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14th October 2020

How AR and VR is Shaping The Retail Industry

As we progress through the digital age customer expectations are shifting. This shift in customer expectations has changed how businesses tackle customer acquisition and retention. While in the past broad marketing campaigns and low prices were enough to set yourself apart from the competition, companies today are focusing on customer experience. According to a joint report by Econsultancy and Adobe, B2B companies identified customer experience as the most exciting business opportunity – beating content marketing, data-driven marketing, video marketing, and social marketing[1].


So, why do businesses find customer experience so exciting? The answer lies in shifting consumer behaviour. In a study of 15,000 respondents, 42% of consumers said they would pay more for a welcoming and friendly experience, and 52% said they would pay more for a fast and efficient customer experience. A whopping 73% of consumers also said that a good customer experience influences their brand loyalties[2].


This is where Augmented Reality (AR) and Virtual Reality (VR) comes in. We now have the tools available to create meaningful improvements to customer experience that benefit both consumers and businesses. Let’s take a look at how AR and VR are shaping the retail industry, what it means for businesses in the UK, and what the future may hold.

AR and VR Use Cases In Retail

Flooring CGI

Product Visualisation

Sometimes simply looking at a product and reading a description isn’t sufficient. You can only get so much from using your imagination to visualise how a product will work for you. When it comes to businesses, they risk alienating customers if their product doesn’t match the expectations of their target consumers, and this happens more often than you would think. Professionals within organizations are often too close to the product to really understand the nuances of the customer journey. They know the product inside out so they can struggle to see where there may be a disconnect between their impression of the product and how the customer perceives the product in practice. According to one report, 67% of customers say their standards for good experiences are higher than ever before, but 51% say that most companies fall short of their expectations for these good experiences[3].


Using AR and VR to help the customer visualise the product is an excellent way to ensure that they understand what they’re getting and that they’re happy with it.


Product visualisation can take many forms. For example, it’s extremely useful for interior design where the customer would benefit from having a full VR walkthrough of their new interior space so they can see how all of their ideas will come together. Customers are people, and like all people, our expectations don’t always match reality. Without a VR walkthrough, you could meet all of the customer’s requests and still leave them with a negative experience.


Even for something less complex than interior design, VR rendering is still a great way to empower customers to make the right decision. A key part of fostering a good customer experience is attracting the right customers, the customers who will truly benefit from your product. Let’s say you sell refrigerators of varying sizes and styles.  The customer may benefit from being able to visualise the product in their home. AR has seen huge success in the furniture market for this very reason. Affordable furniture giant IKEA has an app called IKEA Place App that allows customers to see sofas, chairs, and other furniture in their homes before they buy. AR works particularly well for furniture because furniture tends to carry a higher price tag and is something we only buy infrequently, thereby increasing the pressure on customers to make the right purchase.


However, it’s not just in our homes or other buildings that AR is intelligently informing buyer decisions, but also on our bodies. Popular European fashion retailer, H&M has been working on an AR app that will allow users to try on clothes before they buy[4].

A look at the H&M x Moschino collaboration.

Customer Engagement

AR and VR can also be used to drive customer engagement. The digital age has made it easier than ever before for small and medium-sized businesses to compete with the larger companies. Creating a sophisticated and responsive website is easier than ever and utilizing data analysis to create actionable goals is now something businesses of all sizes can do. This explosion of data-driven advanced software and services has undoubtedly been great for both businesses and customers. However, it does make competition fierce. One way to set yourself apart from the competition is to engage with customers in unique ways.

Businesses are increasingly focusing on personalisation as a way to connect with customers. They are also focusing on marketing techniques that will make their brand easy to remember. Teen sports clothing retailer Tilly’s, did this when they rolled out an AR scavenger hunt app that granted customers a 20% customer for completing the scavenger hunt in their stores.

Driving Innovation and Profits

According to a report by research firm, Lab42, 84% of consumers say it is important that the company they buy from is innovative. It’s clear that a company being perceived as innovative impacts buying decisions beyond simply providing useful solutions for customer problems. Consumers want to buy from forward-thinking companies are always striving to make the most of the technologically rich world we live in. Across industries, consumers reported that they would be willing to pay more for innovative products and services[5].

Quality of Life Improvements

We’ve never been closer to being able to seamlessly integrate advanced technology into our day to day lives. Not so long ago, wearing a headset that would give you information about your surroundings was firmly in the realm of science fiction. Today, it’s a reality. It’s now possible to develop apps that can give customers detailed information about products as they walk through a store. Australian wine company, Treasury Wine Estate did just this. They created a Living Wine Labels app that would give users more information about wines, including which vineyard they were from and any relevant history.

When we say “quality of life improvements”, we mean things that improve the customer experience by simplifying or improving the lives of customers. The biometric health industry is huge right now. People all over the world are purchasing wearable tech that tracks everything from their heart rate to vitamin and mineral levels. As AR and VR continue to advance, we can expect to see more apps on the market that will alert consumers to buy products to improve their health based on their biometric data.

The Future of AR and VR in Retail

In 2016, the worldwide AR/VR market size was 6.1 billion US dollars. This figure is expected to be 18.8 billion US dollars in 2020 and is also expected to drastically increase over the next decade[6]. If we look at retail specifically, Goldman Sachs estimates that the AR/VR retail market will reach 1.6 billion US dollars by 2025[7]. We’ve now at a point where computing power is high, data collection and analysis is widely practised and well understood, and there’s a real market desire for AR and VR products. These factors have made the development of AR and VR products viable in a way they weren’t in the past, and also opened the door for some exciting innovation in the space. We expect this will result in more meaningful and engaging customer encounters that improve the customer experience and drive success for businesses. But what will a future with AR and VR in retail look like? We can’t be certain, but here are some examples of what we expect to see soon:

  • Complete immersion in a new environment to help consumers make the right decision: Customers will be able to sit behind the wheel of a car to give it a test drive without ever needing to get in the car. Some automobile companies, like Audi, have already started to implement virtual reality showrooms in their dealerships, deploying 1000 VR showrooms in 2018. Customers will be able to shop for clothes from home but feel like they’re in the dressing room of the store.
  • Store design for businesses: VR is already having huge success in this space. Designing a store involves a combination of visually stunning design and carefully engineered layouts based on data. Where do you place products in the store? Where are people’s eyes drawn to? These are questions that are important when it comes to designing a store, and VR offers the opportunity to see designs become a reality and to test their success before committing to an expensive design.

Wondering How VR and AR Can Benefit Your Business?

At D Cube we host Lunch & Learn meetings where we come to your office with our latest VR equipment and pizza. The goal of these D Cube Lunch & Learns is to show how VR technology is used in real businesses to help businesses achieve their goals. We expect AR and VR to play a prominent role in the business landscape of the UK in the future and are invested in talking to companies about how the technology will work for them.

[1] https://www.superoffice.com/blog/customer-experience-statistics/

[2] https://cmo.adobe.com/articles/2018/4/new-study-finds-consumers-would-pay-more-for-better-cx-pwc.html#gs.qrp0zu

[3] https://www.salesforce.com/research/customer-expectations/

[4] https://wwd.com/fashion-news/fashion-scoops/hm-creates-augmented-reality-experience-for-moschino-collab-1202891622/

[5] http://customerthink.com/new-study-reveals-importance-of-innovation-to-consumers/

[6] https://www.statista.com/statistics/591181/global-augmented-virtual-reality-market-size/

[7] https://insights.samsung.com/2018/07/31/vr-in-retail-the-future-of-shopping-is-virtual-and-augmented/

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