Emerging technologies like augmented reality (AR) present a fundamental disruption to the retail industry with an outgrowth of mobile and wearable technologies, AR offers the ability to merge the real world with a virtual one. The user views the world around them through a device, usually either via a mobile device or via eyewear such as specialized glasses, which provides a filter of digital information and interactive visuals. If that sounds like science fiction, you’re not wrong, yet it provides a host of opportunities for retailers to engage with customers in new and innovative ways.
Why AR Matters
In 2016, AR represented $6.6 billion in spending, which is expected to reach $12.8 billion through 2017, and as of 2013 represented 60 million users, which should grow to 200 million in 2018. While these are already solid numbers, moderate projections show that spend growing to $90 billion by 2020. That far outpaces its arguably more recognizable counterpart, virtual reality, which is only expected to reach $30 billion in the same period. Retail’s share of that is significant, although projections vary: some put the market for AR and VR retail software at $1.6 billion by 2025, while others peg the AR commerce market by itself at somewhere between $10 and $20 billion by 2020. Of course, this growth isn’t driven by the retail potential alone.
AR Is Popular…
The popularity of augmented reality made mainstream headlines thanks to an extremely popular game: Pokémon Go. That game may not have been developed had AR not already been gaining a measure of popularity all on its own. Consider the fact that 72% of adults in the United States alone own a smartphone, the most common and easily accessible device for AR experiences, while 73% of teens have or have access to a smartphone. By its nature, AR brings an individualized, exciting interaction in the moment, that’s easily accessible.
That’s how AR has been gaining steam, one experience at a time, and it’s accessible to many markets. For instance, Snapchat may be best known for its short-term photo and video messaging, but it utilizes “lenses” that add special filters in real time using facial recognition, such as halos or zombie makeup. AR is also used for deeply emotional storytelling through gamification, such as If You Go Away, which relies on GPS to trigger story elements which can also be affected by other players that are or have been in that area. An early form of AR that didn’t utilize a visual element was Zombies, Run!, which also tapped into GPS and step counting to gamify the Couch to 5K training method to make exercise (namely, walking, jogging, and running) fun through the threat of zombies and the thrill of finding objects along location-based missions.
… And Game-Changing for Retail
This level of popularity allowed businesses that weren’t ready to try AR for themselves to taste some of the benefits offered by the platform. For example, Ingress, the immediate predecessor to Pokémon Go, included locations sponsored by brands like Zipcar and others, each providing special items that required special codes to access. The partnership lifted foot traffic and inevitably gave users a reason to become paying customers. Pokémon Go would unintentionally take this to the next level thanks to its geocentric availability of Pokémon. Restaurants (including bars and hot dog carts) saw their business grow as players changed their eating habits in order to catch or level specific Pokémon and eventually actively utilized the game to draw in customers utilizing team-themed offers and in-game modules like the Lure.
Some businesses saw the early appeal of AR, though. In 2009, Yelp introduced Monocle, which used a smartphone’s camera to identify restaurant locations along with pertinent information, including distance, price category, food genre, and perhaps most importantly, reviews. It was novel at the time, but it’s exactly the sort of feature users tend to expect from retail AR. AR has vastly accelerated from there, offering brands and customers alike incredibly futuristic experiences. Here are a few examples:
- Lego: One of the early AR adopters, Lego’s technology allows customers (especially kids, given the size of the kiosks) to explore different kits in a 3D space through AR. It’s a much more in-depth look at each product than the cover of the box can provide, which better captures the imagination and excitement for the finished kit.
- Home Depot: Various products within the Home Depot online catalog are enabled to be viewed in the context of the customer’s home, effectively allowing them to test out everything from faucets to front doors.
- Ikea: Similarly, Ikea lets customers use mobile devices to see furniture in action from the digital catalog by placing it into a photo they’ve taken of their home. For a company known for DIY assembly, it’s a great way for customers to get excited by seeing the finished product in their home.
- L’Oréal Professional and Dusobox: Both of these brands utilize the Augment platform to help sales agents show retailers what packaging, displays, and products will look like within a brick-and-mortar location utilizing a simulated 3D model. This allows them to test new designs immediately and help close deals more quickly.
- Sephora: In-store, Sephora offers AR mirrors that allow customers to try on makeup. This is parallel to their makeovers and sample applications with beauty experts, but will work without having to clean off any makeup they’re already wearing. Even better, they can sample the same type of product over and over without having to waste time cleaning up in between.
Remember AR Is Happening NOW
It’s critical for brands to understand that augmented reality is about augmenting the customer experience, and there’s no time to lose before taking steps to adopt it. The temptation may be to err on the side of caution, especially since there’s the risk of choosing the wrong AR platform wasting an investment. However, brands need to think about AR long term, that is, over the next three years, not the next three months of this quarter.
You can see it clearly in more subtle and widely accepted forms of augmented technology, such as the AI used in cognitive systems and smartphone voice assistants. Spending on cognitive systems will be more than $30 billion by 2019, and it could double economic growth rates by 2035. These technologies will improve internal processes that deliver more accurate, highly personalized and proactive services for customers.
Lowe’s has fully embraced AR, first with its HoloRoom (which allows customers to virtually build their project before identifying exactly which products they need to buy and where to locate them in-store) and now with Lowe’s Vision. The AR app utilizes the multi-camera Lenovo Phab2 Pro smartphone to act as a tape measure by accurately capturing dimensions in real time, which in turn allows users to sample everything from appliances and furnishings to fixtures and flooring as they view any room in their home through the phone.
Wayfair View provides a similar experience to virtually place full-scale 3D models of products throughout a room directly from their catalog. Both apps allow customers to fully visualize their projects from the comfort of their own home, giving them complete confidence in the purchase they’re making. Meanwhile, in terms of fashion, Converse, Uniqlo, and De Beers each let customers try on their products, effectively increasing the customer’s confidence that they’re purchasing exactly what they want. Converse does it with the mobility of a phone, although De Beers requires a stationary webcam. On the other hand, Uniqlo streamlines the in-store experience by letting customers try on an item once and see it in a variety of color choices without ever having to actually change their clothes.
Those technologies are already proven and in place, and AR and VR are already changing the way brands do business. As an emerging technology, augmented reality is not only the now of retail, it’s the future. Bearing in mind the augmented reality in retail industry projections we mentioned above, it should be quite clear that AR is not the type of technology you can afford to relegate to wait-and-see status. We’ll delve more into information about the future of AR and retail in an upcoming post.