How Augmented and Virtual Reality Are Transforming Retail

August 26, 2021

How Augmented and Virtual Reality Are Transforming Retail

The global augmented and virtual reality market is expected to grow by over $125 billion by 2024. Experts predict that this growth will be fueled largely by the adoption of these technologies in many different industries.

For example, the healthcare industry has used augmented and virtual reality technology to train aspiring healthcare professionals, plan surgeries, and provide personalized care to patients remotely. The travel and tourism industry has used these technologies to give consumers the opportunity to virtually travel to exotic destinations, tour museums, and compare different hotels.

Augmented and virtual reality technology has changed many industries, but it’s completely transformed the world of retail. How are retailers using virtual and augmented reality technology? How do these technologies benefit retailers and consumers? Here’s what you should know:

How Retailers Use Augmented and Virtual Reality Technologies

Retailers are currently using augmented and virtual reality technologies to provide various services and unique experiences, including:

  • Virtual Try-On
  • Product Previews
  • Games
  • Virtual Merchandise
  • Product Tutorials
  • Employee Training
  • Virtual Showrooms
Virtual Try-On

Virtual Try-On

Many retailers are using augmented reality technology to provide virtual try-on services to online consumers

In the world of cosmetics, retailers use augmented reality to allow online shoppers to virtually try on different shades of lipsticks, eyeshadows, blush, and other makeup products. Sephora’s Virtual Artist and Ulta’s GLAMlab tools make it easier for online consumers to choose the right cosmetic products without ever trying them on in-person. 

These tools were several years ago, but they surged in popularity during the COVID-19 pandemic. For example, consumers used Ulta’s GLAMlab tool to try on more than 50 million shades of foundation in the midst of the pandemic. 

Consumers can virtually try on clothing items, too. Kohl’s customers can step inside a virtual closet powered by augmented reality technology, try on different items, and mix and match pieces to create different looks that work for their body type.

Several shoe companies, including Nike, have also created virtual try-on tools for online consumers. Nike’s tool allows consumers to see what different shoe styles will look like on their feet before making a purchase.

To complete their look, online consumers can even virtually try on different accessories such as sunglasses from Solstice Sunglasses. On the Solstice website, consumers can try on different frames from countless luxury brands to see which shape and style suits their face best. 

Thanks to augmented reality technology, online consumers can try on head-to-toe looks without ever leaving home

Product Previews

Product Previews

Just like virtual try-on tools, product preview tools allow consumers to “test out” different products before deciding which ones to purchase. But instead of trying these products on, consumers can use product preview tools to visualize products in their real world surroundings.  

For example, say a consumer is shopping online for a new sofa from Ikea. The consumer likes a specific Ikea sofa, but isn’t sure what it will look like in their living room. Furthermore, they aren’t sure if the sofa is even the right size or shape for their living room layout. 

This consumer can open the Ikea Place app, which is powered by augmented reality technology, to project a digital model of the couch into their living room. The digital model is an exact replica of the couch, so the consumer can see if the couch is the right size and how it complements the rest of their furniture.

Ikea isn’t the only retailer that has used augmented reality in this manner. Other retailers, including Home Depot, Wayfair, Target, and Amazon, also offer product preview tools to consumers who are shopping online. 

Games

Both augmented and virtual reality technology are associated with the gaming industry, so it’s not surprising that some retailers have used these technologies to build entertaining games for consumers.

Burberry, a British luxury fashion house, launched an augmented reality app that allows consumers to build their own digital sculptures. Consumers can choose from a wide selection of Burberry prints, patterns, and shapes to create their own custom virtual sculpture.

Burberry also created a multiplayer arcade game, B Surf, where players can compete to unlock digital rewards, including an augmented reality character and face filter.

Aircoins is an augmented reality app that is designed to increase foot traffic at brick-and-mortar retailers. Just like Pokemon Go, the app instructs players to walk around searching for three-dimensional objects in their real world. However, this app is designed specifically for consumers who are walking around shopping centers.

Instead of Pokemon characters, Aircoin players are looking for coins, which they can collect to redeem rewards such as discounts or special offers from retailers within the shopping center. This app encourages consumers to visit local shopping centers by offering incentives, which can drive traffic to brick-and-mortar retailers. 

Virtual Merchandise

A number of retailers are using virtual and augmented reality technologies to create and sell virtual merchandise to consumers. 

Louis Vuitton, for instance, sells digital clothing and accessories that can be used to dress virtual characters in League of Legends, an esports game. 

Gucci is another luxury fashion label that has launched virtual merchandise. The company created the Gucci Virtual 25, a line of products that included an exclusively digital athletic shoe. Because the shoe was a digital design, consumers couldn’t actually wear it, but they could put it on their virtual avatars in Roblox, VRChat, and other apps.

In the art world, artist Brian Donnelly, also known as KAWS, introduced an augmented reality art exhibition called “Expanded Holiday.” The exhibition featured augmented reality sculptures that were available for consumers to rent or purchase. These consumers were paying to rent or purchase a digital sculpture, not a physical art piece.

Product Tutorials

Some retailers are using augmented and virtual reality technology to create unique product tutorials for consumers. 

Lowe’s used virtual reality to build its Holoroom Test Drive in-store experience. To participate, consumers must put on an HTC Vive virtual reality headset and hold onto a specially designed controller. The headset will transport consumers to a simulated environment created by Lowe’s where they can learn how to use and test out specific products. 

For example, the Holoroom Test Drive experience allowed consumers to test out cordless hedge trimmers. Inside the virtual environment, consumers would be given helpful tips on how to use the product. This gave consumers the opportunity to learn how to use and test out a potentially dangerous product in a safe, virtual environment

After the experience is over, consumers can take what they’ve learned and apply it to the real world to avoid making dangerous mistakes while using power tools and other equipment.

How Augmented and Virtual Reality Are Transforming Retail

Employee Training

Retailers are also using virtual reality technology to train new employees. Instead of training in-person, employees are trained in a virtual retail environment. In this environment, retail workers can learn how to handle difficult customers, emergency situations, and other scenarios that they may encounter while on the job. 

This type of training helps new employees build their confidence so they are fully prepared to handle whatever comes their way once they are out on the sales floor. It also helps them develop crucial interpersonal skills that they will need to achieve success in their role.

Because it takes place in a virtual environment, the training won’t interfere with the retailer’s business operations. This means customers won’t have to be patient with new employees who are still learning the ropes. It also allows retailers to train large groups of employees at once, which is difficult to do when conducting in-person training sessions. 

Virtual Showrooms

Some retailers are using augmented and virtual reality technology to build virtual showrooms for consumers

In the automotive industry, for example, many auto retailers now allow consumers to visit virtual showrooms using their smartphone or computer. Inside these showrooms, consumers can explore different vehicles just like they would if they were in a real showroom. They can see the vehicle from different angles, examine the exterior, and open the door to inspect the interior. 

Consumers can use this experience to learn about different models, compare vehicles, and decide which one they want to purchase without ever stepping foot outside of their home. Thanks to virtual showrooms, consumers only have to visit a dealership when they are ready to purchase a vehicle. This simplifies the process of buying a new car and meets the needs of consumers who want to move as much of the car buying process online as possible.

The Benefits of Using Augmented and Virtual Reality Technology in Retail

Both retailers and consumers benefit from the use of augmented and virtual reality technology. Some of the many benefits include:

  • Improve the Shopping Experience
  • Reduce Product Returns
  • Increase Conversions
How Augmented and Virtual Reality Are Transforming Retail

Improve the Shopping Experience

The internet dramatically reshaped the retail industry. Brick-and-mortar stores began to suffer, whereas e-commerce stores thrived in the new digital world. This transformation was underway long before the COVID-19 pandemic occurred. 

However, IBM’s 2020 Retail Index report revealed that the pandemic accelerated the shift to online shopping by about five years. In other words, online shopping exploded in popularity as a result of the COVID-19 pandemic. With this growth in e-commerce, it’s important for retailers to focus on enhancing the online shopping experience. One way to do this is by incorporating augmented and virtual reality technology.

According to Nielsen, consumers want the opportunity to use virtual and augmented reality technologies to make their everyday lives easier and more convenient. Over half of consumers surveyed by Nielsen also said they would like to use these technologies to evaluate different products. To meet this demand, retailers must use augmented and virtual reality technologies to improve the online shopping experience for consumers. 

Reduce Product Returns

Using augmented reality and virtual reality technologies can help consumers make more informed purchase decisions. This benefits consumers by increasing their satisfaction with their purchases, but it also benefits retailers by reducing product returns

In the past, consumers didn’t have access to tools that allowed them to virtually try on or preview products before purchasing them online. Consumers who were shopping for cosmetics online, for example, may have chosen the wrong shade of foundation or an unflattering shade of lipstick. As a result, many online purchases were returned to retailers.

But now, consumers can use augmented and virtual reality technologies to test out their options and choose the right product when shopping online. These technologies have given consumers the power to shop with confidence online.

How Augmented and Virtual Reality Are Transforming Retail

Increase Conversions

A conversion rate is a metric that measures the percentage of visitors to a retail store that actually make a purchase. Every retailer strives to increase their conversion rate and generate more sales. In the past, retailers often invested heavily in digital marketing and SEO campaigns to increase conversion rates. But now, they may need to incorporate augmented reality and virtual reality into the mix in order to get the results they desire.

Research shows that retailers can improve their conversion rates simply by using augmented and virtual reality technology. Some studies show that these technologies can increase conversion rates by anywhere from 10 to 200%. According to Shopify data, products with augmented reality content have a 94% higher conversion rate than products without this content. 

Based on these statistics, it’s clear that retailers can greatly benefit from taking advantage of augmented and virtual reality technology.

How Augmented and Virtual Reality Are Transforming Retail

How Retailers Can Start Using Augmented and Virtual Reality Technologies

It’s not too late for retailers to start using augmented reality and virtual reality technology. The first step retailers must take is defining their business objectives and goals. Retailers need to determine what they would like to accomplish by using augmented reality and virtual reality technology.

The next step is identifying the right tools to implement their augmented and virtual reality strategy. The main challenge that retailers will face when implementing these technologies is the development of new software. Retailers may need to invest heavily in this strategy in order to develop software designed solely for their consumers. This might explain why Goldman Sachs predicts that the augmented reality/virtual reality software market will grow to $1.6 billion by 2025.

Once the tools have been built and tested, retailers need to launch effective marketing campaigns to introduce them to consumers. Retailers can create instructional videos that show consumers how to use the new tools and feature them prominently on their websites. This ensures that all website visitors know about the tools and more importantly, how to use them.