Expert Alert

How AI impacts holiday shopping supply chains

Orange robotic arms manipulate gift-wrapped boxes on a conveyor belt in a large facility.
Credit: Getty Images

As shoppers and retailers head into the peak holiday season, artificial intelligence (AI) is the hot topic of the year.

Dayton Steele, an assistant professor in Minnesota Carlson, can speak to how AI is affecting the holiday shopping supply chain and where the human touch remains critical.

Dayton Steele

“AI is reshaping processes within the retail industry supply chain. This holiday season, the most common way shoppers may directly interact with AI is through a store’s online chatbot for customer service. This is a form of generative AI, like ChatGPT or Gemini, which often comes to mind when people think of AI.”

“However, AI encompasses much more. Particularly relevant to holiday shopping, retailers are using AI to forecast demand for each product to determine how much inventory is stocked. This ensures everything is routed in time for shoppers checking off holiday lists. The holiday shopping season, in many ways, is the biggest test for retailers to see how their forecasting plans worked out.” 

“While AI can allow for efficient forecasting across many products, my research shows that a human’s touch is still critical and, when used strategically, can even outperform AI models. For example, AI relies on existing data, which isn’t always available, especially for newer products. That may be one reason it’s hard for shoppers to find hot items like KPop Demon Hunters merchandise or Labubus. Additionally, retail managers with close relationships with vendors may receive information unavailable to analytics models, which can help drive decisions. Due to current limitations of AI, retailers continue to leverage human intelligence in places that drive value.”  

“For now, much of AI usage is behind the scenes in the retail supply chain. As the technology improves, expect more enhanced consumer-facing AI tools on the horizon, from AI-personalized products to autonomous shopping assistants.”


Dayton Steele is an assistant professor in Minnesota Carlson’s Supply Chain & Operations department. His research centers on retail operations, with topics of interest including AI, technology, sustainability, and online marketplaces.
 

Media Contacts

Christopher Kelly

University Public Relations

Rose Semenov

Carlson School of Management, Twin Cities

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