Most consumers this holiday season are ready to let AI streamline their shopping and payment experience, according to the latest Applause Holiday Shopping & Payments Survey 2025. The findings showcase how digital commerce is evolving, driven by shoppers who value quality, convenience, and personalization across every touchpoint. This new reality means retailers must adapt quickly to meet changing consumer expectations and embrace smart technologies for sustained success.
AI Is Now Essential for Holiday Shopping
A remarkable 69% of consumers say they are likely to use AI to support their holiday shopping, with 94% willing to try a shopping agent powered by artificial intelligence. Popular use cases include finding deals, discovering gifts through visual search, and accessing personalized recommendations—reflecting a dramatic shift in how people interact with brands online.
Despite this demand, only 50% of software professionals report their organization is developing a shopping agent. Of the group pursuing advancements, 32% work in-house, and 18% partner with leading tech companies. Programs such as OpenAI Instant Checkout and Microsoft’s Copilot Merchant are fast becoming industry benchmarks for embedded commerce solutions.
60% of shoppers plan to use AI to find deals, 56% seek gift suggestions, and 53% will leverage the technology for visual searches. This data signals an undeniable movement toward agentic and recommendation-driven digital shopping.
Online and In-Person Shopping Both Surge
92% of respondents plan to shop online this holiday season, with 41% intending to spend more than last year. At the same time, 90% will shop in person, and 36% expect to spend more in stores compared to the prior season. However, returns are becoming routine; a notable 33% of consumers anticipate sending gifts or purchases back, treating returns as a regular step in online retail.
Last year’s return costs to retailers soared to nearly $890 billion, highlighting the importance of streamlined return policies and omnichannel support in fostering customer loyalty.
Social Media’s Influence Is Unmatched
Social media shopping, powered by AI-driven recommendations and ads, continues to surge. 57% of shoppers are likely to make purchases directly on social platforms this season. Among top channels, Instagram (68%), Facebook (63%), and TikTok (53%) lead the pack as preferred shopping destinations. These results build on the previous year, when 76% of consumers admitted that social media influenced their holiday buying decisions.
Digital Wallets and BNPL Dominate Payment Trends
Consumers now demand true flexibility in checkout, preferring seamless payment methods and high-quality digital experiences. 78% are likely to abandon a purchase if their favorite payment option isn’t accepted—driving rapid adoption of new solutions.
Of the 40% who recently adopted new payment methods, 54% now use digital wallets, which continue rising in popularity. Additionally, 78% who have used Buy Now, Pay Later (BNPL) intend to use it again for holiday spending. Yet, only 15% of developers report their apps currently offer BNPL, showing a gap in market readiness.
PayPal, Klarna, and Affirm are the most preferred BNPL providers, with consumers ranking interest rates and fee transparency as their top considerations.
Omnichannel Experiences Are Make or Break
The survey reveals omnichannel integration is now crucial for retailer success:
- 51% would leave brands offering poor omnichannel journeys.
- Top preferred services include BOPIS (Buy Online, Pick Up In Store) at 78%, delivery lockers at 41%, and curbside pickup at 41%.
- Inconsistent website/app performance remains a major pain point. 62% will abandon shopping carts if bugs occur after two attempts, and 30% will walk away after a single issue at any point in the purchasing process.
Globalization and Localization Fuel Expansion
Retailers are expanding across borders with a strong focus on localization, critical for customer retention. 68% of companies have sites/apps in multiple languages, and 67% tailor checkout flows to different cultures. 65% of organizations serve up to nine countries, while 35% operate in as many as 50.
What’s Needed Now?
Retailers must innovate quickly, offering secure, smooth omnichannel experiences, preferred payment options, and AI-powered shopping tools. “Flexibility and quality are essential factors for driving customer retention and loyalty,” said Luke Damian, Chief Growth Officer, Applause. Businesses able to adapt to this evolving landscape will capture shoppers eager for convenience and personalized service.
