Augmented Reality (AR) is a technology that overlays virtual objects on a live view of physical environments, helping users visualize how these objects fit into their physical world. Researchers from the City University of Hong Kong and Singapore Management University have published a new article in the Marketing Journal which identifies four major uses of AR in retail environments and examines the impact of AR on retail sales.
The study, to appear in the Marketing Journal, is titled “Augmented Reality in Retail and Its Impact on Sales” and is written by Yong-Chin Tan, Sandeep Chandukala and Srinivas Reddy. Researchers discuss the following uses of AR in retail environments:
- * To entertain customers. AR turns static objects into interactive and animated three-dimensional objects, helping marketers create new experiences that captivate and entertain customers. Marketers can use AR-enabled experiences to drive traffic to their physical locations. For example, Walmart has worked with DC Comics and Marvel to place special themed displays with exclusive superhero-themed AR experiences in its stores. In addition to creating innovative and engaging experiences for customers, the displays also encouraged customers to explore different areas in stores.
* To educate customers. Due to its interactive and immersive format, AR is also an effective way to deliver content and information to clients. To help customers better appreciate their new car models, Toyota and Hyundai have used AR to demonstrate key features and innovative technologies in a vivid and visually appealing way. AR can also be used to provide in-store orientation and product support. Walgreens and Lowe’s have developed in-store navigation apps that overlay directional signals on a live view of the path in front of users to guide them to the location of products and notify them if there are special promotions along the way. .
* To facilitate product evaluation. By keeping the physical environment as the backdrop for the virtual items, AR also helps users visualize how products would appear in their actual consumption contexts in order to more accurately assess the suitability of the product before purchase. For example, the Ikea’s Place app uses AR to overlay real-scale three-dimensional furniture models on a live view of guest rooms. Customers can easily determine if the products fit in a space without taking any action. Uniqlo and Topshop have also rolled out the same technology in their physical stores, providing customers with greater convenience by reducing the need to change outfits and change. An additional advantage of AR is its ability to accommodate a wide assortment of products. This feature is particularly useful for made-to-order or bulky products. BMW and Audi have used AR to provide customers with three-dimensional visual representations that are true to scale of car models, based on custom features such as paint color, wheel design, and interior aesthetics.
* To improve the consumer experience after purchase. Finally, AR can be used to improve and redefine the way products are experienced or consumed after purchase. For example, Lego recently released several specially designed brick sets that combine physical and virtual gameplay. Through the companion AR app, animated Lego figures come to life and interact with the physical Lego sets, creating a whole new play experience. In order to address skepticism about the quality of its food ingredients, McDonald’s has also used AR to allow customers to discover the origins of the ingredients in the foods they buy through three-dimensional stories and animations.
Research is also focusing on the promising application of AR to facilitate product evaluation before purchase and examine its impact on online retail sales. For example:
* The availability and use of AR has a positive impact on sales. The overall impact seems small, but some products are more likely to benefit from the technology than others.
* The impact of AR is stronger for less popular products and brands. Thus, retailers with large assortments of products can use AR to drive demand for niche products throughout sales distribution. AR can also help level the playing field for less popular brands. With the launch of AR-enabled display ads on ad platforms like Facebook and YouTube, less established brands might consider investing in this new ad format because they will benefit the most from this technology.
* The impact of AR is also greater for more expensive products, indicating that AR could increase the overall revenues of retailers. Retailers selling high-end products can also take advantage of AR to improve decision-making comfort and reduce customer hesitation in the buying process.
* Customers who are new to the online channel or product category are more likely to purchase after using AR, suggesting that AR has the potential to promote online channel adoption and expansion of the category. As previous research has shown that multi-channel customers are more profitable, omnichannel retailers can use AR to encourage their offline customers to adopt the online channel.
Taken together, these results provide converging evidence that AR is more effective when product uncertainty is high. Managers can thus use AR to reduce customer uncertainty and improve sales.
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Material provided by American Marketing Association. Original written by Matt Weingarden. Note: Content can be changed for style and length.