AR & VR in Retail: Hope or Hype?

Last week during an internal brainstorming about the future roadmap of the retail SaaS offering we have been working on, our founder-CEO implored me to visualize and bring to life the imminent “future of shopping”. Amongst other things, he started to picture our typical customer wearing a headset, head back and waving hands in the air to navigate the products showcased in 3D!

Our brainstorming led to discussions around the poster children of cutting-edge retail transformational technology — Virtual Reality (VR) and Augmented Reality (AR). While the opportunities sounded very exciting, we had to take a reality check before committing us to an expensive and risky endeavor. Too often brands, investors and startups have been guilty of innovation for innovation’s sake, wearing their customers out after the initial hysteria with what they believed to be a cool new feature, that doesn’t consistently solve a fundamental problem.

I conceded that I am no expert in this space and volunteered to come back after introspecting real benefits and a solid use case of whether AR or VR will actually make sense for our brand, product or audience.

Now AR and VR have both been the next “new” thing and been on retailers’ agenda for a number of years now. But for the uninitiated, it is rather puzzling to figure out where these technologies come from. In its simplest form, Virtual reality (VR) stands for a computer-generated reality in the form of 3D images that are transmitted via glasses, headsets or large screens in special rooms. Augmented reality (AR), on the other hand is the interface used to superimpose real-world media with virtual objects or information to create interaction and facilitate better consumption of information. It is this ’real world’ element that differentiates AR from VR.

Every new technology trend starts with an initial trigger that creates a splash, gets noticed and piques people’s interest. For the VR industry, that moment was Oculus’ landmark Kickstarter campaign in August 2012 followed by its $2 billion acquisition by Facebook in 2014. Since then, VR became known for its immersive storytelling capabilities and was positioned as an ideal platform for brands that rely on customers testing an experience out before they decide on a purchase. Examples include virtual tours like one did by Tesco and Alibaba, automakers that offer VR test drives and Adidas’ VR video to promote its outdoor clothing collection.

Buy+ The First Complete VR Shopping Experience

Adidas VR for Retail

Sadly today, thanks to clunky headsets, dearth of content and patchy network, VR mania and hype has faded to the fringes for most industries. Brands stay away from VR because production costs and the low adoption rates of consumer headsets make it untenable for their strategy. For instance, media houses like Guardian and The New York Times opened dedicated VR studios in 2015 with a lot of fanfare but stopped new production after 2017. During the last FIFA World Cup, the BBC created an app that simulated watching the game from inside a hospitality box. Some 300,000 odd people went on to download the app. But that number doesn’t come close to the 40 million streaming requests received via standard online platforms or the tens of millions watching each game on television around the country. Even the VR games market has not yet fully embraced this new way of gaming and the most practical branded experiences in VR are now relegated to the showroom floor rather than the living room.

With the excitement on VR waning, everyone looked up to AR to take the mantle of the exciting new category for retailers! What made AR particularly attractive was the lower costs and easier integration with mobile apps. But it too had a rocky start with the introduction of Google Glass in 2012 — the $1500 luxury that freaked out general public with its recording feature and made the wearer look weirdly goofy. It is fair to say it was ahead of its time, suffered an unceremonious death and was eventually replaced by HoloLens, that truly showed everyone the promises of AR with its better cameras, motion sensors, gesture controls, all packaged into a safer and smarter format. Having said that, I believe what really caused AR to take off was the Pokemon GO mobile game launched in 2016 and the super cool face filters and lenses introduced by Snapchat! That created big buzz and excited a lot of brands and startups.

Pokémon GO — Legendary Trailer

Lenses: Scan Your World

Funny Snapchat Kids Compilation

For E-commerce and retail, AR has proven to be more at home than VR, when it comes to enhancing short and shoppable moments through 2 primary use-cases: virtual try-on and see-this-item-in-a-physical-space. Popular case studies include a fashion brand that lets users examine an item before they buy, a furniture retailer which lets users see what pieces would look like within their homes or a beauty brand providing makeup filters.

One try-before-you-buy use case that has stood the test of time is eyewear which has been hugely successful for brands like Warby Parker.

Virtually try on glasses in our app | Warby Parker

For home furnishing and home improvement, nearly every major retailer has an AR experience, including Home Depot, IKEA, Lowe’s, Pottery Barn, Amazon, Build.com, Wayfair, Target, Houzz, Sherwin Williams and Macy’s. Seeing products “in context” builds confidence in a purchase and can reduce returns — especially valuable for products that are heavy and costly to ship back or return to store.

Say Hej to IKEA Place

Apart from commerce, AR also has a strong enterprise market with a number of brands already successfully running solutions for remote assistance, on-the-job training, remote collaboration, and computer-assisted tasks. AR glasses are reaching enterprise mass market status and software like Holo-Light enable basically all CAD 3D objects created in industry-standard CAD software to be displayed in AR thus leveraging a massive, already existing content ecosystem of models, users, software providers, agencies, etc

Microsoft HoloLens: Mixed Reality in the Modern Workplace

Not all is hunky-dory with AR sadly and there are indeed challenges ahead. The best-in-class AR experiences still require their own app, tremendously limiting scalability and access. On the engineering side, both Apple’s ARKit and Google’s ARCore fight each other for developer adoption. On the consumer side, virtual try-on for apparel, shoes, jewelry and cosmetics, may create false confidence. Mobile cameras may be misleading when trying to match beauty products to skin tones. Footwear and fabrics may look slick through an AR app, but actual fit can’t be discerned through even the slickest digital overlays. These limitations can cause frustration and trigger complaints for returns and refunds.

The industry is aware of these issues and has been making strides in solving some of these challenges. Accessibility for one, will improve in coming times as leading browsers continue building out support for Web-VR, providing developers the ability to create VR experiences that run seamlessly on the web without any elaborate hardware devices or a special app.

Where does that leave us, especially a small or medium sized retailer suffering from the double impact of Amazon and Covid. In my opinion, we are still a few years away until AR reaches mass adoption and gets closer to the idealized form of the technology we’ve all been waiting for. Until then, instead of being sucked by the hype, focus on getting the fundamentals of your customer experience right.