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What is Augmented Reality and How Will It Impact Retail?
Growing a business

What is Augmented Reality and How Will It Impact Retail?

Many retailers across Australia are using augmented reality (AR) to offer a better shopping experience for customers. 

This is in line with the increase in the number of digitally native shoppers in the marketplace today. These tech-savvy customers are comfortable with new technologies and are eager to see how AR can be incorporated in the consumer experience.

But, what actually is AR? And what are the wider implications for the industry?

What Is Augmented Reality?

AR creates an enhanced version of the real world by superimposing digital elements such as visual components, sound, and other sensory cues, onto reality.

Through AR, users get a more immersive virtual experience of the physical world.

A prime example of how AR enables users to perceive their destinations in the real world is the Live View function in Google Maps. Some of the other most well-known examples of AR today include the Pokémon Go app from Nintendo and the photo filters on Facebook and Snapchat.

You can access these examples via your smartphone, additionally, AR glasses and headsets are also being developed.

How Does AR Work?

When a user points a camera-equipped device at an object, built-in AR software analyses the video stream, recognises the object, and overlays digital material on top of it using a mix of depth tracking and computer vision.

The result is that, as the user shifts their camera, the AR display moves automatically with it, even shifting in size and orientation so it doesn’t feel too obtrusive. This technology creates an exciting and immersive digital experience.

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4 ways that AR is Impacting Retail

Retailers are developing AR shopping experiences to offer customers an experiential visit to their stores that will allow them to interact with products.

Let’s examine some of the potential benefits of AR in the retail space.

1. Increased Engagement

In order to create immersive shopping experiences that foster engagement, improve customer education, and pique consumers' curiosity; several firms are turning to AR. For example Starbucks recently created a wonderful AR experience that told the story of the coffee bean on its journey from crop to coffee cup. This educational experience was a hit with customers leading them to be more engaged as they learned about the process that goes into their favourite coffee. 

Creating these unique experiences can help in engaging with customers and this could help in customer retention, with a good AR experience staying in a customer mind helping a retailer retain that customer. 

2. Increased Conversions

AR may dramatically impact both in-store and online conversion rates and have a big impact on your bottom line. In-store displays and activations, virtual try-on experiences, and virtual navigation can all work to influence a purchasing decision by allowing customers to experience products easily before purchasing.

3. Contactless Is the Future

Contactless transactions will increase as ecommerce develops and customers grow more at ease making purchases online.

With more advancements in AR, there would be more opportunities to create a life size virtual model for potential customers to interact with. This offering will enable customers to have a look at products from various angles, while saving time, effort, and even money. Brands such as Apple have already started enabling users to view an AR version of the iPhone in their phone. 

4. Content-sharing

Filters, displays, and applications driven by AR are entertaining to interact with and also effective organic marketing techniques.

Many brands come out with collaborations with Snapchat that let consumers try out products and share content with friends. 

This raises brand awareness for the company but it also offers retailers an opportunity to share information about the products, too. While in-app, if users like the product, they can purchase there and then with a call-to-action (CTA) that takes them straight to your site.

Furthermore, through these fun interactions on social media driven by the AR experience, people will also be talking about the retailer. Whenever people engage in conversation about your brand, there is great potential to gather insights into people’s opinions and general mood around the brand and product. 

Examples of how AR can help retailers:

  1. AR can improve complex warehouse management systems. Warehousing management activities such as inventory control, order allocation and picking, and packaging can benefit from an interactive 3D warehouse layout with the use of AR. These tools can help warehouse staff quickly locate products and quickly extract necessary information.
  2. Virtual fitting rooms allow customers to try on clothing items before they buy without touching them or even without visiting the store.
  3. Placement previews like Ikea’s place App AR feature let customers ‘see’ what an item of furniture would look like in their home. This seamless experience keeps customers motivated through the buyer’s journey and results in increased conversions.
  4. AR-enabled packaging can offer customers the ultimate unboxing experience. For example, customers can scan a QR code on a package that would bring up various digital content offering education or entertainment to accompany the product itself.
  5. AR can allow businesses to offer more product information to customers. Many customers need as much information as possible to influence their purchasing decision. However, retailers can’t put reams of text in-store or even online as this would be disruptive. So, a QR code that brings up interesting product information will be immensely valuable to many consumers.

Final Thoughts on AR and the Retail Industry

The development of higher resolution virtual models will enable consumers to ‘try-on’ products. Experts anticipate that AR will go from a nice-to-have to a retail essential over the course of the next five years. 

More retailers will be trying to integrate the technology into both new and existing strategies as more consumers fall in love with AR and get used to its presence.

Many significant players, including Nike, Ikea, Starbucks, Adidas, and Ralph Lauren have AR experiences in their stores. And, By 2025, almost three quarters of the global population and almost all smartphone users will be frequent AR users. 

Essentially, as retailers, you need to move with the times and fulfil audience expectations. To compete with those bigger brands and to offer an immersive customer experience for your business, it’s time to embrace AR.

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