How AR & VR Redefined the Online and In-store Experience

With AR & VR solutions on our plate, the customer's retail journey has the potential to be more exciting than it has ever been before.

You may be surprised to learn that augmented reality was not born with video games. Its roots go back to 1968, when Harvard professor and computer scientist Ivan Sutherland developed the first head-mounted display called "The Sword of Damocles." It allowed users to experience computer-generated graphics that enhanced their sensory perception of the world.

The term "augmented reality" itself was coined by Boeing researcher Tom Caudell in 1990. Similar to many technological inventions, AR was first used in the aerospace and aviation industries. Then it stormed the world of video games - from "Quake" in 2000 (in addition to a head-mounted display, players had to wear a backpack with a computer and gyroscopes) to the enormously popular Pokemon Go, which brought AR into the mainstream.

Try before you buy

The first brand to use AR for commercial purposes was BMW in 2008 with its AR-enhanced print ads. Others quickly followed: Converse with an AR app for trying on shoes (2012), Google with its Google Glass devices (2014), and IKEA with its game-changing app IKEA Place, which allowed customers to virtually preview their home furnishing options before actually buying them (2017).

These try-before-you-buy experiences have started to influence the retail industry. From previewing furniture in your home to trying on Gucci shoes virtually, AR became much more than a nice-to-have feature. It grew into an essential technology for retailers, and the Covid 19 pandemic accelerated its development by about five years. According to a 2019 global survey by Nielsen, consumers named augmented and virtual reality as the top technologies to help them in their daily lives, and the AR market is expected to exceed $198 billion by 2025.

Shaping the customer journey with AR

The retail industry has much to gain from AR. New technologies are improving engagement and involvement, creating a smoother multichannel customer experience. A consumer can actually become a part of the brand experience, and get a personal, multisensory, emotional journey that enhances the confidence of purchase. It has been proven that AR solutions, such as virtual fitting rooms, increase customer satisfaction and brand awareness, whilst reducing customer return rates. They can also be great tools for marketing as they provide interactive content that piques user interest.

So the question arises, why haven’t they been used before? Why are we experiencing the AR boom right now?

The first reason is that many brands previously felt that the AR was "inaccessible" to the average customer. Some were hesitant to implement tech solutions because they had "bad experiences" before.

However, online shopping is now one of the most common activities, and the pandemic has normalized it for almost all consumers. Covid-19 forced companies to implement changes they would have otherwise likely postponed indefinitely.

The AR revolution was greeted particularly warmly by three retail industries: furniture, beauty and fashion.

AR in furniture retail

As I mentioned earlier, IKEA Place has changed the way we shop for furniture. The AR app, recently revamped as Ikea Studio, lets you design entire rooms and capture full 3D plans with dimensions, including windows and doorways. It also recognizes your existing furniture and places white boxes on the plan where your current pieces are located.

Home Depot also developed an AR app that allows customers to place virtual items in the real world. Justin Burleigh, vice president of e-commerce and connected experiences at Home Depot, admitted that customers who engage with the company's AR feature convert two to three times more than those who do not.

AR in beauty

In response to the pandemic, Sephora has replaced physical product testing with digital testing. Sephora's AR app, Virtual Artist, uses facial recognition to give customers a virtual makeover and experiment with its vast library of eyeshadows, lipsticks, and false lashes. Ulta offers a similar virtual try-on solution with its GLAMILab, while L'Oreal provides a tool that allows users to test not only facial products but also hair colors.

AR in fashion and footwear

The fashion and footwear industries are now leading the way with AR and VR virtual try-on solutions. They allow customers to visualize and interact with an item they are interested in before making the actual purchase. Virtual fitting rooms, fitting apps, and smart mirrors are technologically advanced enough to ensure a high level of realism. Even more crucial is that users feel comfortable with them, as AR filters are already embedded in some apps like Snapchat or Instagram, making them a new purchase channel.

Data proves that implementing virtual tools increases conversion and solves one of the pain points of online retailers – the pandemic-related increase in returns.

Macy's was able to reduce its return rate to less than 2% after implementing virtual fitting rooms last year. Shopify saw a 40% drop in returns last year thanks to AR visualization.

Improving the online shopping experience

Many customers are still reluctant to visit physical stores because of the potential Covid-19 risk. They try to avoid crowded places or touching items that someone has touched before them. As a result, they are likely to spend more time shopping online. This is a great opportunity for retailers to create a more immersive and engaging experience and to give their customers more confidence in what they are actually buying.

AR and VR can also help with the purchase of complicated products, such as cars. Instead of visiting numerous car dealerships, a customer can schedule a virtual meeting with an expert and experience some of the vehicle's features virtually.

A McKinsey study found that the average car buyer visits 1.6 car dealerships today, compared to five dealerships 10 years ago.

Using AR in an online shopping experience can also be a way to connect with younger customers. Luxury fashion brands such as Estée Lauder, Gucci, and Miu Miu offer mobile arcade games, while Louis Vuitton sells "digital skins" (branded clothing and accessories that can be used to dress characters) for the esports game League of Legends.

AR as a part of in-store experience

AR also improves the in-store experience. One example is a simple navigation tool that guides customers through the store and allows them to find items quickly. Some companies are using AR with video walls to provide a virtual in-store try-on experience. Others go a step further and offer gamification experiences – for example, Burberry recently partnered with Snapchat for an in-store game AR.

Lexus – like other car manufacturers – gives potential buyers the chance to test drive the car without leaving the showroom. Shoe company Toms, which offers a free pair of shoes to a child in a developing country for every pair purchased by a customer, developed a 360-degree Virtual Giving Trip campaign to allow customers to experience the impact of their purchase firsthand.

The future of AR and VR in the retail sector

AR and VR will evolve in the future and become a part of the omnichannel customer journey. Existing solutions are likely to use complementary technologies, such as body scanners for a better and personalized fit. Furthermore, virtual fitting has the chance to become a habitual step in the customer journey, especially when buying more luxurious goods.

To be effective, AR and VR must be embedded in the overall commercial ecosystem. It will not completely replace the in-store experience, but rather complement it and make it more attractive to consumers. Brick-and-mortar stores still have a chance to thrive, especially if they manage to create a unique user experience. If you want to learn more on how this can be done, jump into this article.

The retail of the future is a hybrid environment combining physical and online experiences, along with advanced technology such as AR and VR, in an integrated platform. Digital transformation, catalyzed by the pandemic, is in full swing and retail must evolve in response. AR has already proven to add tremendous value to consumers. Now brands need to understand that it is part of their customers' journey both in the present and future worlds of retail.