Immersive technologies refer to all forms of perceptual and interactive technologies that blur the line between the physical world and the digital world, creating a sense of immersion for the user. Virtual Reality (VR) and Augmented Reality (AR) are visual immersive technologies. VR creates an artificial world where the user is fully immersed from a visual perspective. AR blends virtual reality and real life in real-time, allowing its users to see and interact with virtual objects in the real world.
Retailers have embraced VR and AR technology for sales, marketing and product development, leading to an enhanced customer experience and increased brand awareness.
Edgar, Dunn & Company has compiled the following 5 questions that retailers must answer when considering these emerging technologies.
1) Should immersive technologies be used to create a new sales channel?
Edgar, Dunn & Company believes that “Omnipresent” is the new Omnichannel. Omnipresent retailing is universal, borderless, frictionless, and pervasive. Retailers want to achieve a unified customer experience regardless of the sales channel. In the future, the sales channel will be irrelevant and shoppers will not care about the channel or even realise the difference because there will be no difference. Omnipresent retailing is the future. Shopping is an immersive experience and by using immersive technologies in existing sales channels it will be enriched.
AR, for example, is mainly being used via apps on mobile devices. This is an area where the in-app sales channel can benefit with AR which will enrich the customer experience. AR allows users to see how the products would look on them or in their homes. It can have an impulsive effect for customers, based on quick and instinctive impressions. When consumers want something, they want it immediately. This is one of the biggest benefits for retailers and they should take advantage of these technologies to boost their sales by integrating in-app payments with an AR experience. These technologies should not be considered as a new sales channel but complementary to existing channels.
2) What is likely to happen first AR or VR?
VR immerses the consumers in a simulated world, requiring stand-alone technologies such as a headset. AR overlays virtual elements in the real world through a mobile device, such as a smartphone or a tablet. Since almost everyone owns a smartphone, while headsets are still in a nascent stage, AR is expected to be most likely to become mainstream within the customer experience in a retailing scenario. Furthermore, consumers are not yet accustomed to wearing VR headsets and could be reluctant to do so. As a result, AR is currently ahead of VR and is likely to be the first immersive technology for retail shopping, as it provides more freedom for the users and more possibilities for retailers because it does not require special equipment.
If we were to map the progression of immersive technologies within the retailing sector onto a calendar, we are about a month into AR and we are at day zero for VR.
3) Is this technology going to remain niche or become mainstream?
The immersion of the consumer into the augmented and virtual realities will rapidly become mainstream and payment will be integrated into this new customer experience. Digital transformation will be delivered via screen technology and the walls of the retailer will become touch screens defining the consumer’s immersive reality. This will be a huge benefit for retailers to offer more opportunities for consumers to transact but this could equally confuse certain consumers, such as an older or a vulnerable consumer. This also relates to the use of PIN-on-glass at the Point of Sale (POS) device can be combined with immersive technologies.
The future for augmented and virtual realities is full of possibilities. Both technologies are developing quickly, attracting large investments and could be an integrated part of the shopper’s experience. According to Digi-Capital, venture capitalists have invested over $2.3 billion in the last 12 months in start-ups in virtual and augmented reality. As immersive technologies become more mainstream, they will increasingly influence how retailers create new customer experiences. As the technology evolves and costs fall, we can expect to see, for example, virtual showrooms and virtual fitting rooms becoming mainstream in the next 3 to 5 years.
4) Where in the customer journey is this new technology best applied?
The customer journey is the sum of various experiences that customers go through when interacting with a brand or a retailer. We could say that this journey can be summarised into four main stages. ‘Discovery’ is the first stage in the customer journey and refers mainly to brand awareness. Once the customer is aware of the brand, the next stage is ‘engagement’, where the customer considers the product, makes comparisons with similar products and compares prices. The third stage is ‘conversion’, where the customer will complete the acquisition with a payment. Finally, the fourth stage involves the ‘aftersales’ service, where loyalty and brand value is enhanced through the relationship between the customer and the brand or retailer.
Although the technology can be used in any specific stage of the customer journey, it is likely to be used in several of them. Depending on the stage where it is used, the result (i.e. the impact on the customer’s experience) could be different. Therefore, when retailers are going to decide where to apply these technologies in the customer journey, they should think firstly about what they want to achieve and secondly, where the return on investment will be positive.
Retailers can consider if they want to use these technologies as something eventful or for a specific occasion or location (this could result in a fragmented customer journey). Preferably, retailers should use these technologies as an uninterrupted proposition to assist the customer journey from discovery to aftersales.
Retailers with applications that focus on selling, for example, should apply the technology on the discovery, engagement and conversion stages. Ensuring that the engagement stage eliminates known customer pain points, such as, time contraction or indecision, will lead to a more comfortable and personalized shopping experience. Customers can ‘try on’ a wide range of products or see how items would look in their homes or even on themselves. It can be achieved immediately with AR. No need to go to the shop. No need to look for products around the shop. It is faster and more convenient for the consumer.
Customer engagement and customer retention can be a significant benefit during the customer journey. Another example where immersive technologies could be applied is while customers are queuing to enter the fitting room or at the checkout. This way, VR and AR would be used to turn customers’ waiting time into an exciting experience for customers, leading to greater customer satisfaction and retention.
Following the customer purchase is a suitable stage to offer a customer retention experience, which can lead to consumer-brand identification and increase the brand value.
5) Which types of retailer are expected to benefit the most from immersive technologies?
The number of retailers around the world piloting these technologies has been increasing in the last 12 to 18 months, with initiatives being launched on a regular basis. Retail segments, such as beauty, furniture, home, fashion, tour operators, airlines, gaming, automotive industry, etc. are investing in immersive technologies. There is overwhelming evidence that retailers in these sectors are starting to see customer engagement benefits in both AR and VR technologies.
However, some segments are more likely to benefit from these technologies than others. Furniture, home improvement, fashion or the beauty segments can leverage AR and VR for immersive contextual visualizations before the customer makes a purchase. This can help drive customer confidence from the comfort of their homes which will lead to an increase in sales. This supports the adage that a more informed customer is more likely to make a purchase. Making it easier for your customer to conduct product research using immersive technologies is a proactive approach to retaining current customers and attracting new ones.
On the other hand, there are segments, such as groceries, mass merchandise, food & beverages or convenience stores, where VR and AR do not seem very useful yet. We could say that retailers who offer commoditised products have fewer possibilities to benefit from VR and AR to boost their sales. Nonetheless, most of the retailers can use these technologies for brand awareness, customer retention or customer engagement.
Download our free report that describes where immersive technologies are being used in retailers today.
Contributors: Secondary research conducted by Oscar Perez, an EDC Consultant based in London.