Can Retailers Successfully Leverage Augmented Reality and AI?

Facing stiff competition from e-commerce, brick and mortar retailers must innovate to survive. Augmented and Virtual Reality, enhanced by real-time AI insights, may give retailers the edge they desperately need.

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Photo of a mirror with a

Analysts predict that consumer-based augmented and virtual reality will not take off until 2022. Yet for retailers, there’s no time like the present to start leveraging the tech to create engaging in-store experiences. “Retail IoT,” encompassing such technologies as Augmented Reality (AR) and Virtual Reality (VR), is fast becoming a key tactic for retailers in the battle for customers’ attention—and therefore, their business. 

A graph demonstrating growth in implementation of IoT applications in retail
Image Credit: eMarketer

While the first wave of IoT in retail was about data and analytics, the next wave will be about affecting in-store behavior with interactive marketing. Interactive displays, “magic mirrors,” and other immersive technologies are helping retailers build a bridge between brick-and-mortar and online shopping experiences. In the process, retailers are unlocking a wealth of digital content at the critical point (90 percent) of in-store retail purchases being made as customers are touching products.

To be clear, brick-and-mortar retail is still roughly a $4 trillion dollar market! In-store retail is an untapped field for new forms of media delivery.

'The first wave of IoT in retail was about data and analytics. The next wave will be about affecting in-store behavior with interactive marketing. AR and VR paired with AI are building bridges between physical and online shopping.' Click To Tweet

An influx of next-level technologies is enabling retailers to attract shoppers with seamless, personalized shopping experiences that have them coming back for more, driving 5-10x customer engagement and 30-80 percent sales lifts. The technology—once deemed futuristic—has quickly become commonplace with name-brand retailers.

Virtual Try On and Customer Exploration

Saks Fifth Avenue’s magic mirrors, called “Bourjois,” allow customers to try on products virtually and experiment with different looks. Sephora is doing something similar. Virtual browsing is more convenient than physically trying on makeup and dealing with unsanitary samples or having multiple colors smudge. Customers can even experiment and change their hair color without the long-term commitment. Such experimentation makes it easy for shoppers to explore a variety of options and have their experience be not only comfortable also enjoyable and entertaining.

Engaging Customers Through Personalization

Augmented reality (AR) enables customers to interact with unlimited inventory while simultaneously informing retailers on how to adapt to changing customer preferences in real time. For example, Lowes jumped on the AR/VR bandwagon by implementing AR to allow customers to help visualize potential purchases in their homes. They reduced a key friction in the buying process.

Kate Spade, New York uses AR in-store to help customers personalize their “Make It Mine” line of bags. Kate Spade’s visitors can explore thousands of options, not all of which may be available in-store. By reducing the pain points of product exploration, retailers can help customers sift through a much greater variety of products while ensuring that they’re more emotionally engaged with the brands that touch them.

Brand Message Fidelity, Targeting, and Continuous Improvement

AR and VR technologies give brands a huge advantage by enabling them to differentiate their products and maintain direct control of their digital content, marketing, packaging, and pricing. These technologies also provide larger retailers struggling to steal back market share the opportunity to create unique, personalized experiences for their highest margin products in-store. They can distinguish themselves from the competition by creating the types of experiences that drive traffic with digital-first audiences.

Digital integration is just as important as getting your pricing, packaging, and marketing right. Once normalized across databases, the massive accumulation of data on shopper interaction and preferences will help retailers and brands make mission-critical decisions. This becomes especially hard in our omnichannel world, where in-store consumers may finish transactions online (such as with Prime). That’s even more reason for brands to place equal emphasis on in-store customer data to cross-reference with online success.

With AR and Mixed Reality (MR) marketing, retailers can continuously test and iterate messaging. They can even direct personalized messages to customers based upon parameters like gender, age, and purchase history. Delivered at scale, AR can unleash the distinctively flexible power that digital marketing makes possible.

Improving Omnichannel Service

Image of the Tulip omnichannel customer service platform for retail iot
Image Credit: Tulip

AR and VR have been the missing ingredients in the ongoing process of merging physical and digital retail worlds—otherwise known as “retail IoT.” Both AR and VR allow retailers to create a frictionless customer experience for users. These technologies facilitate the natural integration of new experiences with customers’ historical preferences—without the need for consumers to develop new shopping behaviors.

Sales associates can now arm themselves with tablets from Salesfloor or Tulip to help customers browse different looks not seen in stores. They can even help customers complete their purchase online. When the customer hops back online and visits the store’s website, the web chat can be routed to the actual sales associate the customer met in the store. Such personal engagement can make or break a sale today. It’s no longer a question of “digital versus brick and mortar”; it’s digital and brick and mortar working collaboratively to shape a single, continuous customer experience.

Adapt, or Fall Behind

In today’s competitive landscape, brands who don’t think ahead will be left behind. Toys “R” Us has failed to keep up alongside online giant Amazon’s ever-expanding presence. The former toy giant has closed its doors in the US. How amazing would a toy store be if each toy could come alive as you touched it? What if every product could tell a story, build a memorable experience and translate your physical shopping into long-term digital experiences? Online toy retailers have a long way to go before they could replace those kinds of experiences.

Retail isn’t dead. Boring retail is.  — Steven Dennis

The large retailer Nordstrom is continuing to weed out weaker selling brands as they plant a new flag in Manhattan. With the convenience and selection that e-commerce brings to the table, retailers have to incorporate these elements into the in-person shopping experience or risk losing traffic and the revenue potential of these premium locations. But they also have to innovate beyond merely matching e-commerce’s seemingly infinite variety as well, offering unique in-person experiences that are as-of-yet impossible online.

If utilized strategically, the technological revolution that is transforming retail lends brick-and-mortar stores an advantage. Technologies like AR and VR are only getting better at delivering truly immersive experiences. AI is getting better and better at predicting demand, determining what consumers want and how they want it, and thereby eliminating the struggle of buyers “going with their gut.” 

The combination of AI, VR, and AI in brick and mortar retail settings could give e-commerce a run for its money—literally. As consumers increasingly expect more from their shopping experience, retailers holding on to physical stores should adapt their practices through the convenience and depth of insight that AR and VR provides. Their very livelihoods may depend upon it.