Our Thinking

In the age of the experience economy, retailers are increasingly searching for ways to differentiate themselves by offering experiences that are unique, interactive and entertaining. Customers can now do a lot of shopping online, so getting them to show up in person is the art of enticing with the promise of an experience that is novel and exciting, or that adds value in a way an online transaction cannot.

Various technologies are being used to elevate the customer experience – from lights, video screens and audio, to QR codes that redirect to websites, and kiosks that allow customers to ‘create’ their own personalized items, like purses and even chocolate bars.

And though often lumped together with all these technological innovations, one in particular has the potential to be both hyper experiential AND functional, and can deliver long-term results: Augmented Reality (AR).

So, what exactly is AR? And what do retailers need to consider in order to make AR a successful part of their strategy?

A standard definition of augmented reality is: the integration of digital information within the user’s environment in real time. Unlike virtual reality, which creates a totally artificial environment, augmented reality uses the existing environment and overlays new information on top of it.

AR can be just plain amusing. Some applications allow the user to scan their phone on a QR code and a cartoon character pops up and does a jig. Though fun and technically experiential, gimmicky applications are often not thought-through. They tend to be short-lived and do not really add incremental value to the customer’s path-to-purchase – or the retailer’s bottom line.

So, what do retailers need to consider?

More practically, a key advantage of AR is its ability to be used in a way that is both functional and experiential. To be a successful part of a strategy, retailers need to think about: AR’s purpose in addressing a key customer need; its fit within the customer journey; and its sustainability over the long term.

 

AR’s purpose in addressing a key customer needA great example of applied AR is makeup retailer Sephora. They created a Virtual Artist app so users can see how makeup products look on their face, through the lens of a mobile device (usually an iPad) mounted in their stores. The functional benefit is clear: customers save time, avoid having to use shared testers, can explore a variety of options, and send a picture to a buddy for their opinion.

Similarly, home décor stores like Lowe’s and Magnolia have mobile apps that allow shoppers to ‘see’ 3D versions of their products in their own homes, to help them decide if it’s the right style, colour or size for a given room.

These applications are a good fit because they fulfil a purpose. By saving customer’s time, the customer has the opportunity to examine more of the store’s offerings, and make selections with confidence, thereby increasing store sales.

The fit within the customer journey

As with any retail strategy, defining the opportunity requires a solid understanding of the customer’s path-to-purchase, in order to understand how to influence the shopper on their terms, deliver actual solutions, and maximize the value of the technology.

Makeup trial areas and in-situ furniture visualization may seem straightforward, but how and where might AR fit within a shopping journey in a grocery store or a large hardware store? In these cases, the solution customers crave may be help to navigate the store itself. That solution may be wayfinding technology that uses a customer’s shopping list to guide them through the store.

 

Sustainability over the long term

When designed with purpose and tailored to the needs and wants of a target market, an AR strategy will deliver tangible results. Already, a majority of consumers prefer stores that feature AR experiences. Successful AR strategies will leave customers satisfied, engaged and eager to return. And competitors will likely get into the game soon enough.

In short, augmented reality is, well, a reality. It’s here to stay. So, retailers should get on board – but must first do their homework.

Done on the fly, AR may be super cool but gimmicky and have a short life span. Done well, AR is a tool that can sustainably boost customer satisfaction and loyalty – and a retailer’s sales – for years to come.