Lego’s AR Digital Box in-store kiosk allows customers to “see” finished products by holding the product box close to a screen (they can watch on the screen as a digital constructed Lego truck seems to spring out of the box it comes in, for example), and IKEA’s app allows shoppers to “place” digital furniture and other products from the catalog in pictures of their rooms at home.
But AR features have generally lived inside retailers’ stand-alone apps that consumers didn’t want to download.
Augmented reality may offer physical retailers a competitive advantage against online-only competitors, however, physical stores still possess one major advantage: the ability to let customers see, try, smell, or taste the product live.
Augmented reality allows brick-and-mortar retailers to take these showroom experiences to the next level, creating unique experiences that blend digital and physical shopping. The virtual layer can provide a platform that allows improved communication, deeper engagement, and better personalization. As a result, brands deploying AR effectively will be able to provide differentiated interactions with physical products and customer experiences that seem richer than the ones provided by their online competitors.
Today, we’re in the first, introductory phase of applying AR to the retail experience, with companies are experimenting, trying to understand their audiences and grasp how their brands fit in this new environment, and figure out what distinctive offerings they can make and how to integrate them into omnichannel strategies that will foster enduring loyalty.
The effort of creating consumer awareness about brands and products often eats up the majority of a retailer’s marketing budget, and much of it is wasted by reaching non-target consumers.
AR represents a singular opportunity to adjust what is presented to a shopper based on demographic profiles and past in-store behavior, and allows companies to link typical awareness-raising efforts (similar priced related offers) to a live recommendation engine. The result is a more refined level of targeting that presents a benefit to retailers, brands, and consumers.
Brands are already partnering with AR platforms to create interactive retail experiences for their customers. IBM launched an AR shopping app that provided shoppers instant product details and comparison when they pointed their smartphone at the shelf, allowing them to sort the products there by nutritional value, highlight gluten-free or organic options, and display currently available coupons. Retailers can use the same app for shelf stacking. Tesco employees tested IBM’s AR app to report out-of-stock products and instances when conditions on shelves didn’t comply with display plans.
As AR becomes more powerful, we are likely to see a higher degree of personalization of in-store product recommendations.
For instance, pointing your smartphone toward a shelf in a clothing store will not only provide information about the origins of the wool in the cashmere sweater, but reveal special deals that are tailored to your profile — such as a discount in advance of the ski season.
Ultimately, we are likely to see integration between AR, big data, and machine learning. The final result will be an intelligent personal shopper that can provide consumers with information, recommend products, and even look for special bundle deals and coupons, depending on the shopper’s preferences and behaviors.
Retailers keep shoppers engaged by creating carefully thought out, memorable interactions at every touch point. Doing so is vital to both retailers’ and brands’ customer conversion rate and customers’ future loyalty.
Virtual try-on experiences are the first step that brands have taken toward using AR to raise customer engagement.
L’Oréal released its Makeup Genius app, which allows shoppers to virtually try on different shades of blush and mascara before making a purchase decision. Once the makeup is “applied” on the face through the smartphone camera, the facial recognition system follows face movement and angles, showing what the makeup would look like from different perspectives. According to Forbes, Makeup Genius had been downloaded more than 20 million times. And it has inspired similar efforts from innovators such as Meitu, a Chinese company that built a range of “try-on” apps for makeup, hair, and fashion; the app has been installed on more than 1 billion unique smartphones and valued at an estimated $5 billion.
By using AR to give shoppers access to experiences such as product showcases, fashion shows, celebrity endorsements, and music/video content, brands can improve the shopping experience and begin to compete with their online-only competitors. Topshop used Oculus Rift’s VR glasses to offer a virtual experience of the catwalk show during London Fashion Week to five competition winners.
As AR matures, we will start to see applications that go beyond.
Someone could experience various Nespresso machines in-store, surrounded by the aroma and freshly brewed coffee, and then, using an AR app, display the machines on his or her kitchen counter, customizing colors to see which best matches the backsplash. Finally, the customer would be able to order it with one-click checkout and a linked credit card or Apple Pay and immediately subscribe to monthly shipments of assorted coffee pods. In the app, users would also be able to report technical issues and request warranty support six months later, thus having a seamless shopping, paying, and post-purchase support experience.
Converting attention to action
Brands are already using AR to increase conversion. For example, China’s largest online grocery store, Yihaodian, created more than 1,000 virtual shops in public places. Shoppers can use the company’s AR app to browse products and make purchases that are then delivered to their home. Similarly, Nike is using AR and image recognition to connect print advertising with its online store. Upon pointing a smartphone at a Nike ad in Runner’s World, a user can jump to the shopping cart on Nike’s website. Similarly, British online fashion retailer ASOS uses mobile technology to make its magazine ads instantly shoppable.
As the technology evolves and bluetooth-enabled devices communicate with nearby shoppers’ smartphones, collecting information about their movement patterns or sending ads or coupons, we are likely to see localized deals and offers within the premises of a particular store (geo-fencing). These offerings can be personalized using historical purchase behavior and augmented with recommendations based on predictions of future behavior. Brands can also display online reviews on products, integrate them with social media purchase buttons, and upsell related products.
The ultimate goal in conversion optimization will be personalized one-to-one marketing that tracks shoppers between real-world and digital shopping. From the retailer’s perspective, shoppers can then become leads to be nurtured along sales funnels toward all their possible product purchases.
Building enduring loyalty
AR affords opportunities for loyalty programs by allowing brands and retailers to create customized, far more targeted loyalty programs that correspond to a shopper’s exact interests.
Repeat customers tend to spend 60 percent more per transaction than first-time customers.
Imagine heading into a supermarket and having an application on your phone that suggests products based on your past purchases, one that can also seek out the best deals based on how often you’ve purchased that brand before.
As AR and other technologies mature, stores will gain a much better idea of shoppers’ behaviors. A future standard application might be a virtual shopping assistant that helps you make purchases from retailers both online and offline and that can advise you on the best way to take advantage of loyalty programs. A thrifty consumer might enable a setting allowing the shopping assistant to lead him or her through specific aisles of a supermarket that have been incentivized by a brand. A shopper who values speed, on the other hand, might use the shopping assistant to remove as much friction as possible from the purchase process, reducing decision ambiguity.
In retail, trends and fashion come and go quickly. But it is clear that regardless of what is selling today, the ways in which products will be sold are evolving rapidly. Augmented reality clearly has the power to transform retail. Ultimately, the first platform that successfully hosts large shared augmented experiences will be a significant winner.
To be sure, some skepticism is warranted. But in the 21st century, paradigm shifts that used to take years now routinely happen in months. Just as retailers came to rue not investing earlier in e-commerce, or a Facebook presence, or mobile purchase apps, they may regret not investigating the potential of AR more aggressively.
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