Holiday Retail Grows with Help of AI and E-commerce
Despite macroeconomic concerns, holiday retail spending in the U.S. saw a rise of 4.2% year-over-year, as reported by Visa, after excluding inflation.
The data is based on payments activity tracked from early November and excludes automotive, gas, and restaurant spending. Although in-store purchases still dominate with nearly three-quarters of holiday spending, e-commerce has emerged as the primary driver of growth.
Artificial intelligence played a significant role in boosting online shopping activities. According to Visa’s survey, roughly half of the consumers said they intended to use AI tools for comparison shopping and gift selection.
The Role of AI in E-commerce
It’s encouraging that holiday sales have increased by over 4%, largely due to the growth of e-commerce, which surged nearly 8%,” stated Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. AI is contributing significantly to this growth by making product searches more efficient and relevant.”
Apgar explained that agentic search utilizes AI to interpret user requests beyond keywords for more accurate results, thereby increasing the likelihood of purchases.
Agentic Search vs. Agentic Commerce
It’s essential to differentiate between agentic search—where AI assists users in finding products—and full-fledged agentic commerce, which allows AI agents to independently handle transactions.
An example is the partnership between PayPal and Perplexity, where users can consult an AI agent within a chat interface and complete purchases, although final decisions remain with shoppers.
The Importance of Omnichannel Retailing
While agentic search is contributing to the boost in e-commerce, physical retail remains crucial. According to Visa’s research, about 75% of total retail spending occurred in-store this holiday season.
This underscores the need for retailers to align their omnichannel strategies, ensuring that inventory and buying options are available even when users specify they can pick up items on the same day,” Apgar noted.
The Future of Agentic Commerce
Despite these advancements, the retail sector is not yet fully embracing agentic commerce. However, Visa anticipates significant growth in this area, expecting millions of consumers to rely on AI agents for personal shopping during next year’s holiday season.
The company has already conducted trials through its Intelligent Commerce program and believes that agentic commerce will break through more widely in the coming years.
