In this blog series, we’re sitting down with top Algolia executive voices to discuss innovations shaping the future of retail, consumer trends to watch, and practical advice for businesses navigating the age of AI search. 

To continue the series, we spoke with Piyush Patel, Algolia’s Chief Ecosystem Officer, on his predictions for consumer spending for the rest of the year, big summer sales and what we can expect for the holidays. 

Q: Can you sum up consumer spending so far in 2025 and how you expect it to progress through the rest of the year?

A: Throughout the beginning of this year, we saw consumers make a flurry of panic purchases on big-ticket items like cars and home appliances to get ahead of tariffs, signaling that these consumers have less purchasing power now. Total household debt also increased by $167 billion to reach $18.20 trillion in the first quarter 2025, according to the latest Quarterly Report on Household Debt and Credit. With the increasing debt, unpredictable global politics, and other factors, consumers, retailers, and businesses across every sector are struggling to plan.

Consumers are split in how they’re spending, but it’s clear that price-conscious behavior remains at the core. Some are already purchasing or planning out how they will purchase items that they won’t need for months – like holiday gifts – in case these items get more expensive or inventory runs low. In fact, according to a recent survey we conducted polling 1,000 US-based adults, half of consumers are planning to purchase winter holiday gifts during summer sales or Prime Day. Others are narrowing their focus to just the essentials they need this week. These two behaviors are squeezing out spending on medium-term needs and causing many to pause plans for things like non-essential home upgrades or seasonal wardrobe refreshes. 

Q: Reflecting on 2025 to date, are you seeing any shifts in how consumers search for and discover products online – and how should retailers adjust their strategies to prepare?

A: Over the last 30 years or so, we had to go to the store, buy an item, bring it home to try it and then go back into the store if a return was needed. Then ecommerce became a digital version of the store and you could do most of those things from the comfort of your couch. We’re now seeing the beginnings of the next big shift: AI shoppers. We’ll soon have an AI-powered shopping agent doing the search and discovery for us. Wealthy shoppers had that luxury before with personal shoppers, but now everyone will benefit from one. The agent will handle the search and discovery part and the process will quickly become so seamless that there isn’t even a “customer journey,” you just get the purchase you want.

For retailers to prepare, they need to ensure they have high quality, descriptive, and accurate data on their inventory in place. Furthermore, they must ensure their data can flow between systems, eliminating any silos. Most retailers’ catalogue data is currently fragmented and incomplete, which is something that won’t work for the next evolution of ecommerce. Maybe people are searching for things in ways that brands haven’t already defined them, signalling incomplete data that must be unified and high velocity retrieval.

Q: Are there any rough predictions specifically around how you think Prime Day and other summer sales shopping will stack up to recent years? And do you think Amazon or other retailers will do anything differently this year to amp up summer sales?

A: According to our recent survey, 87% of consumers plan to shop during summer deal days. That said, 64% say their summer shopping budget has tightened this year compared to last year and that percentage goes up to 73% for gen Z. It’s really a coin toss this year on how sales will net out as consumer behavior and sentiment have become a bit unpredictable, but we know consumers are more budget conscious this year. As for retailer plans, I’m also sure warehouses will be fully stocked this summer in the lead up as retailers make educated guesses on the popular items and once again plan for the ever elusive Tariff threats. 

Q: Beyond deep discounts, what other factors are driving consumer purchasing decisions during back to school shopping and summer sales this year, and how can brands better tap into those motivations?

A: 75% of our survey respondents with children under 25 said they plan to shop back-to-school earlier this year compared to last year, with 55% saying they hope to get better deals that way. That said, there is a lot more stability in back to school shopping because of the necessity surrounding the purchases; students will always need school supplies and it is not discretionary spending. We may see people switch from premium to basic products where quality differentiators are smaller (think pencils or notebooks) to save on costs. In general, 62% of consumers say they would buy a similar item or brand instead of their preferred choice if it was available at a much lower price. 

Q: How can retailers optimize their ecommerce platforms for back to school shopping?

A: A suggestion we tend to discuss a lot with our customers is adding new features to the consumer shopping experience such as ‘watch this item’ for inventory and price change triggers. Getting a better idea on what consumers ‘might’ purchase will help retailers better navigate the lack of clarity in regards to tariffs, inventory, and consumer demand.

Q: What is a creative strategy retailers can employ to capture attention, stand out and drive loyalty with consumers beyond discounts? 

A: Let’s look at a consumer that needs to buy multiple items from more than one store. The items will be shipped in different packages by different vendors. I think brands should come together and offer bundles, discounts, and ship items together if they are all coming from the same co-bundled warehouses – similar to a DoorDash or UberEats that recommends other products and restaurant add ons along their route. It would be efficient for the brands and the delivery companies, and as a consumer, you could get everything in one. There are ways to do partnerships to control costs and drive efficiency. This may be easier for private brands owned by the same holding companies, but I do think it’s an interesting strategy to consider that could lower the cost of acquisition and improve logistics.

Q: Why is Algolia’s technology a major game-changer for retailers?

A: To be ready for the big AI-driven shift in the way consumers shop, you have to have cleaner, better data. The speed at which Algolia can update data in real-time means that retailers don’t have to take on a multimillion dollar project to fix their backend. Algolia will be the place where they get their data ready to deliver to this next generation agent-driven world. 

Algolia also recently announced the release of its MCP Server, the first component in a broader strategy to support the next generation of AI agents on the heels of its new AI agent experience. This new offering enables large language models (LLMs) and autonomous agents to retrieve, reason with, and act on real-time business context from Algolia, safely and at scale, making it more efficient to get to the consumer’s outcome.

Our existing ‘multi query’ capability allows for that bundle concept for brands to help consumer find related products from their co-sell partner from each other.  

To learn more, check out the press release here.