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Listen to the highlights from this quarter:
The past decade has seen Halloween emerge as a significant commerce opportunity for brands and retailers. One of biggest retail success stories in the US and Canada has been seasonal chain Spirit Halloween, whose business model (aptly enough for a Halloween store) relies on the reviving of dead stores – albeit temporarily. The right spooky product can have a significant impact on a retailer’s overall business performance, as seen in 2020 when Home Depo’s viral 12-foot skeleton (‘Skelly’ to his fans) contributed to record sales for the US company.
This year, US Halloween spending is predicted to rise by 13% to $13.1bn according to the National Retail Federation (NRF)– although part of that rise will be attributed to tariff-related price increases.
A desire to capture a greater chunk of that predicted spend is likely one of the factors behind Amazon’s decision to hold its fall Prime Day sales event in October. With its big box retailer competitors Walmart and Target also introducing overlapping discounting events in early October.
In the UK, Halloween spend is set to grow by 3.2% this year to reach a value of £537m according to Global Data. Though this does represent some slowing of growth vs last year, that the 31st falls on a Friday is driving a sense of optimism for some retailers. Speaking to The Grocer, Edward Reaney, Co-op commercial buying manager, shared that “The biggest influence on Halloween sales is the day of the week it falls on”. This because the closer to the weekend the big day falls, the more likely people are to indulge or to host parties.
The increasing popularity of Halloween has led it to be described by cultural critic Sarah Marshall as ‘Millennial Christmas’ – albeit one centred around friends instead of family. With a growing appetite among consumers to indulge each Halloween, this offers an opportunity for brands to tap into those spooky desires.
An October survey report from consultancy firm Deloitte revealed that most US consumers are planning on spending less this Christmas. The combination of tariff-related cost increases on imported goods and fear of a future recession is leading US households to reduce their festive budgets ahead of peak season.
That sense of an economic squeeze will also impact how consumers shop this year – namely, with a strong focus on value. Deloitte’s research suggested that most consumers are planning to reduce their holiday spend through searching for deals (89%), trading down on brands and retailers (77%), reusing or recycling items (73%), and making DIY gifts (49%).
Caution around consumer demand and new import costs are impacting one category particularly associated with Christmas – toys. Mattel, the manufacturer of Barbie and other toy brands, reported net sales of $1.74 billion in its Q3 results, down 6% on last year.
Part of that drop is down to big box stores Walmart and Target in the US – one of the company’s key sales outlets – delaying their Christmas orders. As reported by Quartz, instead of placing large direct orders months in advance (which would have counted toward this quarter’s sales) they are instead taking a more cautious approach, waiting to restock domestically and closer to the peak shopping period when there is a clearer picture of demand.
Though overall holiday spending may look sluggish in the US, projections from Adobe paint a rosier picture for ecommerce specifically, forecasting that online holiday shopping will reach $253.4 bn this year, up 5.3% on 2024’s record-setting sales figures. That is not to say that US online shopping is unaffected by the economic environment, as Adobe also predicts Buy Now, Pay Later (BNPL) will factor into nearly 8% of all holiday online sales.
In the UK, survey data from the British Retail Consortium has suggested inflation and the potential for tax rises are weighing heavily on consumer’s minds as they approach the final quarter of the year, which may affect consumer spending and will likely lead to a similar focus on value to that seen over the past few years.
As in previous years, retailers will likely begin their holiday and Black Friday discounting early to secure their portion of a smaller holiday pot. Indeed, US retailer Best Buy has already announced plans for an early holiday promotional campaign starting on Halloween and extending through the holidays.
However, in a repeat of last year, consumers may hold off on the majority of their purchasing until Black Friday weekend itself in a bid to ensure they benefit from the best deals.
Both retailers and brands should consider looking beyond discounting for other signals of value and stay close to consumer insight to understand what other messaging may achieve cut-through in what may well be a festive snowstorm of percentage off offers.
Consumer confidence is also a challenge for retailers in China, wherepresented with a slowing economy, the nation’s biggest shopping event, Singles Day, kicked off in mid-October. Alibaba, JD.com, and Douyin all launched campaigns immediately after the autumn Golden Week, a seven or eight-day public holiday period encompassing China’s National Day – during which, this year, spending was also muted.
The extension of the discounting event is a response to weak consumer spending, driven by a slump in the property market, US tariffs and domestic competition. Though a decision likely driven by that context, expanding the festival across several weeks may help with logistical and delivery bottlenecks, with purchasing no longer so highly centred on 11th November.
The move from ‘specific date’ to a multi-week period or season has been happening over the last few years. This date creep mirrors how Black Friday has evolved in the US and other markets, with the last few years seeing some retailers kick off their Black Friday discounting as early as October.
The 20th October saw a major Amazon Web Service (AWS) outage that disrupted payments and took many ecommerce sites offline.
AWS is the dominant player in retail cloud services. As reported by Internet Retailing, following the outage, Amazon’s own ecommerce site experienced issues, alongside United Airlines, the McDonald’s app and more. Alongside retailers and ecommerce platforms themselves, payment providers such as banks and transfer apps were also taken offline, leaving some retailers who had remained online unable to process orders. With CNN reporting that the total economic impact of the outage is predicted to be in the hundreds of billions, the outage made for an expensive 13 hours.
Though the outage was resolved by the afternoon, the spread of the disruption should act as a warning to governments about the fragility of our digital infrastructure and the over reliance on a small number of global cloud providers. For retailers, payment providers and product designers should ensure they stress test their infrastructure and prepare a communications plan to keep consumers informed in case a similar event should happen again.
OpenAI has now launched the ability for users to buy within the app with a feature called Instant Checkout.
In the press release for the launch OpenAI explains how this works for the user, saying that “If a product [searched for by the user] supports Instant Checkout, users can tap “Buy,” confirm their order, shipping, and payment details, and complete the purchase without ever leaving the chat. Existing ChatGPT subscribers can pay with their card on file, or other card and express payment options.”
“Orders, payments, and fulfilment are handled by the merchant using their existing systems. ChatGPT simply acts as the user’s AI agent—securely passing information between user and merchant, just like a digital personal shopper would.”
Among the early retailers partnering with OpenAI for Instant Checkout is Walmart. Walmart has been an early adopter of generative AI into its processes and customer experiences, with innovations such as a GenAI bot for merchants, a shopping assistant for customers and product catalogue data enhancements carried out through GenAI.
President and CEO, Walmart Inc., Doug McMillon was keen to place this partnership into that broader context: “For many years now, eCommerce shopping experiences have consisted of a search bar and a long list of item responses. That is about to change. There is a native AI experience coming that is multi-media, personalized and contextual. We are running towards that more enjoyable and convenient future with Sparky [Walmart’s own shopping assistant], and through partnerships including this important step with OpenAI”.
This announcement comes as new research casts doubt on ChatGPT’s ability to drive sales. A new working paper from researchers at the University of Hamburg and the Frankfurt School of Finance & Management based on the analysis of 12 months first party data from almost a thousand ecommerce sites found that referral traffic from ChatGPT converts far more poorly than traditional marketing channels such as paid and organic web search, email, and affiliate links.
Though the researchers highlighted that conversions from LLM traffic had improved over the length of the study, their findings challenge the narrative that LLMs are supplanting traditional web search.
While the introduction of Instant Checkout may make ChatGPT a more significant ecommerce player, it is a good reminder that pre-existing channels are and will remain important.
Agentic AI has been a buzzphrase for the last year or so, and a big part of the excitement around it has been driven by its potential to transform commerce by acting, as OpenAI suggests in its press release, as a ‘digital personal shopper’. Should the use of agents to do our shopping for us become widespread, that would represent a huge shift in the consumer brand relationship.
Reckoning with the transformative potential of these technologies, Shopify has introduced new rules around shopping agents. July saw the ecommerce giant introduce a warning directly into the code powering merchant storefronts that “Automated scraping, ‘buy-for-me’ agents, or any end-to-end flow that completes payment without a final review step is not permitted”.
As covered in October’s instalment of Econsultancy’s Digital Shift webinar, Shopify’s objective is to retain control over checkout and protect its revenue base. However, there is an interesting friction here as Shopify is one of OpenAI’s commerce partners. As Neil Perkin, co-host of Digital Shift said, “Who owns the agentic transaction will be a defining question within ecommerce”.
Also responding to potential concerns around the rise of shopping agents and the potential for rogue purchasing or fraud, October saw both Visa and Mastercard unveil new tools to help secure agentic transactions from end to end.
Trust will be vital to the rise of agentic commerce, and protecting payments will be foundational to that. Writing on Mastercard’s blog Pablo Fourez, Mastercard’s chief digital officer, laid out the critical questions here “How can they distinguish between legitimate AI agents and malicious bots? How do they know the consumer authorized the agent to make the purchase? How can they know if the agent has carried out the consumer’s instructions correctly?”.
Mastercard’s response to those questions is its Agent Pay Merchant Acceptance Framework which registers and authenticates agents before any transaction.
Similarly (and launched on the same day), Visa has introduced their Trusted Agent Protocol, allowing merchants identify verified AI agents and securely process their transactions.
The Trusted Agent Protocol brings works based on agent-specific cryptographic signatures, that include the following information:
While this is a Visa specific response, the organisation was keen to highlight in its press release that ‘enabling agents to safely and securely act on a consumer’s behalf requires an open, ecosystem-wide approach.’
It has been a tough few years for the US big box store Target. The combination of declining store traffic, inventory troubles and customer backlash have all contributed to the company warning that it expects annual sales to decline this year. But, following a change in leadership, the retailer sees technology as part of its path back to growth.
During its annual Demo Day this October Target introduced a range of new AI-enabled tools. Most interesting was the launch of ‘Trend Brain’, a GenAI-powered trend intelligence platform designed to surface emerging consumer trends based on a wealth of global data. Allowing the retailer to identify emerging styles and design pattern, and stock their shelves in response.
The descriptions of ‘Trend Brain’ sound similar to the sophisticated AI trend spotting machinery that has been foundational to Shein’s global growth. In an environment where the trend cycle appears to be speeding up, Target will be looking to replicate that success.
Target is also looking to integrate AI into its ecommerce experience via improvements to its internal search, and behind the scenes via AI enabled inventory management and store operations.
In a blog post on the company’s website, chief information and product officer Prat Vemana was keen to underline how AI was improving the customer experience, sharing that, “It helps reduce checkout times, guide team members to assist guests faster in the aisle, streamline returns and Drive Up, and ensure shelves are stocked with the right products.”
Though Target are betting on AI enabled efficiency and experience improvements as a key part of their turnaround plan, they are also doing more traditional cost cutting as late October saw them eliminate 1800 corporate jobs, the retailer’s first major set of layoffs in a decade.
The China tech company has reported that it has already made back its huge investment in AI for ecommerce. This announcement marks Alibaba as one of the first examples of a global retailer reporting direct financial gains, not just cost savings, from AI investment.
Among the drivers of this performance was increased return on advertising spend of 12% across Taobao and Tmall following the integration of AI, with Alibaba attributing this improvement to smarter ad matching, dynamic pricing, and personalised product recommendations.
Speaking ahead of the launch of the Singles Day promotional period, Alibaba’s Vice President Kaifu Zhang shared that, “Our integration of generative AI drove significant improvements on top of an already mature tech stack.”
He added, “We are confident that AI will deliver even greater value across Taobao and Tmall. This includes further gains on core search, recommendation, and advertising engines, empowering the merchants’ day-to-day operations and lowering costs, and exploring new AI native shopping experiences. This year marks the first of many future 11.11s with generative AI deployment at scale”.
This announcement follows growing scepticism around GenAI’s ability to produce measurable returns on investment beyond efficiencies. As many retailers and brands consider how to scale their own AI investments, there will be a strong demand for Alibaba to share more details of how they drove this success.
Amazon has announced plans to close all of its UK based Fresh supermarkets as part of a change in its grocery strategy. Five of the Fresh locations are expected to be converted into Whole Foods stores while the remaining 14 will close.
The unfamiliarity of the high tech, checkout free Fresh stores without some other compelling value proposition for shoppers, created a barrier for consumers, many of whom may have felt awkward walking out of the shop without having visited a till.
The closure of the Amazon Fresh stores follows the roll-back of till-less experiences from other supermarkets, with Sainsbury’s having removed their ‘Just walk out’ cashier-less tech earlier this year, and Tesco having brought tills back as part of a ‘hybrid’ system at their GetGo stores,
Amazon sees a greater opportunity in grocery ecommerce. From next year the retailer plans to offer same day delivery for grocery items, alongside other products available on Amazon.co.uk. This follows a similar launch in the US.
Amazon has been trying to become a serious player in grocery ecommerce for some time now without significant success. However, as British retail consultant Natalie Berg suggests in Management Today, given the size of Amazon and its broader company ecosystem, just converting a sizable share of Amazon customers may be enough to validate their entry into the grocery sector – even if they never come to rival leaders like Walmart in the US or Tesco in the UK. Lending weight to this idea, Amazon’s announcement highlighted that the company wants to increase the number of UK Amazon Prime members with access to groceries through its partners, which include Iceland, Morrisons, and Co-op.
September saw Door Dash reveal Dot, its new autonomous delivery robot. Built in-house, Dot can autonomously drive on bike lanes, roads and pavements to deliver food and small packages at up to 20MPH. DoorDash says it’s already testing the robot in the city of Phoenix and plans to expand it to the area’s 1.6 million residents by the end of 2025.
At one tenth the size of a car, Dot is designed to be able to deal with navigating an urban environment – and is also designed to look cute, with front headlights positioned to resemble eyes and a central button designed to look like a mouth.
Giving Dot a face and a name is likely a tactic to shape resident’s responses to the robots occupying their bike lane and deter theft or vandalisation. Such vandalisation may well become more common due to a rise in anti-robot and AI sentiment and the highly publicised burning of autonomous taxis as part of the recent protests in LA.
This is a problem other delivery tech companies have also previously looked to solve for their delivery robots. Along with tracking and security cameras, tech company Starship ensured that their robots would ‘screech’ when picked up by an unauthorised person, and reported in 2020 that this was successfully deterring theft.
Alongside the launch of Dot, Door Dash has also expanded its partnership with Serve, a separate autonomous sidewalk delivery company, to bring robot deliveries to LA. DoorDash describe this as a part of a multi-modal delivery platform strategy, combining human delivery, drones, and autonomous robots, with the aim of ‘increasing demand while lowering emissions and traffic congestion’.
October saw Door Dash rival Grubhub announce a pilot with self-driving technology company Avride. The New Jersey based pilot will test Avride’s AI-based self-driving robots’ ability to navigate a metropolitan area and deal with diverse weather conditions. Following the pilot, Grubhub plans to expand robot deliveries to more US markets.
For a while it felt like the air had gone out of the excitement around autonomous robot deliveries, as early prototypes struggled to deal with the complexities of the real world. However, the progress across all forms of autonomous vehicles and other issues such as the detentions of delivery workers in the US, may be making these knee-high robots an increasingly attractive delivery alternative.