New frontiers: How brands are harnessing AR and VR in retail
May 17, 2019
We talk to experience designer Tom Philipson, co-founder of YourStudio, about the capacity of augmented, virtual and mixed reality solutions to strengthen customer connection to brands.

As augmented and virtual reality (AR/VR) platforms deliver increasingly sophisticated and interactive experiences, this technology is expected to filter into everyday life in diverse and exciting ways, with a particular influence on the way we shop. At the same time, the strategic shift by leading retailers away from siloed channel-centric targets to cross-channel customer engagement is opening the gates to greater innovation on the shop floor. 

For Tom Philipson of YourStudio , an award-winning experience design agency and QICGRE collaborator, technology-enabled storytelling is one of many reasons that this is a thrilling time to be in the retail business. Here, he takes us through some of the most impactful usages of AR and VR by bricks-and-mortar retailers.

Playing the game

“Retailers who give us empathy and the excitement of discovery are the ones we want to spend time with, much more than those who remain standoffish and non-experiential,” says Philipson. One brand that has excelled in building this friend-like connection with consumers with the help of AR and geofencing technology is athleticwear giant Nike. Through its Sneakrs mobile app, the retailer runs Pokémon Go-style scavenger hunts for limited-edition sneaker lines, thereby conferring status on those who are willing to visit real-world locations to ‘catch’ a product in order to purchase or share its location with the sneakerhead community.

Philipson says: “This gamified approach blends real-life adventure and digital connection in a way that ignites the emotion associated with hunting down products in the pre-internet era, and this in turn builds loyalty.” While this interaction takes place beyond the storefront, Nike also alerts app users when their nearest store takes delivery of exclusive products and is able to tailor a store’s product range to reflect local character by analysing app browsing data in that area.

As for in-store scavenger hunt experiences, Walmart has collaborated with Marvel Studios to drive footfall and movie merchandise sales since 2012 by offering exclusive AR visualisations of Avengers characters when app users scan promotional signs in-store. Philipson expects to see more retailers leveraging AR gaming software to boost dwell time in-store and expand into new environments when 5G mobile internet arrives.

He adds: “At YourStudio we talk about one-journey or omnichannel retail but what we’re aiming for is a continuum in which shopping is so pleasurable as to be indistinguishable from other experiences such as gameplay.”

Trying before buying

Beauty retailers lead the way when it comes to investment in AR tools to complement the tactile try-on experience. Last year, Sephora introduced its Virtual Artist face-scanning kiosk to Australia when it opened a store at Robina Town Centre, allowing shoppers to see any number of makeup shades projected on to their reflection in quick succession before physically testing their favourite.

Philipson says: “With major players such as L’Oréal and Sephora buying tech companies to develop these tools in-house, we’re going to see rapid advances in the software, which is making product discovery more efficient and enjoyable while freeing up sales assistants to provide value-add services.” Already, AR try-on platforms are beginning to integrate facial expression analysis so that on-screen product recommendations can be served to users based on their responses to different products.

Home improvement and furniture retailers are early adopters of AR too, harnessing smartphone camera functionality to help shoppers envision photorealistic 3D products in their own rooms. Ikea’s Places app, for example, both boosts online conversion and facilitates more streamlined interactions within its warehouse-style stores by allowing shoppers to narrow down their shopping list in advance. 

US retailers such as Crate and Barrel are also making shoppers feel like experienced home decorators by offering 3D visualisations in-store and online based on their personal style preferences and room size specifications. Philipson says: “Retailers who use AR to help consumers discover something about themselves and give them confidence about their purchasing decisions can quickly turn a person who likes a product into an advocate who loves the brand.”

Research firm Gartner predicts 100 million global consumers will shop in augmented reality in-store and online in 2020.

Innovating every step of the way

While we wait for the spatial computing landscape depicted in 2002’s Minority Report to materialise, big-box retailers and shopping centre operators are making strides with AR-enabled wayfinding. Philipson says: “In the coming years, AR indoor mapping is going to be an important component of the visitor experience for all sorts of venues ranging from supermarkets to airports.”

T his technology, which usually relies on indoor beacons to overlay directional prompts on to an app user’s real-world view, can assist with the management of customer flow in  busy commercial environments as well as help individuals find products faster. Home improvement retailer Lowe’s is enabling shoppers and employees to find products two times faster than by self-navigation through its wayfinding app, for instance.

The one to watch for sophisticated usages of digital layers to simplify the in-store experience and reassure customers about their decision-making, says Philipson, is Alibaba’s Hema supermarket chain.

Making a splash

“Now is an exciting time for customer-focused retail designers because C-suite executives are realising that the role of the physical store goes way beyond its functionality as a point of purchase; it’s where you build people’s connection with your brand,” says Philipson. “We should be creating experiences so compelling that passers-by would be willing to pay to come into your store,” he adds. 

YourStudio harnessed virtual reality to create one such pop-up experience at TopShop’s London flagship in 2017, going on to garner 10 million media impressions in 10 days and a 100 per cent year-on-year increase in swimwear sales. Intrigued consumers queued up to sit in a waterpark-themed set within the store window where they donned an Oculus headset to take a virtual waterslide ride to a tropical island while seagull sound effects and beachy scents were diffused into the space.

“We only had 12 weeks to plan and execute that installation, which included fabricating 65 metres worth of prop waterslide,” explains Philipson, “but it delivered strong results because we had cross-departmental buy-in from marketing, product, technology and real estate management teams.”

He says 360-degree video can be a highly effective driver of impulse sales by allowing store visitors to picture themselves within the scenarios and environments where they would use a product. He adds: “Studies have shown that viewing 360-degree video through a VR headset generates much greater connection to story than traditional media.”

VR headsets will be in use in 2.2 million Australian households by 2021 according to analyst firm Telsyte.

Bringing life to the intangible

VR is also being incorporated into long-term experiential strategies by retailers of big-ticket items such as cars and property, and by intangible service providers such as travel agencies.

YourStudio’s hotel lobby-style store concept for Virgin Holidays’ Cardiff flagship, for example, features rollercoaster-style seats equipped with VR headsets through which customers can experience a whistlestop virtual tour of the operator’s signature destinations.

Philipson says it’s worth noting that stores in the Virgin Holidays portfolio that offer VR experiences register a higher Net Promoter Score than those which do not. He adds: “With VR hardware now able to track shifts in your gaze and when your pupils dilate, the data harvesting potential of this medium is a major point of discussion.”

QICGRE partner Accenture is already utilising VR and eye-tracking data analytics to advise brands on retail merchandising decisions and doing so far more quickly than traditional market research methods would allow.

Apparel retailers such as Tommy Hilfiger and Zara, meanwhile, are using VR and AR to transport customers from the shopfloor to the front row of fashion shows on the other side of the world. “Treating store visitors as valued guests and offering them little moments of surprise like this makes them want to spend time and money with your brand,” says Philipson. “This brand equity is why silo mentality has no place when calculating the ROI of AR/VR and other immersive experiences; we have to look beyond on-the-spot sales,” he adds. 

With an innovation mindset and customer obsession, retailers that are alert to the opportunities offered by augmented reality, virtual reality and 3D web technologies could reach entirely new dimensions of customer experience.

Read more about the blurring line between physical and digital commerce , or talk to our Brand iQ team to find out about creating impactful pop-up experiences within our centres.