powered shopping assistants are rapidly changing the way consumers approach holiday shopping, with a significant portion now relying on generative AI to find and compare gifts. This trend is especially pronounced among younger shoppers, with two-thirds of consumers in affluent markets and the vast majority of those aged 18-24 planning to use AI for their purchases. Major tech firms and retailers are racing to control this new interface, striking partnerships and developing proprietary AI tools to maintain customer relationships and data access. While some, like Amazon, resist third-party AI agents, others such as Walmart are embracing integration, hoping to reach new audiences. The rise of “generative-engine optimisation” is forcing brands to rethink their marketing strategies to ensure visibility in AI-driven recommendations. However, AI’s limitations are evident in categories where personal taste and physical experience matter, such as fashion, reinforcing the ongoing relevance of physical stores. As advertising becomes embedded in AI shopping tools, questions about trust and objectivity are emerging, prompting brands to seek new ways to influence recommendations and maintain consumer confidence. 

IADS Notes: The rapid adoption of AI-powered shopping assistants has fundamentally reshaped the retail landscape, particularly during peak periods such as the 2024 and 2025 holiday seasons. As highlighted by The Robin Report in December 2024, 38% of shoppers were already using generative AI for holiday purchases, with major retailers like Amazon, Walmart, and Target deploying advanced AI assistants to personalize recommendations and streamline the customer journey. This trend accelerated into Black Friday 2025, as Retail Week (October 2025) documented record-breaking sales and significant shifts in consumer behavior driven by AI-powered search and analytics. The competitive dynamics between retailers and tech giants have intensified, with Financial Times (November 2025) noting the shift of retail power toward AI platforms and the risks for brands that fail to adapt their digital strategies. In response, leading retailers are embracing new revenue streams and omnichannel strategies, as detailed by BCG (June 2025) and Journal du Net (November 2025), to maintain customer loyalty and data control. The emergence of generative-engine optimisation has prompted brands to overhaul their marketing tactics, as Inside Retail (November 2025) and Retail Dive (September 2025) describe, ensuring visibility in AI-driven recommendations. However, the limitations of AI in taste-driven categories like fashion remain evident, with BoF (May 2025) and BCG (December 2025) emphasizing the enduring value of human creativity and physical retail experiences. Finally, the evolving role of advertising within AI shopping tools, as reported by Forbes (April and November 2025) and BoF (October 2025), underscores the need for retailers to balance innovation with trust and operational excellence as AI-driven commerce becomes mainstream.

How AI is disrupting Christmas shopping