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How AR/VR Should Be Used By Retailers

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Just a week ago I gave a speech regarding AR/VR and its usage by retailers in Moscow, Russia. Nice, quiet event with speakers varying from advertising agencies, gamification experts, university lecturers and marketing directors from Media Markt and the biggest Russian national bank – СБЕРБАНК. Even though I attend numerous conferences and marketing events as a speaker, I was stressed. It was my first time in Russia, my name was wrongly translated, I knew very few people there understood English and I had an interpreter with me translating every word I said. Somehow I felt strange and out of place. But just before I stepped on the landing and looked at the people gathered in the conference room I understood that all this fear meant nothing. I was there to shed a light on augmented and virtual realities as industries, draw up a forecast for the next couple of years and entertain the audience with some awesome case studies. Piece of cake – I told myself. I took a deep breath, pulled off a smirk and fired away with no hesitation.

Michal Gasior, Managing Director at FC Mannschaft giving a speech in Moscow, Russia

Michal Gasior, Managing Director at FC Mannschaft giving a speech in Moscow, Russia

New technologies are no longer nice to have. They are must have and this is backed up by numerous researches. Brands using new tech (or adtech) are considered way more modern and future focused by consumers. They also have their sales increased and create far stronger loyalty with customers. Just to give you solid data: 71% consumers think that brands using new technologies such as AR or VR are modern and more in line with our times, hence they are more trustworthy. At the same time 64% consumers claim they are more loyal to brands they interact with. In other words, the world we live in today is driven by experiences. The sum of all those moments we encounter every day and every second. Have a brand participate in it making my life better, more valuable or interesting? Good, you have my gratitude I might keep you in the top of my mind next time before I make a purchase.

Virtual Reality itself isn’t new (the foundations for the technology have been kicking around since the ’60s) but it has finally progressed to the point that it’s inexpensive enough for the average consumer to own. You can pick up Google Cardboard for as little as $15 or buy Samsung’s sturdier Gear VR for just $99. VR is an adaptable technology with endless potential, and we’ve only scratched the surface so far. It’s important not only to consider execution, but the insights artificial environments can unearth to help you create a smarter business. Today’s technology combined with creative ideas can drive sales, increase brand awareness, the time consumers interact with brand and cover all the possible KPIs marketing directors are so addicted to. In general AR and VR are booming, the hardware is getting more affordable and its usage, both commercial and private, has been growing exponentially around the world. Cinemas started creating those dedicated AR/VR bonus content zones (we have been developing such zones in India recently), you can meet AR in mobile games and applications (that we have developed tons of worldwide), in car and other vehicle configurators (we have both cars and yachts in our portfolio). Cereal boxes are often markers for AR or you can encounter AR as heart transplant simulators being used by med students before they start operating on people. It’s almost everywhere and if it’s not, it will be soon.

What US Shoppers expect from VR?

What US Shoppers expect from VR?

So why are retailers using VR/AR in their marketing mix? The simple answer is: because the customers do. In marketing to communicate with the target audience the brand always has to adjust its message, tools and touchpoints to the customer and speak the language he speaks, be where he is and use the same technology he does. If more and more customers cease from visiting physical brick & mortar shops while declaring at the same time they would rather buy from brands that provide VR/AR experiences, then it’s pretty obvious the next move for the company should be investing in just that. First, because customers want that and will probably shift their loyalty and money towards those brands who understand their needs and second to be out there first before all the other competitors on the market (this has become mandatory and it’s not limited to the pioneer brands). Setting down a retail strategy now in 2016 on how to integrate VR and AR, means truly being customer centric. It all comes down, in the end, to how applications solve the consumer’s problems and extend the brand’s connection to the consumer. A sporting goods store, for example, can focus on virtual tryouts of a new tennis racquet or running shoes (Conversa did that with sneakers), creating a point of differentiation from a mass retailer at which sporting equipment is an afterthought. I understand retailers are counting people in store but they forget it all comes down to sales. So as long as customers are spending money – whether through eCommerce, aCommerce (augmented commerce) or vCommerce (virtual Commerce) then all is good and they still bank the money. The obsession with retail wanting to fight with digital is pointless. All the channels that the brand owns should cooperate with each other. They are just different points of sale and the sooner brands get it the better they’ll be off.

Forecast: Value of AR and VR markets

Forecast: Value of AR and VR markets

A sneak peek into the future: AR/VR will become vital to e-commerce as consumers become less reliant on brick-and-mortar locations. One of the main barriers that keeps shoppers from going online is not being able to see products in person — 60% of US consumers prefer to shop in-store because they can see, touch, and feel the products, according to a report from PwC. But VR and AR tools will change this over time by giving shoppers in-store capabilities at home. As VR technology, in particular, becomes more mainstream, shoppers expect it to change their shopping experiences. Overall, 74% of US shoppers anticipate that VR will impact their buying decisions.

This is how shoppers think VR will change their shopping patterns the most:

    • 33% of US shoppers believe that introducing VR into retail will make them more likely to shop with a retailer that offers a VR experience
    • 24% would be more likely to purchase more online. That’s because VR allows shoppers to see items in a lifelike manner without being in a physical store
    • 17% would be less likely to visit a physical retail store

All this is good news. At least for agencies like ours because this means the need for AR and VR executions for companies will skyrocket very soon. For brands, on the other hand, it is going to be a difficult time making decisions. Most will probably act as if with every other technology or trend – they’ll wait for the competitors and pioneers’ moves. And may actually lose in the process, same as Kodak did when it couldn’t realise times changed. Remember social media hype? Those first brands using Facebook as a communication tool? Then Twitter, Instagram and Snapchat. Show me a brand that doesn’t use social media today and I’ll show you a loser. Exactly the same will happen with AR and VR and it’s just a matter of time. But for now let’s see how some brands already monetize AR and VR.

LEGO

Lego introduced a series of kiosks that feature AR, so that when a shopper holds up a box of the kit they are intending to buy, the kiosk displays the completed model as if it were in their hands in front of them. Brilliant and easy way to increase sales by using simple AR and plays around kids’ imagination. Have a kid that doesn’t know which set to buy? Have him try all of them and see what he can build from it. Not only is Lego offering something unique to its customers in the form of an experience that they can’t get anywhere else, it is also encouraging shoppers to spend more time in their stores and interact with products on multiple levels – something all brands should do or at least think of now before it’s too late and customer – being unloyal as they are – will simply change to other brands. On top of that, this simple solution handcrafted to Lego’s needs may actually increase sales because people are likely to buy products they haven’t considered buying earlier.

IKEA

IKEA has remained successful partly because of their ability to leverage technology and ecommerce for their consumers. The brand created an AR catalog app to help customers visualize how certain pieces of furniture would fit and look in their very own homes. Customers simply launch the app on their smartphone or tablet, and use the camera function to capture an image of a room in their home. The customer can then select different items from the IKEA catalog to see how the finished, assembled piece of furniture will look in their home before they purchase. Augmented reality technology makes it possible for the customer to test drive different products in real time. IKEA’s visionary retail campaign performed well as it helped decrease common objections furniture shoppers often have when making the decision to purchase. Will if fit in my living room? Will this look okay in my bedroom? Augmented reality for retail is helping customers answer these questions themselves, thus raising a positive excitement about their purchase.

Converse

Converse uses innovative technology to show how shoes will be tried on in the near future. With their AR-fueled Converse Sampler app, the customer can select any shoe from the Converse catalog and simply point the phone towards his foot to see how the (virtual) shoe will look wearing it. This particular app also supports purchases and is connected to an eCommerce platform so the customer can have the full retail experience of shopping, trying on shoes, and making a purchase all through the power of AR. This is exactly how retailers should use AR to drive sales and ease the way for customers’ shopping experience. Less brick & mortar, more immersive technologies.

ModiFace

This is something we have been developing ourselves lately. The newest trend, something that touches consumers in the most intimate place possible – their communicators such as Facebook Messanger, Kik, Whatsapp, Telegram and others – chat bots. But chat bots don’t have to be just artificial intelligence (AI) client service machines. Augmented Reality can be applied to them as well and the creative solutions are endless. This case here is solely for a makeup brand (similar to the client we are developing our version for the US market). However, the possibilities to apply this to other categories are limited only to insights and our own creativity.

Picture that: a 3D augmented reality model of a house you want to buy that lets you visualize the spacial arrangement of rooms or better yet – lets an architect design it using a real-time AR. How about an AR car configurator connected to eCommerce (or aCommerce) that allows customers to create their very own personalised cars and order them (or at least a test drive) without ever going to a website or a car dealership. These ideas obviously contradict the very purpose of the conference I was attending, where everybody praised retail, yet most of those ideas are designed to avoid brick & mortar stores by consumers. Is that all bad then? – You may ask. No, it isn’t bad at all as long as such executions sale, add value to customer’s experiences and lives or carry out any marketing goals brands might have. Keep in mind there are people doing everything to avoid shopping or going into stores by all means and those brands who understand that the soonest, will convert lots of new acolytes for themselves or at least minimize losses they would suffer otherwise.

The break down of AR and VR industries in 2020

The break down of AR and VR industries in 2020

So where are AR and VR going and what does the future hold for them? In short VR and AR will herald another transaction point, not unlike eCommerce or social commerce, but virtual commerce or aCommerce. So this is not just an augmentation of physical retail, it will eventually lead to another way of shopping, another way to experience the brands we love and the products we are interested in purchasing. This is especially pleasing to me for a funny, personal reason. Back in the day, when I was still working in Mediacom, they let use choose mottos we then put on the backs on our business cards. Mine read: The future of online is offline. AR is in fact in between those worlds, physical and digital. In the everexpending clutter we face today, the amalgamation of those two worlds is the only way for marketers to win the hearts, minds, souls and – most importantly – the attention of their customers. Think disruption. And, as depicted here in the forecast, both AR and VR will grow exponentially to the point where they won’t be just another trend or fad but solid industries of their own.

By 2020, which is almost just 3 years from now, the AR market alone will be worth $120B (some studies even estimate that value at $150B up to $180B) with VR valued at around $30B. To show you how big numbers these are, get this: the total worth of russian advertising market today is worth around $4B. And it’s not going to be just silly mobile applications and games. Imagine aCommerce (Augmented Commerce), using AR/VR in film, voice and data. And forget about the purpose, it’s not going to be just entertainment parks and theme parks. Everybody will use AR because once the platforms are up and running the cost of developing and launching AR/VR campaigns will fall down drastically.

AR is truly between online and offline worlds

AR is truly between online and offline worlds

The cheap AR/VR won’t apply only to highly personalized solutions but luxury comes with a hefty price tag. Speaking of, have you wondered what luxury has become lately? When I was living in the Middle East I saw Lamborghinis, Ferraris and Bugattis every single day. After a while it seemed I got used to that sight and, although it was nice and made the voice in my head shout „I WANT THAT!” all the time, it lost somehow its uniqueness. And this is what made me realise luxury is in fact uniqueness. Having one-off things that nobody else has. Personalized, handcrafted, customized, signed by etc. The only way to differentiate yourself in the Middle East, when you are equally rich to everybody else, was to have your car personalized. So there was a bunch of Pink Ferraris, Yellow Lamborghini with Pikachu painting all over the car, military camouflage Bentleys or gold chrome Rolls Royces. The same will happen to technology we all consider new today. When everybody can have a ready to go solution from a shelf then in that world the only luxury is the personalization. Knowing the future of AR and VR and knowing brands can’t escape that and sooner or later will jump the AR/VR wagon, the question is not whether or not you will use AR/VR but whether you will allow yourself the luxury and go for custom solutions that will clearly set you apart (or above) you competitors and deliver unforgettable experience to your customers. When it comes to technology – brands’ luxury translates directly to customers’ luxury. So don’t think for a second you are just spending money. You are investing in you customers.

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