Augmented reality (AR) unlocks a variety of unique benefits to the retail sector as it is much easier to implement than virtual reality (VR), which requires specialized hardware and software applications.
Also, it allows online shoppers hands-on interactions with retail goods by combining the convenience of digital with the personal nature of physical shopping experiences, leading to the rise and development of a booming market.
According to a September 2021 report from The Insight Partners, it will grow at a 24.8 percent compounded annual growth rate (CAGR) from 2021 to 2028, crossing $17.8 billion USD in value by the end of the forecast period.
Specifically, the pandemic has demonstrated how AR technology could enable more seamless shopping experiences without having to travel to an offline outlet.
Understanding the Potential of AR in Retail
Augmented reality or AR refers to an immersive and interactive experience where 3D digital objects appear to meet real-world surroundings to create a digitally enhanced environment.
There are three ways in which AR operates:
- Mobile AR – Arguably the most common form of AR, where customers hold their smartphone cameras in front of their surrounding environment. The mobile AR application superimposes digital images onto the camera feed, allowing digital objects to “latch onto” real-world surroundings as if following the laws of physics. Snapchat and Pokémon Go are good examples of mobile AR.
- AR glasses – Users can also view AR feeds in the field of view (FoV) of a pair of smart glasses. This method is more expensive than mobile AR, but supports more precise applications.
For instance, field service executives in the manufacturing sector often use AR glasses to share images of their surrounding environment with a remote expert, who later sends back instructions, diagrams, and other assets to superimpose in the glasses to provide contextualized information.
- Web AR – Web AR operates exactly like mobile AR, but does not require AR-enabled apps like Snapchat or Pokémon Go. Instead, it works directly via the mobile phone’s browser and makes AR experiences available as easily as any other web page or online information.
Of these three types, mobile AR is best suited for retail use cases, with web AR also having strong potential as nearly every consumer has access to smartphones, eliminating the need to invest in specialized gear to shop using AR.
Implications of AR Technology in Retail
AR can transform the retail sector in a number of ways:
It takes try-and-buy retail to a whole new level
Many customers prefer try-and-buy retail models, where they obtain a sample or test version of an item before investing in the real thing.
Try-and-buy possibilities were largely limited in the online world, namely as there was no way for customers to get a hands-on understanding of apparel, accessories, and other lifestyle products.
AR enables users to virtually try any product with an aesthetic import on an online app before making a purchase. Examples include eyewear, home decor, and similar items.
It could reduce the number of returns
With the rise of online retail, another trend has seen a steady increase – historic rates of returns and refunds. In 2021, it was found that retailers issued refunds totalling $4.4 billion USD while informing customers to keep the products without returns, simply because the cost of reverse logistics is so high.
Thanks to AR retail, customers have a better chance of understanding if a product is suitable for them in order to make the right call to returns, which also has a positive impact on the environment.
It drives a high degree of personalization
In a way, traditional online shopping experiences sacrifice the personal touch – of visiting a store, interacting with an executive, picking out a product, trying it, and considering alternatives, before making a purchase.
AR-powered retail allows customers to personalize certain aspects of online shopping. For instance, they may place a painting bought online directly on their walls through an AR app, which enables personalized views of how the product looks against the customer’s walls in a unique experience to the individual.
AR-powered retail stores can improve self-service
Retailers can also combine mobile AR with physical stores to create positive implications for self-service. Customers can simply hold up their mobile phone in front of an item and the AR app will immediately display product details, assembly instructions, provenance history, and other relevant information to the purchase.
AR for retail self-service could be useful in a number of product categories such as DIY furniture, antiques, indoor plants, and so on.
Retailers can leverage AR for brand activation
Given that AR is a new and emerging technology, AR campaigns tend to capture consumer attention. Ads using the technology can garner a lot of traffic and strengthen brand recall.
For example, several brands partnered with Pokémon Go to direct users to sponsored locations through its AR features. Firms can embed AR ads to provide customers with an engaging glimpse into the brands around them, even as they navigate outdoor surroundings.
Pros and Cons of AR in Retail
The biggest benefit of using augmented reality is that it makes online experiences more engaging. Customers using a brand’s AR app are less likely to switch to competitors than when visiting the e-commerce site.
AR retail experiences also leave a lasting impression on the customer, making it more likely that they will return for another purchase. It is also relatively easy to get started with an AR-friendly product catalogue, thanks to new tools and technologies.
However, AR use remains limited to specific demographics and market regions and does not enjoy the universality of e-commerce. Poorly executed AR shopping apps could also potentially do more harm than good.
AR in retail is definitely a powerful solution but is primarily meant for established players with a highly-targeted customer segment.
