Augmented reality will change how retailers engage with consumers

Augmented reality’s ability to merge the real and digital worlds is bringing a wealth of opportunities to retailers and making services more convenient for customers

  • By Fernando Moncada Rivera | Thursday, April 19th, 2018

The sudden popularity of AR-supported game Pokeémon GO was one of the first ways AR made it into the mainstream

Augmented reality (AR) has the potential to drastically affect the way businesses market and sell their products. The technology merges the real and digital worlds by superimposing computer-generated images onto physical contexts. Unlike its more immersive cousin, virtual reality, AR does not block out your surrounding visuals, but rather enhances what is already there.

Much has been made of the technology for its novelty value. The mobile gaming sector was taken by storm in 2016 with the release of Pokémon GO, which saw players walking around real cities looking for AR creatures to capture and battle.

Now, AR’s applications in the retail space are catching up, and the market is set to see explosive growth in the coming years.

Paint manufacturer Dulux is using AR to produce its “Visualizer App”, which lets homeowners overlay different paint colours onto their walls before making a purchase. Similarly, IKEA’s “IKEA Place” app allows customers to see what furniture would look like in their homes through their phones.

Cosmetics company Sephora produced an app last year that enables customers to try on makeup virtually via facial recognition software on their phone. L’Oréal even went as far as buying Canadian AR tech firm, ModiFace, in March in order to gain better use of the technology across multiple channels.

As AR continues to improve, there will likely be intense competition to gain first-mover advantage, with companies wanting to use the innovative technology to differentiate themselves.

A leap in availability
According to James Holland, Managing Consultant for Creative Technology at Text100, the increasing adoption of AR has not come so much as the result of significant leaps in the technology itself, but rather in its availability. “AR has been around for a while; it’s not a new technology,” Holland told The New Economy.

“What’s happened in the last [one to two years] is that the technology to make AR experiences has become much more available; it’s become democratised. You don’t need to build a custom installation anymore to give your consumers or your shoppers an AR experience. You can do it on their phone or you can do it using off-the shelf technology in a store.”

Earlier ventures into AR involved stores setting up custom-made screens and ‘magic mirrors’ using available – but expensive – technology such as Microsoft’s Kinect camera setups, which are typically used alongside the Xbox game console. “They were great marketing stunts, but they’re not really a sustainable enterprise because they have to be handmade,” said Holland.

An exciting element of AR is that small improvements in technology have a big impact on how it’s applied and how companies can benefit

“But now you look at the iPhone with ARKit or you look at Android with ARCore [both are AR platforms], and they have the technology in them to do those things in your pocket. So you just point your phone at someone or something and you transform it.”

An exciting element of AR is that small improvements in technology have a big impact on how it’s applied and how companies can benefit. For example, the first version of Apple’s ARKit was only capable of placing virtual objects on horizontal surfaces, meaning companies like IKEA were limited to placing furniture on the floor.

Subsequent versions allow for objects to be overlaid on vertical surfaces like walls, opening the way for paintings and wall-mounted furniture to be integrated into apps. “[It is] an admittedly small leap forward – going from horizontal to vertical – but it opens up a whole new market,” said Holland.

“It opens up all sorts of new stuff that people can sell and try out. I think what that shows is that even the smallest advances can open up whole new opportunities.

“Whole new industries can start to use this technology through actually a very simple small change. I think in the next few months and years you’ll see a lot of those small incremental changes, and they might seem tiny at the time, but when you look at what they enable and how they all add up, that becomes quite compelling.”

Convenience and competitive advantage
One of the principle advantages of the technology for consumers is convenience. Shoppers can quickly and easily test entire product catalogues without going to the trouble of physically trying numerous products. As such, AR goes a long way to eliminating buyer’s remorse in everything from clothing to restaurant orders.

The technology benefits businesses too as it has the potential to bridge the gap between e-commerce and traditional brick-and-mortar stores

The technology benefits businesses too, as it has the potential to bridge the gap between e-commerce and traditional brick-and-mortar stores. When a customer physically interacts with a product, it stimulates an emotional response not produced by imagination alone. AR can replicate the emotional connection between consumer and product without requiring the customer to have physical contact with a product.

For businesses, AR technology can be leveraged into a competitive advantage. According to research by Digital Bridge, one third of consumers would be more likely to make a purchase after using AR to preview a product. The technology could be especially lucrative for retailers who specialise in large investment products that are not as easy to visualise as other consumer products.

Furthermore, 51 percent of those surveyed said they put off home improvements in the past year because they were not able to envision the finished project. Additionally, 42 percent already expect AR technology to be available to them when they shop.

According to another survey by Retail Perceptions, 71 percent of shoppers would go to a specific retailer more often if they offered AR tech and 61 percent prefer to shop at stores that offer it over those that don’t. Moreover, 40 percent of those surveyed would be willing to pay more for a product if they had the option to try it through AR.

Consumers today are more digitally inclined than ever before, and the more interactive a shopper’s experience is, the greater the chance of converting browsing into sales. For example, websites that feature single static images of a product, say a shoe, fare worse than a site that has multiple images of the shoe from different angles, which customers can scroll through and even experiment with different colours.

While dynamic sites are better than static ones, using AR to see what a shoe would actually look like on your foot is even more likely to drive sales.

AR also has the potential to reduce the large costs incurred by retailers as a result of customers returning products they’ve bought online. This is especially true for clothing; when a piece of clothing is returned, it takes time and money to get the piece ready for resale. By the time the returned item is ready for resale, there is a chance that its season will have passed and it would have to be sold at a discount.

Getting it right
Using AR can be a game changing way to engage customers, but only if done right. Not every application of the technology is appropriate. “A bad use of AR is taking content that could exist on another medium and just shoving it into an AR experience,” said Holland.

Using AR to show content such as video, for example, which is not conducive to a 3D format, does not play to AR’s strengths. “Don’t try and do something [with AR] you could do with another technology… the other technology is probably the best for it. You’re going to be using AR as a gimmick at that point.”

This technology can, if not revolutionise, significantly impact the way retailers and consumers interact. If harnessed correctly, it could result in a windfall for companies that embrace the new technology wholeheartedly.

There are barriers to the implementation of AR, most notably the cost of rolling out and maintaining it. In that sense, smaller retailers with fewer resources will be at a disadvantage. However, for those that are willing and able to invest heavily into the technology, the possibilities for improving the customer experience are endless, and the financial rewards bountiful.