Retail: Transition from E-V
Renu Chaturvedi
Email: renu_chaturvedi@isb.edu
ISB Institute of Data Science, Hyderabad, India
In the words of Chris Dixon of Andreessen Horowitz, a venture-capital firm, “the next big thing will start out looking like a toy”.(Virtual environments are being used everywhere | The Economist).
Virtual Reality took early roots in gaming industry and has now permeated many aspects of our lives, particularly in retail. What started as a science fiction idea is transforming the retail industry. Augmented Reality (AR) and Virtual Reality (VR) applications have been on the rise with virtual ‘try-before-you-buy’ experiences ranging from previewing furniture and products in your home with everyday brands like IKEA and Home Depot, to virtually trying on luxury fashion such as Louis Vuitton and Gucci. Once seen a nice-to-have feature, AR has quickly become an essential technology for retailers.
In a traditional brick-and-mortar model, the consumer buys the product from the physical store. Services offered are typically limited — helpful staff, easy returns, gift cards and issuance of credit note to count a few. V-Commerce promises to bring an immersive experience that will surpass the experience traditional retail or e-commerce offers. E-commerce allows customers to see pictures or watch videos, V-commerce offers them to visualize products in a real world.
The consumer can gain a full real-world, immersive experience through readily available AP/VR tools. The future of retail lies in omni-channels that customers can straddle between seamlessly & effortlessly. With the advent of AR/VR in retail, friction between the shopping experience and purchase has been minimized. As number of channel interfaces proliferate, retailers will have to iron out glitches in several touchpoints for switching and working with multiple channels. Companies that flourish are the ones that differentiate themselves from the competitors in terms of services offered through AR/VR tools. Services range from full product information, personalized digital visualization and an overall enhanced product experience — all resulting in higher consumer engagement.
AV/VR can provide end-end business solutions if digital designs are adopted for complete integration. Benefits are accrued with adoption of AV/VR in terms of huge data that gets generated. The analytics’ study of data collected through multiple channels helps the retailer get a comprehensive view of how products are viewed, explored, selected, experienced, purchased, serviced and advocated. Big data collected this way can help retailer make data-driven informed decisions on product development, construct a marketing strategy and design store layouts too. Ultimately, AR/VR offers a win-win for both, the retailer and the consumer.
In response to the pandemic, beauty retailers such as Sephora and Ulta have prohibited customers from physically testing makeup products on their skin. The Cosmetics’ retail industry has turned to AR to help customers digitally test out thousands of beauty products to assist in buying decisions. Launched four years ago, Ulta’s virtual try-on beauty tool, GLAMlab, has seen a surge in usage since the pandemic. Engagement has increased seven-fold, and more than 50 million shades of foundation have been swatched digitally with the app post-Covid. E-commerce company Shopify recently released new data indicating products having AR content show a 94% higher conversion rate than products without AR. (https://hbr.org/2020/10/how-ar-is-redefining-retail-in-the-pandemic)
AR/VR has helped retailers cut costs, engage customers more and enhance production. It has opened avenues for retailers to reach a wider audience without physical expansion of stores eliminating costs of hiring additional staff amongst other costs. Retailers are able to reach out to remote customers too by offering the VR channel of shopping.
Post pandemic retail world has witnessed enormous digital transformation. Pre-pandemic, AR and VR was quietly revolutionizing retail. The pandemic has only accelerated the change in turbo mode. Many retailers have migrated onto digital platforms leaving the physical stores. (source: https://www.analyticsinsight.net/ar-and-robots-redefining-retail-industry-and-in-store-experiences)
AR/VR interface can help customers have a better shopping experience in several ways:
In Exploring products- An off the rack product carries limited information on the label at the back. A detailed information like product history, where the raw material was sourced from etc. can be made available with the AR interface. This allows the customer to get all information she may desire to get. VR lets your customers engage with your brand and products in a whole new way. It is especially convenient when the product in question is large or a luxury item, like a car. Lexus has been using VR since 2014 (Oculus) to let potential buyers test drive the car without even leaving the showroom. (https://www.engadget.com/2014-10-02-lexus-creates-an-oculus-rift-powered-virtual-test-drive.html)
Product Availability — AR interface can help check product availability in a particular store or any other store even before you get there. There will be a time when you can order any product online and have it delivered to any location via a drone.
Deeper Engagement- Products can be simulated to the customer need and visualized in the comfort of home. The decision to buy the product crystallizes quickly as the uncertainty of ‘how it would look’ gets converted to ‘this is how it would look’. A VR interface can also guide you to who else has bought the product and give you consumer reviews in real time. For clothes, it might be able to show you visuals of what other people (not neccessarily only models) look like when they wear the product. The digital tools can also suggest other products that you might need based on your past buying pattern and preferences. www.forbes.com/sites/nikkibaird/2019/03/25/the-four-definitive-use-cases-for-ar-and-vr-in-retail/?sh=2efd
AR and the newly launched WebAR technology promises to revolutionize the retail industry and re-invent product interaction. This web-based AR experience can be accessed through a web browser and does not require a third-party carrier like an app.
Ikea was one of the first stores to adopt and leverage digital platform for its customers a few years ago. It had launched the ‘Ikea Place’ app. with Apple’s ARKit. On this, single-piece furniture placement could be viewed in real-world settings. Fast forward to 2021, Ikea has re-designed the app to ‘Ikea Studio’ app that allows the customers to design multiple rooms with several furniture options. Going forward, Ikea has intentioned to take the experience on WebAR so that the entire shopping experience can be enjoyed going directly through Ikea’s official website without using the app. (Design Your Room Using Augmented Reality with the New IKEA Studio App | Immersive Technology (immersive-technology.com)
While Augmented Shopping is getting immensely popular, its wrought with a few challenges. The traditional shopping models offer the charm of co-shopping that the v-commerce vertical is currently not able to address to satisfaction. In the Gaming Industry where VR found its roots, it is commonplace for friends to play games from different locations and share the experience together. It remains to be seen if the ‘let’s-go-shopping’ experience can be simulated, accepted and enjoyed by customers on VR/ AR platforms of retail too.
According to Goldman Sachs, the market for AR and VR in retail will reach $1.6 billion by 2025. Statistics show that two-thirds of internet users would be interested in virtual reality, and 63% said such technologies would change the way they shop. The future of retail seems quite literally — Unreal. (https://steantycip.com/blogs/future-of-retail-is-virtual/)
An interesting parting shot- While all indicators are positive, many consumers still prefer the traditional retail model of a physical outlet. In the words of Ziad Mahomedy at Immersiveauthority.com “You cannot eat popcorn while wearing a virtual reality headset”.
