How Augmented Reality Is Transforming Retail: More Immersive, More Personal

Retailers of all shapes and sizes are grappling with some big questions. How can we make the customer journey more interesting? How can we improve conversion rates? How can we reduce returns (the cost of which is a huge burden for retailers, especially online retailers)?

Augmented reality (AR) technology can provide some solutions to these critical questions. Here are three ways AR is transforming retail for the better.

1. Engaging customers through interesting new experiences

Using AR, brands can create informative, entertaining experiences that delight customers. One great example comes from Danish toy company LEGO and its “Hidden Side” AR-focused LEGO sets, which are designed to combine real life and the virtual world. The idea is children build a model of a haunted house (all of the sets feature a haunted house), then use a free interactive AR app to hunt and trap ghosts – with the app telling a wider story about children uncovering mysterious happenings in their hometown.

Even if they don’t buy one of the sets, LEGO fans can still use the app to play a standalone game – although the experience is obviously better when combined with the physical LEGO. I love how LEGO has bridged real-life and virtual play with these sets, and found an interesting way to deepen the experience children have when playing with real-life models.

2. Allowing customers to see and experience products in more detail

AR has enormous potential to ease buyers’ decision-making processes, by letting them see and experience products, without having to visit a physical store or showroom. Indeed, many brands are investing in AR tools to help their customers get a good look at products, from the comfort of their homes.

Online retailer Wayfair has done exactly this with its AR-enabled “View in Room” feature, part of the retailer’s mobile app. This projects furniture or décor into the user’s room in 3D, at full scale, so that customers can easily visualize the products in their own home – and see whether it fits in their space. And because the image is 3D, shoppers can walk around the digital object (be it a couch, table, or whatever) to view it from different angles. This allows customers to experience the product in much more detail before deciding whether it’s right for them.

3. Taking “try before you buy” to a whole new level

Building on this idea of allowing customers to see and experience products, AR is also enabling customers to “try on” products digitally to work out whether they’re right for them – thereby improving conversion rates.

As an example, family-owned retailer Tenth Street Hats partnered with AR solutions specialist Vertebrae to create an AR experience where users can try on a range of hats, view them from any angle, and even take a picture of themselves “wearing” their favorite hat. To measure its success, Tenth Street Hats monitored whether pages that funneled customers to the AR experience led to more conversions than regular product pages. The result? An impressive 33 percent increase in conversions and a 74% boost in engagement. For me, this example shows that AR doesn’t just provide a novel experience for customers – it can have a demonstrable impact on a business’s bottom line.

Research shows customers are ready to embrace AR technologies

There have been some interesting studies on customers’ perception of AR technology, and the results indicate that the majority of customers are not only open to these tools – they may be more likely to purchase an item when they’ve experienced it through AR, even if they weren’t originally intending to purchase that item:

• A 2019 study found that 57 percent of customers in the UK said they would definitely or probably use AR applications that provided more information on products. For customers in the US, that figure was 62 percent.
• Another study found that 72 percent of shoppers bought something they had not planned to because of AR, and that 55 percent of shoppers said AR makes shopping fun.
• In the wake of COVID-19, when physical stores in many locations were closed, retailers that used AR enjoyed a 19 percent spike in customer engagement. What’s more, conversion rates increase by 90 percent among customers that engage with AR versus those that don’t.[i]

For me, this is the tip of the iceberg. In the near future, AR will fast become a completely mainstream way of engaging customers and boosting sales – rather like social media and apps before it, which means retailers who fail to embrace AR risk being left behind.

Read more about extended reality technologies in my new book, Extended Reality in Practice: 100+ Amazing Ways Virtual, Augmented and Mixed Reality Are Changing Business and Society. It’s packed with real-world examples from retail and many other industries.