AR & VR in Retail eCommerce

Part
01
of two
Part
01

AR/VR Trends in the Retail Industry

Some trends relating to the use and adoption of AR and VR technology in the retail sector include the use of 5G technology, the use of AR/VR to explore products, augmented shopping, retail marketing through social media, sharing the shopping experience with family and friends, the use of VR in employee training, and designing custom goods/DIY projects. Details around each of them are given below.

1- Retailers Using 5G Augmented Reality

OVERVIEW
  • With the advent of virtual and augmented reality, retail has transformed for the better. However, 5G technology will further enhance the user experience for those who are looking to try products before they buy them. 5G technology enables retailers to extend shopping experiences beyond stores.
IMPACT
  • Furniture retail is one of the most-impacted sectors by this technology. IKEA, for example, the pioneer among many others, offers its customers the ability to see how their 2,000+ items will fit into their homes before they even buy them.
DRIVING FORCE
  • 5G technology can accelerate the process of AR and VR adoption.
  • This acceleration is the driving force behind new and increased revenue streams for all use cases, hence a source of attraction for retailers.
EXAMPLES
  • 5G combined with AR can also be used to try on makeup by downloading complex Instagram filters without having to worry about connection issues.

2- Use of Augmented/Virtual Reality to Explore Products/Categories

OVERVIEW
  • Augmented/virtual reality offers customers the ability to browse products at a given retail store from the comfort of their homes. Compared to a label on the shelf, AR provides a whole world of information to customers instantly.
IMPACT
DRIVING FORCE
  • Convenience is the key motivating factor for customers that attracts them to the use of AR by retailers.
EXAMPLES
  • A wine company in Australia, Treasury Wines Estates, implemented AR to introduce AR labels through their Living Wine Labels app.

3- Augmented Shopping

OVERVIEW
  • Much like the use of AR to browse products and categories, implementing AR into the shopping experience also offers customers to try different products by visualizing them before purchasing. This trend is also known as experiential shopping.
IMPACT
  • From furniture retailers (e.g. IKEA and Wayfair) to makeup brands (e.g. Sephora, Cover Girl, and L'Oreal), retailers are implementing AR to enhance their shopping experience.
DRIVING FORCE
  • Paul Lee, head of telecomms, media and, technology research at Deloitte, thinks laziness is the key driving force behind the trending AR technology in shopping experiences. He said, "People are lazy, they like immediacy, so if you can deliver an immediate experience that's better than one which has a lag to it, you'll have an advantage."
EXAMPLES
  • IKEA and Wayfair let consumers place and manipulate items from their catalog in their own homes and see for themselves how they look.
  • "Magic mirrors" from Sephora offer customers the ability to virtually try on makeup and see how they look.

4- Retail Marketing Through Social Media

OVERVIEW
  • Not only sales but also marketing in the retail sector has also seen the innovative use of AR/VR to their advantage. Brands are now creating AR-based social media marketing campaigns to catch their audience's attention.
IMPACT
  • Brands and retailers are creating marketing campaigns that are not easy to replicate and at the same time generate high engagement from their target audience.
DRIVING FORCE
  • Content on social media is highly shareable and drives engagement for the brand. It also allows the campaigns to be spread through word-of-mouth marketing and user-generated content. These features are highly attractive and lucrative to brands and retailers.
EXAMPLES
  • Foot Locker, a sportswear brand, created "a scavenger hunt in Los Angeles, which led sneakerheads to a location where they could purchase an early, limited-edition drop of the LeBron 16 King Court Purple court shoes." All of the shoes were sold within 2 hours.

5- Sharing the Shopping Experience

OVERVIEW
  • AR and VR will offer the ability to share virtual experiences with family and friends through social media. This will allow multiple shoppers to be present in a virtual store simultaneously, even if they are sitting at their homes at a distance.
IMPACT
  • Although this technology has not widely been adopted yet, it has the ability to transform the shopping experience and allow individuals to adopt virtual co-shopping as a potential pastime.
DRIVING FORCE
  • This technology will address the loneliness factor of being alone in a virtual store and not being able to show and elicit a second opinion on what to buy among multiple choices.
EXAMPLES
  • L'Oreal's Armani Beauty incorporated AR into their WeChat application.
  • L'Oreal's ModiFace adopted AR technology that enables customers in China to try on makeup products from Armani Beauty using their mobile phones and then share snaps through social media.

6- VR for Employee Training

OVERVIEW
  • The use of VR for training employees is making waves in the retail industry. VR can be used for sales training and testing employees in a given situation and stress testing potential candidates.
IMPACT
  • Retail giants like Walmart have taken up this opportunity and many more are following suit.
DRIVING FORCE
  • Retailers with millions of employees have to make sure that new employees are job-ready and that they are aware of what to do when faced with real-world situations. VR training offers them the ability to train them using real-world situations and make them ready from day 1.
EXAMPLES
  • Walmart distributed 17,000 Oculus headsets to their stores and learning centers to train new employees.
  • KFC uses VR to train employees through their training simulator. Using the simulator, employees have to prepare chicken "the KFC way".

7- Designing Custom Goods/Do-It-Yourself

OVERVIEW
  • One of the best things that AR/VR technology has offered to customers and retailers have taken note of is the ability to design custom goods. Retailers have designed software through which customers can design their desired products themselves.
IMPACT
  • This technology has given the shopping experience a new dimension and customers can be designers of the products they want to purchase.
DRIVING FORCE
  • Creating a custom order was a time-consuming undertaking and even then the final product was not guaranteed to be how the customer wanted it to be. AR and VR can now finally overcome these hurdles.
EXAMPLES
  • "Nike’s Makers’ Experience combines AR, object tracking and projection technology (using AI and IoT) as well as digital signage or videowalls to enable a customized design to appear on sneakers. An hour later the customer can pick up the finished product."
  • DecorMatters allows customers to start from scratch and create Do-It-Yourself furniture design projects by leveraging existing designs from Instagram, Houzz, and Pinterest.

Research Strategy

To identify trends in the retail sector relating to the use and adoption of AR and VR, we scoured through industry publications, research reports, news and media articles, and technology providers' reports and identified several trends. We focused on identifying trends that have been used widely in the industry and not just by a couple of anonymous users/companies. We identified trends by going through the sources and locating issues that appeared repeatedly through a number of different sources. We relied only on credible industry/news/media sources for our research.
Part
02
of two
Part
02

AR/VR in the Retail Industry; Statistics

Some prominent statistics for the adoption of AR/VR in the retail industry for e-commerce and offline channels are outlined below.

1- The Augmented Reality Boom

  • According to Gartner, 100 million customers will shop using AR technology in 2020.
  • Principal Research Analyst Hanna Karki said, "Retailers are under increasing pressure to explain the purpose of physical stores, and take control of the fulfillment and return process for cross-channel execution."

2- Augmented Reality is Fun for the Customers

  • Research has shown that consumers love immersive experiences.
  • 71% of shoppers would visit a retailer more frequently if they offer AR.
  • 61% would switch retailers if the other one offers AR.
  • 55% had fun shopping with AR.
  • 68% would stay longer at stores with AR.
  • 71% would go back to a store more frequently if it employs AR.
  • 40% would spend more on a product experienced through AR.
  • 72% of shoppers have made impulse purchases thanks to AR.

3- Retail's Share in the AR/VR Market

  • Retail showcasing was among the top 5 applications of AR and VR technology and had a 2.9% share in the total revenue generated by AR and VR technologies globally.
  • AR and VR technologies will generate $500 million in 2020 and $1.6 billion in 2025 in the retail sector globally.

4- Influencing Consumer Choice

  • A survey interviewed 1,000 US adults and the results showed that 61% of them believed that AR technology would have influenced their shopping choices.
  • This is due to the fact that AR technology offers customer engagement, a personalized shopping experience, improves customer satisfaction and return rate, and content marketing opportunities among other benefits.

5- Customers Want AR from Retailers

6- Impact of AR/VR on Consumer Behavior

7- The Elimination of the Home Try-On Effect

  • The apparel industry will see the home try-on effect plummet by as much as 25%, thanks to VR technology.
  • "In addition, the use of virtual reality technology to build online virtual change rooms can help retailers improve conversion rates by more than 6.4%, increase order value by 1.6%, reduce fulfillment costs by 5%, and lower returns by 5.2%."

8- Attracting Specific Demographics Through AR/VR

9- Brands Joining the AR/VR Adoption Race

10- Projected Market Growth

  • The global AR/VR market in the retail sector will reach $1.6 billion by 2025.
  • Driven by a 5-year CAGR of 240%, forecasts show that retail could become the top industry for VR/AR spending by 2020.

Research Strategy

We scoured multiple industry sources, news and media articles, sources from AR/VR technology providers, and advertising/marketing sites to gather relevant statistics about the adoption of AR and VR in the retail industry.
Sources
Sources

From Part 01
Quotes
  • "5G capabilities can support multiple uses cases, such as real-time rendering for immersive video, shorter download and set-up times, and extension of brands and shopping experiences beyond stores."
Quotes
  • "IKEA has already begun to show what's possible with AR, with its Place app enabling customers to see exactly how more than 2,000 items in its catalogue would look and fit in shoppers' homes."
Quotes
  • "AR is the go-to engagement method of choice when it comes to product and category exploration. A label on a product on a shelf can only do so much to convey product and brand information, vs. AR, which can easily tap into a wealth of digital information online and bring it to life as an overlay on a product or on the label itself."
Quotes
  • "With comfort and efficiency becoming critical factors in e-commerce a notable impact VR and AR has on e-commerce is the convenience it brings to consumers, and to retailers."
Quotes
  • "AR is proving to be a compelling way to enable consumers to envision and try products in different styles, colors, sizes and settings."
Quotes
  • "Though it has become the norm for retailers to create a social media presence through company profiles, a new approach has recently emerged—using these channels to connect with shoppers and promote their products, bringing the content into the users' physical space."
Quotes
  • "a great AR experience is highly shareable. Meaning, if you create amazing AR experiences for your audience (such as lenses, games and other interactive AR experiences), people will want to share the results with their audience – this is incredible news for brands and marketers as it’s basically word-of-mouth and UGC (user generated content) on steroids"
Quotes
  • "Through AR technology from L’Oréal’s ModiFace, Chinese consumers will now be able to virtually try on lipsticks, eyeshadow, and other products from Armani Beauty’s cosmetics line using their mobile phones, as well as take screenshots, save photos, and share images to social media."