How is the retail sector faring in the AR revolution?
With the global AR, VR and MR market worth $28bn in 2021 (and projected to top $250bn by 2028), it’s little wonder that companies are wanting to hop onto the XR bandwagon. In the retail industry, the augmented reality (AR) subsector is proving particularly enticing, with retail having been one of the boldest industries adopting AR technology, particularly over the past decade. That’s been aided by AR going mainstream thanks to the advent of smartphones packed with all the sensors and capabilities necessary for advanced experiences, resulting in 810 million active mobile AR users in 2021 (up from 440 million in 2019).
That rapid increase can also partly be attributed to the COVID-19 pandemic, which has resulted in a huge shift to online shopping and e-commerce – adding $219bn to US e-commerce sales in 2020-2021. Of course, even before COVID-19, the ratio of internet sales to total sales was trending steadily upwards, but as the pandemic itself has abated, digital shoppers have remained. And as customers have moved online, they have become increasingly ready to embrace digital technologies such as AR.
AR and the Customer Experience
Seizing on that appetite, retail brands have created a wide range of AR experiences to entice customers. Sportswear brand Nike, for instance, has built-in AR functionality in its app in order to properly measure shoe size. The app makes use of a smartphone camera and simply requires the user to point their phone at their feet. The app also allows customers to share their saved shoe size with Nike stores via a QR code – helping to ensure a perfectly fitting shoe.
Part of the attraction for retailers is the way the technology can build excitement and deliver unusual and buzzy customer experiences. Retail stores themselves can build-in AR functionality, taking advantage of their physical space to offer more complex possibilities. Consider magic mirrors, for instance, screens which capture live views of shoppers, overlaying products onto their person. AR displays can also be placed on a storefront to draw viewers inside. Timberland took exactly this approach, utilising Microsoft Kinect technology to produce a virtual fitting room in the front of a store. Shoppers could stand in front of a screen and see a virtual representation of themselves wearing Timberland clothes – all before they’d even stepped foot inside.
For brands without the capabilities to build these AR experiences themselves, agencies have sprung up to help retailers make the most of the technology. Rather than create their own AR apps, brands can also benefit from tie-ins with some of the biggest AR-enabled apps, with the likes of TikTok, Instagram and Snapchat all offering extensive filter options. That removes much of the legwork from getting started with AR, which is why there are so many examples, whether it’s Porsche, Coca-Cola, or Starbucks.
The branded filter approach has been proven effective for marketing brands, as with over-the-counter cold and flu medicine Mucinex, which created a TikTok filter which resulted in a 42.7% increase in purchase intent.
Aside from including AR in their marketing endeavours, some retail companies have even delved into creating full-fledged AR products. Consumer product manufacturer Bic has released an app and accompanying drawing book known as DrawyBook which lets children bring their illustrations to life via an AR scan.
The Virtual Try-On
Perhaps the most popular use-case for retail AR, however, is the virtual try-on. Most of the industry’s biggest brands offer some form of the technology, which allows prospective buyers to see how a product would look on them without needing to physically try it on. Typically, such AR experiences make use of the ubiquitous phone camera to display the virtual elements in real-time. Prominent virtual try-on examples include make-up from Maybelline, clothing from ASOS and Zeekit, and shoes from Vyking.
Try-ons needn’t be limited to clothing. One good example is the IKEA Place app which allows users to place 3D models of the company’s furniture into their own rooms in order to preview how they would look, automatically scaling them based on the room’s dimensions to ensure they are true to life. In the US, Home Depot has taken a similar approach, aimed at improving the experience for mobile shoppers, who make up more than two–thirds of online traffic. Home Depot said in 2020 that customers who engaged with its app’s AR features were two to three times more likely to convert.
Virtual try-ons have added benefits for retailers. It is estimated that returns cost retailers in the UK £60bn every year. If people can have a better idea of what they’re ordering before it is sent out, there’s every chance of bringing that number down – helping retailers and also the planet, as items don’t need to be sent back the other way after being delivered. Customers might be nudged into trying items virtually thanks to retailers increasingly moving away from free returns.
Room to Grow
Despite the plethora of AR options on offer, consumer interest for retail AR is still at a relatively low level. In October 2021, a survey found that only 13% of US adults had ever used AR or virtual reality (VR) to shop. Admittedly, that was up 5% on the year before, and 37% of those questioned did say they were at least somewhat interested in using AR or VR to shop. That means that 50% of US adults have either used or are interested in using AR while shopping.
According to the Impact of Augmented Reality on Retail report, of those making use of AR, 77% use the technology to visualise differences in products, such as alternative colours and styles. Meanwhile, 72% of shoppers who used AR in their shopping journey said it resulted in them buying.
AR also has a burgeoning role when it comes to navigation and directing customers around retail stores more effectively. In the US, home improvement store Lowe’s has developed an app which overlays directions onto a smartphone’s view of the store, for instance, helping customers to more quickly find what they are looking for.
In the retail sector, AR finds a distinct niche, serving to enable new and innovative customer experiences in the never-ending battle to attract potential buyers. Retailers have already become very canny with making the most of AR opportunities using customers’ smartphones – the next frontier will see better use of physical stores themselves to deliver more complex and compelling AR experiences.