How retailers can leverage AI and data analytics to navigate the holiday season

Every year, it feels like the holiday season arrives sooner than before. Consumers are no longer waiting to kick off their holiday shopping on Black Friday or even in mid-November.

As retailers and consumers navigate ongoing tariff negotiations, inflation, and economic uncertainty, both retailers and consumers are looking to proactively plan ahead in 2025. As a result, retailers are adjusting their holiday purchasing and inventory strategies with greater precision and are starting to stock shelves with seasonal items and must-have gifts as early as October.

In the lead-up to the holiday season, many retailers looked to mitigate the impact of additional tariffs by further diversifying their sourcing strategies for apparel and consumer electronics to help buffer against geopolitical supply chain risks, and also front-loading high-demand imported items in early Spring 2025 to lock in lower prices and shipping costs.

Simultaneously, consumers have shown concerns about inflation, the impact of tariffs on the cost of consumer goods, and the continued economic outlook. A study from August 2025, titled U.S. Shopper Spotlight: o9 Consumer Survey 2025, indicates that 45% of American shoppers are extremely or very concerned about global trade issues (such as tariffs) affecting their ability to find the products they want this holiday season.

The aforementioned survey also indicates that some respondents' purchasing behavior is becoming more selective due to tariffs: 43% say their decision to buy imported products depends on the price difference, while 27% say they’d still purchase the product even if it’s more expensive due to tariffs.

Additionally, survey respondents indicate they haven't purchased a product that they want or need from the following categories: clothing (24%), groceries (22%), and electronics (21%). This holiday season, all of these factors are converging, making it all the more challenging for retailers to ensure that they have enough of the right products in the right place, at the right time, and — most importantly — at the right price to meet consumer demand. Striking the right balance between accurately forecasting demand, developing an effective promotion strategy, and ensuring optimal inventory and product selection to reduce stockouts is a necessity.

Additionally, for many retailers, their demand forecasting and inventory planning processes are still managed in spreadsheets, and critical information that needs to be shared across teams is often siloed. But more retailers are starting to leverage AI technologies and platforms to strengthen their forecasting and inventory planning capabilities amid the current business and economic conditions.

Some of the tools that retailers are relying on this season include predictive analytics to ensure the right mix of product inventory is available at each store level to meet local customer demand, as well as real-time store traffic and POS data to modify promotions and messaging accordingly.

To gain more forecast demand accuracy, retailers should integrate robust, real-time data analytics into their inventory planning and omnichannel marketing that reflects earlier seasonal shopping and more cost-co scious purchasing behaviors.

More specifically, retailers should consider:

•Leveraging platforms with knowledge graph technologies to optimize data insights For many retailers, the challenge isn't access to data availability; it's having access to data that is cleansed and ready to be used for providing insights that inform a retailer's planning and decision-making processes.

Platforms that include knowledge graph technology, which can ingest a vast amount of data, cleanse and organize data, and map out relevant data points, provide retailers with insights at a granular level that allows them to make real-time adjustments at the distribution center (DC) or store level to match inventory and product selection with consumer demand.

•Use real-time data to align inventory and promotion strategies with consumer purchasing behavior Pinpointing what drives price elasticity is also a key factor in unlocking what motivates increased consumer demand. Real-time consumer purchasing data can help a retailer determine if a 20% discount rather than a 25% discount is enough to increase demand for a product.

Retailers can also determine the impact promotions are having on purchasing behavior changes and use insights to create more segmented pricing and promotion strategies that further optimize sales.

•Create a strong omnichannel experience Beyond promotions, another way to engage customers this holiday season is with an omnichannel experience that allows them to shop seamlessly
between in-store and online.

A planning platform that can use real-time data to optimize scenario planning across multiple channels to tailor pricing and promotion strategies and also ensure that each store and DC has the proper amount of inventory to meet consumer demand could help retailers maintain a competitive advantage.

This holiday season, real-time data that can build end-to-end visibility is critical because, instead of going with gut feelings or store manager feedback to gain insights, retailers should always come back to what the numbers indicate to make an informed decision. Retailers that leverage AI-enabled platforms to achieve greater accuracy in proactive scenario planning strategies for a variety of inventory sourcing, demand, pricing, and promotion situations will have greater success in navigating the 2025 holiday season.