Small Retailers Gear Up for Early Holiday Season with Better Deals and AI 

With the holiday season approaching, retailers are gearing up with new AI-powered strategies to boost profit. According to Capterra's Holiday Retail Preparations Report, 70% of small to midsize (SMB) retailers plan to provide more holiday promotions this year. This is a notable increase compared to only 45% last year, and almost half of these promotions will occur before Halloween.

“Facing the challenges of cash-strapped shoppers this holiday season, small retailers are innovating with urgency to avoid lost sales and a surplus of returns. Embracing AI as a tool for growth is the natural next step to level the playing field against big box retailers,” says Molly Burke, senior retail analyst at Capterra.

Despite intense competition, 75% of small to midsize retail businesses (SMBs) anticipate higher holiday profits than the previous year. However, 57% of them also foresee an increase in returns, which could potentially offset the gains achieved during the holiday season.

Retailers plan to implement several strategies, including offering more non-returnable or final-sale items (41%), reducing the return period timeframe (26%), and raising shipping fees (24%). Additionally, they are exploring the use of AI-based tactics to boost product promotion and reduce the likelihood of returns.

Retailers embrace AI with open arms

Generative AI, like ChatGPT, is a valuable resource in reducing product returns by assisting online customers in finding products that align more closely with their immediate requirements. Small and midsize business (SMB) retailers intend to leverage generative AI tools like ChatGPT in their holiday plans for various purposes. These include generating marketing content (44%), personalizing customer interactions (43%), and enhancing data analysis capabilities (39%). This usage spans activities like creating holiday sales strategies and scrutinizing online shopper behavior to enhance the overall user experience.

Small retailers are increasingly adopting AI tools not just for their convenience but also to establish a presence in the future of online product searches. With generative AI reshaping how shoppers explore online products, 73% of these small retailers are worried that large corporations could overshadow them. This concern arises as online product searches transition from traditional search engines to AI chatbots and search utilities.

In another one of its recently published reports, Capterra revealed that 65% of shoppers believe that AI tools are not responsibly managing their personal data.