James Brooks, Innovation Principal at Capita, examines how augmented reality is set to reinvent the way we shop.
We know that, when they visit a shop, customers spend more than when they visit a website1. Shopping is an emotional, visceral experience and people love to see, smell, touch, taste and try on the things they want to buy before they buy them.
Before the Covid-19 pandemic, online shopping was growing at a steady pace year-on-year2 but still generated a small part of traditional bricks-and-mortar retailers’ income. However, since the Government introduced lockdown measures in March 2020, all non-essential shops closed and made online shopping the only real option for many items. Online sales have since exploded – seven years of forecasted growth have happened in just seven weeks3, a growth rate never seen before.
So, what happens when we come out of the global pandemic and non-essential shops are open for business again? After staying at home for so long, will people have the confidence – or the desire – to return to the physical high street? If they don’t, retailers will need to be innovative about standing out on the virtual high street and create a new digital customer experience that redefines retail post-Covid-19.
Augmented reality could be the answer to exciting people about shopping again. Can we use this technology to combine the emotional experience of going to the shops with the convenience of purchasing online to create ‘phygital’ shopping?
So why AR and not VR?
Let’s take a moment to define the different types of extended realities.
- Virtual reality (VR) is a fully simulated digital environment in which people don’t just view reality but become part of it. It requires hardware such as a headset for a fully immersive experience.
- Mixed reality (MR) is where virtual objects are integrated into a physical view, allowing real and virtual objects to interact. As with VR, users require additional hardware to enjoy the immersive MR experience.
- Augmented reality (AR) overlays digital 3D objects, or information, on a live environment. While people can use digital goggles or headsets to receive AR, they can also enjoy a rich and immersive experience via their smartphone’s built-in capabilities.
Most new Apple and Android mobile devices have come with AR capability built in since 2018. Those capabilities are set to be further enhanced: Apple introduced LiDar (Light Detection and Ranging) technology to its 2020 iPad Pro and is rumoured to be including it in some variants of the iPhone 124.
Apple has invested significantly in AR capabilities. The company has launched ARKit, a platform for developers to create AR software, and CEO Tim Cook has commented on what he sees as the benefits of AR over VR: “I'm excited about augmented reality because, unlike virtual reality, which closes the world out, AR allows individuals to be present in the world but hopefully allows an improvement on what's happening presently.”
Put simply, AR has the fewest barriers to entry. It requires retailers to make minimal effort and spend less money than they would on VR to engage customers and deliver a fantastic experience for them.
Why and how?
E-commerce is wonderfully positioned to provide personalisation and convenience, but it can’t rival the see, hear, touch experience we get from a physical store. However, as we start to emerge from lockdown, bricks-and-mortar stores will find it harder to exploit these physical advantages.
The Covid-19 pandemic has caused online shopping to surge, thanks to national lockdown and rules about social distancing. It’s more important than ever for retailers to differentiate themselves from competitors by delivering captivating, emotive online experiences.
The quickest way to address this challenge is to take advantage of the most powerful and widely available consumer technology: the smartphone. More than 50% of all UK web traffic occurs on a mobile device and it’s predicted that, by 2023, mobile e-commerce spending will overtake desktop e-commerce spending5.
AR can be delivered today through the current generation of smartphones, straight from an internet browser. Retailers can use it to present products to customers to rotate, resize and frame against an actual live environment - like your living room.
To use AR, retailers just need to combine their digital assets with an API call. This makes it straightforward to complement their existing e-commerce platform with AR and begin to reap the benefits of a better, more engaging experience for their customers.
Opportunities for retailers
Initiating a new shopping experience is the most compelling reason for retailers to look seriously at AR. The immersion happens on the smartphone, but the trigger can come from an array of options: a hyperlink accessed directly via SMS or WhatsApp on the smartphone, for example, or a QR code scanned in-store or at a kiosk, in the print media or even directly from a TV commercial.
The mix of traditional and non-traditional direct sale initiations gives retailers the opportunity to reach new customer segments while stimulating more impulse buying. There’s also the potential to create richer marketing insight through product interactions and personal content creation.
Early adopters will ride the wave of novelty as consumers rush to try out the newest retail adventures, and with better customer experience comes improved sales conversion and repeat purchases.
But AR should be more than just the latest trend. The practical benefits of people experiencing a life-size product in their personal environments will give them more confidence to make a purchase and make them less likely to return a product (because they didn’t measure up correctly). Retailers will also be able to reduce the amount of inventory they have to stock in their stores; this brings a host of benefits including reducing the need for storage space and transport.
Augmented reality has been around for a while. It’s mature enough for mass adoption and scale and now, thanks to the way that the Coronavirus pandemic has accelerated people’s digital shopping habits, it’s poised to be a ubiquitous feature for every smartphone user.
Expect to see retailers creating ‘phygital’ experiences as customers tentatively emerge from lockdown and define the next era of consumerism.