A fully immersive retail experience is the next big thing in online shopping and augmented reality (AR) and virtual reality (VR) tech will help with this. Read on to find out how.
- The immersive tech market is expected to reach USD 134.18 billion by 2030
- Virtual and augmented reality in retail can improve customer journeys, reduce returns and boost sales
- Retailers like IKEA and Alibaba have integrated immersive tech into shopping journeys and have seen success
Immersive tech may have taken over the retail industry now. But it wasn’t always the case.
The tech first entered shoppers' radars as a part of marketing and ad campaigns. They captured buyer attention and successfully nudged shoppers down the sales funnel.
Soon enough, businesses began integrating immersive tech into buyer journeys.
Furniture retailers like IKEA used the tech to enable shoppers to buy furniture confidently from their couches. While beauty retailers like Sephora supplemented their in-store and online shopping experiences with virtual try-on.
Then the pandemic struck in 2020, forcing people to shop online. Brands now needed to stand out among businesses offering similar products. Once again, they used immersive tech to enhance buyer experiences.
The immersive tech market has grown ever since. And it is expected to reach USD 134.18 billion by 2030.
Virtual reality in retail
Virtual reality (VR) allows shoppers to view and interact with 3D objects in a computer-generated environment.
Brands can use this tech to provide buyers with a novel customer journey. Thanks to VR tech, businesses can bring the store to customers’ homes, engage them in immersive games, and even market their products uniquely.
Brands like Alibaba and Nike have implemented VR into their buyer journeys. And they have seen enormous success.
Alibaba simulated an in-store-like experience for buyers. First, customers could walk through the store and select products. Then, they could add them to their carts and complete the purchase virtually.
Nike focused on engaging its shoppers instead. The brand allowed shoppers to design and buy virtual shoes. It also set up metaverse stores for this very purpose and managed to grow its sales.
Thanks to VR, customers can interact with virtual products and their environments. They can experience shopping from their couch while having the perks of a tactile in-store shopping experience.
Augmented reality in retail
Unlike VR, augmented reality (AR) does not make shopping immersive. Instead, it adds digital information to the shopper's environment in real-time. We’ve also written a more in-depth article on examples and use cases of augmented reality within the retail sector.
Businesses use this tech to improve buyers' existing customer journeys. They help buyers view products from different angles, materials, and environments. Some retail brands even use AR for creating interactive ads and improving brand awareness and have seen good ROIs.
The success of AR efforts by brands like Warby Parker and FaceCake is a testament to this.
Warby Parker allows its prospective buyers to try various options before choosing a pair through AR.
Customers can simply select a pair of glasses they like and hover the phone in front of their faces. Then, the AR app superimposes the chosen glasses onto the image of the face. This allows buyers to "virtually" try the product.
In contrast, FaceCake allows customers to create their dream closet. Customers can try on the products through AR-tech before creating their capsules.
In both these cases, customers try products through AR. All without isolating themselves from their immediate surroundings. The tech improves customers' real-world experience by introducing digital objects.
Consumers can change materials and view products in the real world. This contributes to their confidence in a purchasing decision. This is why AR reduces the return rates for many brands.
Differences between virtual reality and augmented reality in retail
VR aims to provide retail customers with fully immersive, unique experiences. It separates them from reality through sophisticated tech and immerses them into a fully-digital realm. This either enhances their buyer journey or makes them more entertaining.
In contrast, AR simply seeks to improve a buyer’s reality. It layers digital information onto the real world, never isolating its users from it. It is easier to use and access, requiring only a smartphone and a stable internet connection.
Businesses use AR to enhance the retail shopping journey. They simplify try-ons with the tech and make product pages interactive and engaging. Occasionally, they use the tech for marketing and ads too. Put another way, the goal of AR is to improve buyer convenience.
Companies use VR to differentiate themselves from the competition. They use the tech to immerse buyers into digital worlds to facilitate unique customer journeys. This makes the brand memorable for the buyer.
How augmented reality impact sales
1. Reduces returns
There is a significant dissonance between the online and offline retail experience. While customers can evaluate the products in-store, they cannot do the same when shopping online. This is why the return rates for e-commerce retailers are higher on average.
One survey suggests 30% of items bought online get returned. For brick-and-mortar stores, that number is 9%.
But immersive tech like AR can help customers scrutinize products virtually. Buyers can look at different product variants and sizes. They can also check product functioning in different environments. This helps them make confident buying decisions, reducing returns.
Overstock.com added AR functionality across its web stores, allowing its online shoppers to place 3D models of products in their homes. Customers could inspect products before purchasing them. And Overstock saw a fall in return rates by 25%.
2. Increases buyer engagement
To retain shoppers, online retailers must differentiate themselves or engage consumers. And immersive tech makes both of these possible.
VR, for instance, can help brands create one-of-a-kind experiences to enthrall buyers.
TOMS, a shoe retailer, has been known to conduct “Virtual Giving Trips”. On these trips, the brand gives a new pair of shoes to a needy child in several countries.
In 2015, TOMS rolled out its “Virtual Giving Trip” VR experience to shoppers. Upon putting on the headset, buyers were transported to Peru, where they could ‘experience’ the act of TOMS employees giving the shoes to needy children.
“(The experience has been) positive and also very emotional for some” - Keith Eshelman, TOMS Retail Director
The effort improved customer engagement for TOMS and was a success.
3 Companies using virtual reality and augmented reality in retail
1. Lowe’s, AR navigation
Lowe's knew its customers spent hours looking for the product to buy upon entering their store. So, in 2017, they introduced Lowe's Vision: In-Store Navigation app to make navigating the store easier.
Shoppers with Tango-enabled smartphones could use the app to search for products. They could also add the items to their carts. Then the app would locate the product within the store and guide the buyer using AR.
"With Lowe's Vision: In-Store Navigation, we've created a more seamless experience using breakthrough technology so customers can save time shopping and focus more on their project." - Kyle Nel, Executive Director, Lowe's Innovation Labs
2. Forever 21, Metaverse shopping
To connect and engage with their shoppers uniquely, Forever 21 launched their metaverse store Forever 21 Shop City in December 2021.
Designed on Roblox, Shop City is Forever 21’s metaverse offering to its consumers. Users can interact with fashion influencers and creatives to build and manage their stores. They can buy and sell Forever 21 products, hire ‘non-players,’ and customize their shops.
The brand even launched an F21 Metaverse Collection, selling the most popular products from virtual testing efforts.
“Since its launch on Roblox last year, Forever 21 has pushed boundaries, becoming the first and largest retailer to make on-trend virtual fashion accessible.” - Justin W. Hochberg, CEO, Virtual Brand Group (Forever 21’s metaverse store creators)
3. Tommy Hilfiger, in-store virtual experience
In 2015, Tommy Hilfiger wanted to elevate its traditional in-store shopping experience. So, it introduced virtual reality in select brick-and-mortar outlets.
Customers could wear the headset and be transported to the Fall 2015 Hilfiger Collection runway show. They could immerse themselves in exclusive backstage moments. And they could watch the clothing and view the collection as a visitor would.
Future of immersive tech in retail
With new trends emerging daily, one might assume consumer expectations are shifting rapidly. But their basic desires have remained mainly the same; convenience and engagement. Immersive tech caters to both of them.
VR and AR in retail will help businesses create seamless digital experiences for their customers. While AR will continue to add value to regular shopping, virtual reality will help brands express themselves uniquely.
Augmented reality in business will continue to remain important. But virtual experiences will be more sought after by consumers.
More retailers will test out web3 platforms as they become mainstream. But they will consider whether the investment in the tech and the tools is worthwhile.