Fiverr International research flags an AI disconnect between shoppers and retailers this festive season

More than 85% of UK retailers plan to offer steeper festive discounts; a significant increase when compared to the last two years where only 54% in 2023 and 57% in 2022 planned to go down this route.

That’s according to Fiverr International, which surveyed 2,539 consumers and 2,508 small-to-medium business leaders globally, including 500 consumers and 500 business leaders in the UK, in partnership with Censuswide. 

70% of UK retailers expect sales to increase this year compared to last year but 23% of Brits plan on spending more this year compared to last year.

The UK's cost of living crunch continues to impact shoppers as a third prioritise good deals when shopping. Frugality increases with age. 40% of 16-24-year-olds said they will spend more whereas only 21% of 45-54-year-olds are willing to spend more, significantly dropping to 8% for 55+. 

For retailers, using AI tools like ChatGPT to expedite work is the number one marketing strategy for two years in a row with 69% of respondents planning to invest in AI this year. Of those investing in AI, 31% will embed AI in their entire customer journey.

The more employees a UK retailer has, the more likely they will be to use AI. Almost three in four businesses with 50-99 employees will use AI, rising to 87% for companies with over 100 employees. 

On the flip side, British shoppers are reluctant to use AI this festive season. 73% of Brits don’t use AI for Christmas shopping and 39% will not consider using it for this purpose.

Google search is the top way people plan to shop this festive season (37%), closely followed by shopping in-store (31%). Despite this, investment in in-store promotional activity continues to be low on the list for UK retailers three years in a row - 22% will reduce investment in this area in 2024.

The top three challenges businesses will encounter this festive season remain the same as last year. SMEs continue to feel the weight of big brands like Amazon. 49% of respondents said competition from larger e-commerce brands and inflation-impacting sales were their greatest challenges.

These were closely followed by supply chain disruptions or inventory shortages (38%).

Only 17% of SMEs surveyed are not planning on reducing investment compared to 31% in the previous year.

Digital marketing tools are the top area where UK retailers plan to invest the most this year as part of their festive season strategy with social media ads continuing to be a top three investment in three consecutive years (40%).

Hiring seasonal workers is the top avenue retailers take when seeking additional support during the festive season (61%). Businesses are looking to freelancers as 31% have relied on freelancers to support them during the festive season for two years in a row now. 

Bukki Adedapo, Fiverr International Expansion Lead, comments: “As we approach peak shopping season, retailers will not only need to overcome ongoing macro-economic obstacles but also tailor their approach to changes in consumer behaviour.”

“The cost of living crunch continues to impact both shoppers and retailers so being smart with investment will be crucial in the coming months. It’s promising to see that freelance support has not faltered as businesses continue to rely on this group, year on year.”

2024 RTIH INNOVATION AWARDS

AI is a key focus area for the sixth edition of the RTIH Innovation Awards, which is now open for entries.

The awards, sponsored by CADS, 3D Cloud, Retail Technology Show 2025, and Business France, celebrate global tech innovation in a fast moving omnichannel world.

It’s free to enter and you can do so across multiple categories.

Key 2024 dates

Friday, 25th October: Award entry deadline 

Tuesday, 29th October: 2024 shortlist revealed

30th October-6th November: Judging days

Thursday, 21st November: Winners announced at the 2024 RTIH Innovation Awards ceremony, to be held at RIBA’s 66 Portland Place HQ in Central London.