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The Expanding Presence of AR in Retail

shopping app
Placement of digital information in the store enables convenient filtering capabilities.

Brick-and-mortar stores remain the primary point of purchase for many people, according to a recent report from the National Retail Federation. With the pandemic supercharging the growth of e-commerce, this now poses a serious long-term threat to the dominance of physical stores. Meeting and engaging with shoppers “ in the moment in-store “ is a big challenge for retailers. Further, with online retailers providing a seamless experience for exploring, buying and making payment, physical stores have struggled to provide the same level of personalization and convenience. Aside from loyalty program-generated mailers and coupons, every visitor to a physical store receives the same offers and ads, regardless of intent, demographic or purchase history !

With In-store promotions competing with actual products for eye-level real estate, the art of merchandising is a painful exercise in compromise.  Further, shoppers become frustrated by having to rely on sparse signage to help them navigate the aisles in search of the items they need. This inefficiency is a waste of time, frequently leads to a poor shopping experience, and can be costly. Studies show that when customers can’t find an item in-store, close to a quarter of them will leave and look for the product elsewhere. With those dollars and customers being lost – it’s important to add digital capabilities to improve outcomes – today, and encourage people to return for additional items in the future.

AR technology can help retailers deliver a better customer experience using their smartphone. By adding a digital AR layer to the physical store, retailers can leverage the advantages that have enabled e-commerce to thrive with easy – discovery, search and personalization.

Wayfinding AR apps like U.K. retailer Marks & Spencer’s List & Go provide customers with an on-screen path to the products on their shopping list. Using their phones, shoppers follow a compass and digital markers to more quickly and easily find what they need, discover other items they might want, etc.

Placement of digital information in the store also enables convenient filtering capabilities. For instance, Walmart is exploring AR filtering features for its store app, to enable customers to point at store shelves and sort items based on preferences like ingredients and markdowns.

Extending on providing faster and easier shopping, AR offers ways to bring fun product interactions to in-store experiences. Take U.K. grocer Tesco’s AR Discover App, which helped bring Disney “ Frozen ” branded products to life by letting children take “ selfies ” with their favorite characters.

These innovations and technological advances are creating opportunity and changing the landscape to improve outcomes for customers and retailers.  This is because Consumers want speed, ease and convenience in their shopping experiences – with no tolerance for latency, friction, etc. That’s a big reason that convergent commerce – the blending of digital and physical is being welcomed by shoppers and retailers. This is especially the case with Gen Z shoppers who are the most eager for these experiences and that younger people are the main adopters of immersive shopping and are twice as likely to use emerging media than older generations.

With AR being a powerful tool to satisfy rising customer expectations, retailers gain a better physical and virtual In-Real-Life experience to increase store appeal.  Further, this is a strategy to transform and elevate the in-store shopping experience beyond simple perks, particularly when coupled with helpful in-app features like scan and go. If retailers leverage first-party customer data to precisely place digital information via AR – complemented by AI-enabled shopper guidance – physical stores can reach customers in more personalized and meaningful ways.

With AR technology being used by more than 101 million people in the USA in 2022 – there is a major new opportunity to expand this in retail. And with ongoing labor shortages and thin margins, it’s expensive and unrealistic to give personal attention to each shopper using traditional approaches in a store. However, well-timed and targeted relevant AR capabilities can meaningfully improve business outcomes and shopper experiences to increase store appeal, boost customer engagement, increase sales, and for brand differentiation with unique integrated physical and virtual experiences.

May 11, 2023                    Auki Labs / CAIL                  CAIL Innovation commentary                                  905-940-9000