Christmas Consumers Are In a Festive “Frenzy” and Retailers Need to Reduce Friction

Ah, Christmas shopping. As popular festive media would have us believe it’s a cosy experience bathed in a warm glow, possibly featuring Richard Attenborough as Santa Claus or Will Ferrell decorating the toy department in paper crafts in a fit of elfin enthusiasm.

These days, more and more of our Christmas shopping is taking place online instead of in fancy flagship department stores. And now, of course, artificial intelligence is adding a whole new dimension to the festive scramble.

Festive frustrations

VML’s recent report ‘The Future Shopper 2025’ revealed that despite developments in technology, many retailers are still failing to meet consumer expectations – and with the holiday season looming large, that looks like a problem. Whatever frustrations shoppers experience the rest of the year are magnified in mulled wine season.

“The festive period (and the lead up) is certainly a source of stress for consumers, but also of enormous reward for retailers, with many making significant proportions of their revenue during peak and the lead up to the festive period,” says Hugh Fletcher, global content and thought leadership director at VML. “Consumers are also in a frenzied state of buying, be that to take advantage of peak offers, or to source presents for their loved ones.”

“With such a high level of activity, online experiences are stress-tested to their maximum, and the figure of 45% often abandoning their purchases due to frustrations with the online shopping experience will only get higher.”

One of the phenomena highlighted in the report is ‘compressed commerce’, that is that consumers’ patience to wait from ponder to purchase is shrinking. “At such periods of stress, the concept of “compressed commerce” is even more important – this is the idea that consumers want to get from inspiration to purchase as quickly as possible. Or, to put it another way, retailers must work out how to remove as much friction from the shopping experience as they can,” says Hugh.

It’s all the more reason for retailers to make sure that their online experiences and the supply chains underpinning their operations are slicker than ever. “Issues that often arise at this time of year might include availability, delivery times, ability to effectively search and find products. More than ever, the festive period will highlight elements of the experience that are not working.”

How customer-centric are you really this Christmas?

And the risks of getting it wrong are also greater. Considering the findings unearthed in the report, the gap between retailers’ perception of how helpful they are for their customers and their customers’ perception, the festive period can be particularly exposing.

“Already 51% say that while businesses talk about being customer-centric, their online experiences would suggest otherwise while the same percentage will not shop with retailers or brands that do not match their expectations of online shopping.
“All of this is a major opportunity for retailers and brands that can be seen to be addressing consumers’ online and offline shopping issues.”

Presents and pain points

When retailers and brands prepare for the holidays, they are often focused on their big creative Christmas marketing push. But all these efforts can be for nought if shoppers can’t get what they need because of low product availability (which is a particular problem if a certain item is linked to a promotion and isn’t significantly stocked) or clunky, hard to navigate e-commerce experiences and overstimulating, stressful in-store experiences.

Another familiar festive pain is the last minute gift buying rush. And while that historically was largely the domain of in-person retail, with more Christmas shopping online, retailers should look to how they make lives easier for those who have inevitably left it to the last minute, especially on delivery.

“The point about last-minute shopping is valid. We live in a world of the endless online aisle, and in a period where 32% of all consumers expect the products that they order online to arrive in less than two hours, this means that retailers must offer lightning-fast fulfilment. Failing to meet these rapid delivery expectations means risking losing last-minute festive sales to more agile competitors.”

But, inevitably, the most crucial pain point – particularly when you’re looking at Christmas in an ongoing cost of living squeeze – is price.

“In this current world climate, where consumers are concerned about their finances, it is even more important, so retailers should seek to offer consumers the best price, and transparency and honesty around this pricing too. Perhaps one way of delivering this is through personalised offers – this is the key reason that consumers like personalisation – the ability to get deals, at the best price, specifically for them,” says Hugh.

Is AI on the naughty or nice list?

One place you might imagine that retailers would be winning is in the use of AI to sprinkle a bit of automated pixie dust on the shopping experience. That’s what headlines might have you believe, but the truth is, this Christmas at least, retailers haven’t particularly embraced the possibilities of AI.

“Our data actually tells a slightly different story,” says Hugh. “While usage of AI has exploded (68% of global consumers claim to have used AI), when it comes to the customer journey (inspiration, information gathering, search and purchase), the usage of AI is still relatively low – around 2-5% depending on what part of the journey the consumer is in.”

In fact, when retailers do have a go, VML have found that shoppers aren’t turned off by their experiments. “What we do know is that 47% of consumers ‘love’ how retailers are starting to use AI. Brands and retailers can capitalise on this explosion of usage and love of AI by focusing on practical, utility-driven applications that enhance the customer journey. For instance, retailers could and should use AI for personalised recommendations, improving search, summarising ratings and reviews and improved product information,” he says.

“At this stage of AI adoption, the retailers who will benefit the most, are those that can seamlessly integrate the benefits of AI into a customer journey allowing for customers to easily interact and benefit from it.”

Perhaps by next Christmas though, AI will have significantly changed the whole retail landscape. Hugh views the potential revolution as having two phases. The first is just more frequent use of AI by both retailers and consumers, changing how we search and get inspiration for our purchases. Longer term, however, Hugh sees agentic AI taking on the role of Santa’s little helpers.

“This means AI will anticipate needs, curate information, negotiate prices, and even execute transactions autonomously,” he says. “The focus will shift from brand-controlled touchpoints to AI-driven pathways, requiring brands to design for an "agentic future" where understanding and integrating with intelligent agents is paramount. This will transform loyalty from winning hearts and minds to meeting the uncompromising standards of efficient algorithms.”

Getting ready for the holidays means getting the basics right

So when the scramble of Christmas shopping (and in the UK, the Boxing Day sales) has settled, retailers looking to gear up for 2026 may find allure in the baubles and tinsel of artificial intelligence. But while there’s certainly a lot to be gained there, the retail elves would also do well to make sure that they have the fundamentals right too,

“There is a significant risk of running before they can walk, as many retailers are still failing on fundamental customer experience basics,” warns Hugh. “As we’ve mentioned already, our report reveals 46% of shoppers are "amazed at how poor the online shopping experience is" and 45% abandon purchases due to frustration.

“While AI offers exciting opportunities, prioritising "flashy digital features" over core functionality (as 53% of consumers observe) will only exacerbate existing frustrations. Brands must first master the fundamentals before fully leveraging advanced AI capabilities.

“If we boil it down to the basics, consumers want to be able to make the right product choice, easily find the exact product they want, have it available to purchase, at the right price, and in their possession as quickly as possible. The key to future retail success will be in working out how AI can help to deliver on these expectations.”

Find out more about The Future Shopper 2025 here.

Photo by Filiz Elaerts on Unsplash​