Photo: CES
Will retailers be ready when AR adoption takes hold?
Through a special arrangement, presented here for discussion is a summary of a current article from the blog of Nikki Baird, VP of retail innovation at Aptos. The article first appeared on Forbes.com.
If consumers want to shop and pay on Instagram or use Facetime to co-shop with distant friends, retailers better figure it out. That challenge is no different when it comes to augmented reality (AR).
The challenge for retailers, who operate thin-margin businesses and don’t have a lot of extra cash available to experiment, is trying to decide when the time is right to “get in” on a new technology.
Despite the Pokémon Go hype and Snapchat filter selfies floating around, only one-third of U.S. consumers have reported using AR, according to a study last year from Artillry Intelligence. Yet of the users, 73 percent were satisfied (or very satisfied) with their experience.
Similarly, a study last year from Adtaxi found only 10 percent of consumers have used AR or VR while shopping, yet 45 percent would like to try it and 30 percent would never go to another clothing store again if AR would allow them to buy the right size clothing with confidence.
Right now, AR and VR use cases focused on customer experiences tend to be highly specialized — seeing if the couch will really fits in your house, what paint color might look like on your walls or what a redesigned kitchen might look like to walk through. Virtual try-on of makeup looks and colors and 3-D visualizations of clothing to get a better assessment of fit are other early applications. Some of these work better than others. What retailers need to figure out is if AR or VR will be expanded beyond these specific use cases. Buying with confidence is an important value that AR or VR can bring, but it’s probably not the only one.
In the meantime, until consumer adoption at home reaches a tipping point of some kind — and who knows, the long-awaited Harry Potter AR game may be that — retailers are going to have to find ways to experiment and stay on the learning curve. If AR or VR is anything like any other technology experience that consumers have adopted over the last 20 years, when it hits, it will hit fast.
Discussion Questions
DISCUSSION QUESTIONS: What signals would indicate that retailers should be ramping up AR or VR investments? Do you see retail applications for AR or VR broadening beyond the current virtual try-before-buy benefit?
Poll
BrainTrust
Phil Rubin
Founder, Grey Space Matters
Lee Kent
Principal, Your Retail Authority, LLC
As with any technological innovations, retailers have tradtionally taken a conservative crawl, walk run approach. After so many years of hype we are finally seeing the fruits of the omnichannel revolution become a reality with BOPIS and other last-mile innovations becoming a reality. Until these innovations are operationalized, AR, VR and voice commerce will remain a novelty.
We have seen retailers such as Sephora, Restoration Hardware, Nike and others leverage the power of augmented reality. Yet it’s still very much in its infancy stages. Augmented reality and virtual reality will have far better results in experiential retail centers such as Nike’s House of Innovation. The technologies are maturing, and when retailers and their consulting partners determine the best way to monetize and drive higher margins, we should expect AR, and VR to scale.
I very much agree with the sentiment that “If AR or VR is anything like any other technology experience that consumers have adopted over the last 20 years, when it hits, it will hit fast.” The tipping point will, of course, be impact to revenue.
This is an opportunity for specialty retailers – or retailers who sell experiential products. Camping is top of mind for me. Consumers want to know how easy it will be to use what they’re buying, how supplies can work together, spatial logistics (carrying/packing). AR/VR that would allow consumers to “try” products in a fitting setting (want to do desert camping? Let’s go backpacking in the mountains…) for the experience … that’s compelling.
Great piece Nikki.
Retailers, like other brands, should follow a marketing (and sales) technology investment strategy where selection follows strategy and design. This includes how such a technology will support the intended business outcome, customer experience and expected financial return. On almost a daily basis we see brands that have bought – or more rather, been sold — technology that is in search of a strategy and likewise, a business case. That strategy should be more than simply emulating a competitor.
That said, retailers especially need to invest in more and better technology capabilities but if they don’t get the customer experience right, which starts with using customer data to be more relevant, it really doesn’t matter what else they do. They will end up like so many other retailers today, in the bankruptcy bin and the endless downward spiral of Retail Darwinism.
Phil, really great points. No one has brought up the point that AR/VR can also be used very effectively for internal processes such as planogramming. Bethany is right that it has to impact revenue – OR it has to lower costs.
Thanks and I agree re: internal applications and especially merchandising. Bethany’s is right on, that’s why there has to be a business case, which is stunningly foreign to so many decisions involving tech.
The speed of change and adoption of technology by the general public continues to increase and retailers have to keep up with the demand, even though that demand is driven by some retailers, gaming companies or even social media. The newer generations are already at home with AR. The problem is that most retailers are run by older people who are slower to adopt.
However, that does not mean that online retailers are ahead of traditional retail in this space. They potentially have more to gain but all retailers need to embrace technology to see how it can benefit them and make sure that they are not left behind. Technology is a major competitive weapon and speed to market can make or break a retailer. The days when we feared that new technologies might bring down the old world order have passed and acceptance is now common place. We cannot ignore it and the faster we embrace it the better.
Retailers simply need to buy, sell and turn the product on their shelves. Speculation is largely focused on new product that their consumers want and/or need. This statement will make it easier for the IT vendors to understand how necessary it is to design and develop sales support systems that are easy to understand, use and own. A dash of longevity for the sake of ROI might help too. Did you ever wonder where all of those beepers and flip phones we had to have so fast went?
We have a long way to go before this is relevant to most businesses – so no, most of you shouldn’t be ramping up your investments. And when the time is ripe, someone will sell you a solution that’s far beyond what we can imagine today.
These days, if you want to differentiate, it’s all about the experience you offer. AR and VR are great ways to offer fun and helpful experiences if done right. The question retailers must answer is, what part of the customer’s journey can be augmented with what kind of technology? Not just tech for techs sake. I see AR and VR as technology choices. I don’t know that AR or VR is going to help me buy a pair of shoes unless the shoes are part of a specific outfit and I need to see them all together but there are endless scenarios where this tech is a perfect fit. Retailers need to figure that out. And that’s my 2 cents.
As others here have already said — retailers need a sales/marketing strategy to drive the selection/creation of AR or VR experiences. Let’s also talk about internal applications throughout the supply chain, distribution centers, and planogramming that keeps getting left out of the discussion. The impact of AR/VR won’t just be in customer-facing experiences. Retailers will also focus on the ROI of these technologies — so far they are still expensive propositions that need testing in most scenarios.
There are some obvious use cases emerging — AR for apparel to try before you buy, VR for furniture to walk through a room remodel, to name a few. These just don’t seem to be compelling enough to go mainstream for most consumers despite the research showing quite a bit of interest. Getting over the hurdle of trying these experiences is still a challenge for many consumers.
AR or VR (or any technology) is not the answer. It should be the result of finding better ways to deliver more value to the consumer. As we’re able to create meaningful experiences that use AR/VR, something like 65% of shoppers expect it will change the way they shop, so they’re ready and willing to engage.
If there is a compelling business need/use case where new technologies improve service, efficiency or experience, retailers are foolish not to give it a try!
The experts have exhausted all the good points here. The underlying theme comes down to this — the current assortment of AR/VR solutions is specific, non-revolutionary, and with some exceptions, not business driven. Clearly, the use case for the tech has to advance to a point where it makes sense for the business. This tech just hasn’t hit a critical tipping point to reach mainstream retail no matter how much proponents push for it. Too many other retail issues will take precedence right now to make this a hit, and the customer is not screaming for the current version. We’ll see lower costs, dramatic added customer value, and completely new applications of the tech in places we never thought of first.
Augmented and Virtual Reality will be important some day, but less so today. Like everything else, selling on the internet evolves. From the beginning I said high-end luxury is less likely to sell well on the internet, but houses and water filters are a natural. We have all been wrong on what we think will sell and what actually does sell. So few consumers have experienced any form of reality. We don’t have a common technology format yet. To be effective it must be delivered over high speed internet or 5G technology. Give it 3 to 5 years and then ask the question again.
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