Augmented shopping: How extended reality can boost retail performance
By Anais Masetti - 13 November 2020
Is extended reality (XR) shaping the future of retail experiences? We take a look at the factors and companies fostering the growth of augmented shopping.
Creating memorable customer experiences has become a key component of success for retailers. That is why many are now experimenting with new technologies to make their online and physical stores stand out. Meanwhile, customers are embracing contactless and digital ways of shopping. This is partly due to ongoing tech-led consumption trends but also to the new restrictions brought by the pandemic. For obvious hygiene reasons, shopkeepers are doing their best to limit contact in-store and offer their products online. In fact, a recent report by IBM estimated that the pandemic accelerated the shift to digital shopping by five years.
But how can you replace the experience of prodding a couch, trying on a jacket or chatting to a shop assistant? Extended reality (XR) is among the key enablers of augmented shopping, which itself is turning into the “new normal” of retail experiences. XR is used as an umbrella term encompassing virtual, augmented and mixed reality solutions.
Is augmented shopping becoming the norm?
Throughout the past 10 years, smartphones have become better and better at processing augmented reality (AR) content. In turn, brands have found a myriad of use cases for AR. It was arguably Nintendo’s hugely popular Pokemon Go game, launched in 2016, that brought AR to the mainstream.
Now many large retailers are trialling AR alongside other forms of XR to enhance shopping experiences. IKEA was among the early adopters of this technology in retail, launching its app IKEA Place in 2017 to allow consumers to visualise a piece of furniture in their homes before buying.
Luxury brands have also jumped on the bandwagon. For instance, Gucci partnered with Snapchat in July 2020 to allow potential buyers to virtually try on shoes. Users could then “click to buy” or just share snaps of the shoes “at their feet” with their followers. A strategy meant not only to attenuate the hit of reduced footfall in stores since Covid-19, but also to engage Gen-Z future buyers.
Meanwhile, in an interview with The Drum, Lubomira Rochet, chief digital officer at L’Oréal stated: “We now consider virtual make-up try on to be the base of any experience. At the end of the day, the only barrier to buying [a product] is wondering what it will look like.” In fact, thanks to the acquisition of AR leader ModiFace, the beauty giant has been able to implement the technology throughout its website, leading to a 3 fold increase in conversions.
Another major beauty player, Estée Lauder, highlighted the acceleration in adoption of this type of technology brought by the Covid-19 pandemic. Indeed, it recorded a 133% increase in usage of its virtual lipstick try-on during the first lockdown.
Key benefits of extended reality experiences
As exemplified above, AR can help consumers visualise the products on themselves for clothes, or in their homes for furniture. This, in turn, allows them to make more informed purchasing decisions online. Indeed, many brands see virtual try-ons as a tried and tested method of boosting retail performance.
Moreover, extended reality can enhance the emotional dimension of a retail experience, allowing for richer storytelling. Louis Vuitton recently leveraged this in its ready-to-wear Spring 2021 show, which blended VR with a live stream of the catwalk. The aim was to provide a rich emotional and artistic experience for viewers present and at home.
If we project ourselves in a future where high-street stores will be able to safely stay open, XR has its place there too. Businesses can use AR and holograms not only facilitate a contactless experience but also make a memorable impression on visitors and collect data on them. The rated startup Outernets, with its interactive displays, is a prime example of this.
The big and small companies enabling augmented shopping
When it comes to providing the technology, augmented shopping has so far been dominated by tech giants such as Intel, Snapchat and Google. But there are some promising startups offering targeted solutions to fill in the gaps in the market. One of these is VNTANA, a Los-Angeles based startup developing end-to-end solutions for AR and holographic experiences.
They have created an automated CMS platform allowing companies to store, optimise and publish 3D content in different XR experiences. For instance, a fashion brand could upload its 3D model of a handbag to the VNTANA CMS and then optimise the file to publish it both on its try-on app and on a browser-based virtual showroom. In the past, the startup has also pushed the boundaries of holographic content. Indeed, in 2017, it created with Satisfi Labs the first-ever AI hologram concierge for retail, sports events and hospitality.
In 2018, VNTANA received a strong growth potential score in the top 10% of all startups rated by Early Metrics. What drove the rating up was mainly the innovativeness and versatility of their offering. Other positive factors included the complementarity and diversity of the founding team, as well as the excellent market timing.
Another notable newcomer that has successfully gone through the Early Metrics startup rating process is Arilyn. The Finnish startup has created a platform for non-tech professionals to easily create VR content. UK-based INDE (in the top 10% of rated startups) is also one to watch for holographic and AR content creation.
The next frontier in augmented shopping?
Startups are important because they are solving specific pain points for companies looking to offer augmented shopping. Indeed, creating and optimising 3D content for XR experiences can be difficult, especially for companies with limited internal tech resources. Hence, these new solutions can democratise access to XR as a marketing tool. Considering the rapid spread of such solutions, it’s likely we will soon find some form of XR in all retail experiences, both digital and physical. It’s then the quality and the interactivity of the XR content that will set brands apart.
Experts, such as author Helen Papagiannis, project that the next frontier of augmented shopping lies in the gamification of retail. XR is a key tech enabler for immersive and interactive loyalty campaigns, which can cement a brand’s image as forward-thinking.
Looking further into the future, the dematerialisation of the retail offering is another interesting trend. What dematerialisation means here is virtual “goods” without a physical counterpart. Early data shows consumers, especially influencers and Gen-Z buyers, would be willing to purchase virtual fashion items to overlay on their selfies or videos. This is very much akin to skins in video games. And if the financial success of Fortnite is anything to go by, the commercial potential for the fashion industry is tremendous. Moreover, digital clothing plays nicely with the growing consumer interest in sustainable fashion.
The growing role of AR and holograms in a pandemic context
Overall, the current sanitary crisis is causing the acceleration, rather than the disruption or creation, of many tech trends. The market readiness for augmented shopping was already growing pre-Covid and we expect it to ripen at pace. So, extended reality technologies will remain a key enabler of retail performance in the future. While smartphones have made the consumption of XR content very accessible, the creation of such content has yet to be democratised. That’s why it’s great to see startups giving all retailers, from luxury brands to household staples, the chance to engage their consumers in novel ways. And be close to them, even during country-wide lockdowns.