One thing Covid did, among many others, was to radically accelerate the digital and eCommerce driven shopping experience. A report by IBM estimated that the pandemic accelerated the shift to digital shopping by 5 years….so, does that mean traditional store retail will be left in the dust?
Source: Office for National Statistics – Monthly Business Survey – Retail Sales Inquiry
Retailers have always invested in creating beautiful, coherent in-store environments because it encourages consumers to visit while providing an enjoyable experience. As humans, we are sensory beings. We are constantly taking in information through all of our senses, so there are huge opportunities to reach people emotionally and effectively by communicating more with engaging, sensory retail experiences.
Brands are increasingly turning to augmented reality (AR) and virtual reality (VR) to completely transform the in-person shopping experience. They are innovating through in-person digital and, in so doing, are succeeding in pulling in feet, increasing in-store conversion rates and making their entire customer journey more interesting.
Even before Covid, retail was going through a bit of an overhaul, especially in the online space. We saw brands like Wayfair jump on the AR bandwagon pretty early, but why?
Wayfair identified a common challenge: whereby buying furniture could be challenging since it’s difficult to judge if a sofa or coffee table will fit without seeing it in person. AR is a solution to that challenge; allowing us to digitally project furniture into our homes to determine style and size before committing to purchase.
Brands such as L'Oreal and Estée Lauder started early by offering “try before you buy” types of AR driven digital shopping experiences via their websites.
Now, the chief digital officer at L'Oreal considers virtual make-up try on to now be “the base of any experience”. In fact, thanks to the acquisition of AR leader ModiFace, the beauty giant has been able to implement the technology throughout its website, leading to a 3 fold increase in conversions.
Another major beauty player, Estée Lauder, highlighted the acceleration in the adoption of this type of technology brought by the Covid-19 pandemic. Indeed, it recorded a 133% increase in usage of its virtual lipstick try-on during the first lockdown.
With AR often serving as the entryway for brands into this rich, customer engagement space, VR is the next level in providing that unique, deeply immersive customer experience and it has seen massive growth recently in location-based experiences with retailers bringing increasingly immersive VR into their real-world stores…
For example, Wren Kitchens encourages customers to book in-showroom appointments to design their dream kitchen with one of their experts. Then their in-store experience allows you to visualise a 3D render of your kitchen design with a VR experience walk around of what your kitchen would actually look and feel like!
And what about Farfetch, the online luxury pure-player, who unveiled their ‘Store of the Future’ (SOF) during their conference in London in April. Their SOF was positioned as driving change in luxury retail and encouraging innovations. The beta version of the ‘Store of the Future’ will include an augmented reality shopping experience, emotion-scanning software, and innovative payment solutions to bring together online and offline worlds. Farfetch will use data to improve the customer journey and offer a personalized experience. Its SOF aims to be used as an innovative platform where technology will be tailored for each brand to create the ultimate shopping experience.
It’s clear from the way Wren and others, have deployed AR and VR that they are driving to create an immersive and shareable experience for their consumers and to blend that digital technology with their retail experience. In fact, the Global Marketing and Communications Director at Topshop has called it “...retail theatre”.
Physical retail is not dying but changing thanks to the appearance of a new generation of stores offering a connected and experiential shopping experience.
A question we're all asking... does having a VR room make us shop more, will these VR experiences pull us from our convenient eCommerce shopping habits and back to bricks and mortar stores?
It appears shoppers are demanding a ‘connected shopping’ experience, we want the ease of online shopping with a blend of the richness that comes with an in-store experience.
A recent study called ‘Future of Shopping’ surveyed 20,000 shoppers and found that 35% of global consumers would visit a store, specifically if it had interactive virtual services, such as a smart mirror that allowed them to try on clothes or makeup. Interestingly, MAC Cosmetics and Shopify have also reported an increase in buying habits with the use of AR or VR technologies.
MAC Cosmetics, which allows Snapchat users to try on makeup using AR, found those who used the app were “three times more likely to buy an item, spending 10% more, on average” whilst Shopify has released data showing that 3D/AR content showed a “94% higher conversion rate for products than those without”, resulting in lower cart abandonment rates.
Fans of the in-store VR tools point to the success of AR in the eCommerce space as a clear indicator that offers that same, personalised, engaging level of experience through virtual services, virtual reality headsets and even virtual simulators as being key to helping drive similar successful results in real-world stores.
Psychological studies as well as those focused on human behaviour have pointed to some key theories at play beneath our VR shopping behaviours and explain why incorporating VR into the real world shopping environment is helping push increased buying behaviours and elevating those in-store conversion rates.
Affective appraisal theory tells us that one reason VR shopping is proving to be so successful is that it can produce an emotional state of pleasure and arousal in an individual, leading to an increased propensity to enjoy the shopping experience and purchase more.
Expectation confirmation theory is at play too. The interactivity of VR allows consumers to clearly understand how a product can be used and that enhanced knowledge and experience makes consumers feel more comfortable making their final purchase decision.
User gratification theory has demonstrated that entertainment is a crucial psychological factor for humans. We actively hunt for that feeling of pleasure and VR enhances that feeling of pleasure that consumers can derive whilst shopping.
We also know, through the stimuli-organism-response framework that the technological stimuli used in immersive VR technology evoke an individual's cognitive and affective states and if retailers do that successfully, they can motivate behaviour changes in their consumers.
VR experiences, deployed in real-world store environments have been reported to provide:
These kinds of reports provide us with clear signals about today’s shoppers. For one thing, we have never been more comfortable buying online and secondly, AR and VR experiences can help overcome the gap between real-world retail and eCommerce.
Keep an eye out for these popular terms;
We are likely to see brands playing more with all elements of XR and trialling things like holographic content. In 2017, a startup called VNTANA, created the first-ever AI hologram concierge, with Satisfi Labs, for retail, sports events and hospitality. I also suspect we’ll see the end of the clunky headset access to VR, with eCommerce brands quickly taking e advantage of that innovation.
One of our sister agencies from within LAB Group, Studio Blup, recently launched the Kylie Virtual World, an augmented reality experience aimed at connecting Kylie Jenner’s Gen Z fanbase to Boots, the UK’s biggest health and beauty retailer.
Customers were invited to explore, virtually try on and buy Kylie Cosmetics on their smartphones. This campaign broke new ground by taking users straight to the Boots checkout system in one seamless swipe. This pioneering, visually striking shopping journey joined up all the dots in the journey and the game-changing add-to-basket feature enabled customers to checkout with maximum speed and ease…resulting in 5 x higher conversions than the UK’s average eCommerce conversion rate.
Today, most brands are already living on Instagram, Snapchat or YouTube and are comfortable engaging richly with shoppers. Then we have the metaverse, providing yet another digital overlay of reality. By converging eCommerce, social networking and community and entertainment, it is still to be seen just how significantly this is going to impact business, marketing and how shoppers interact.
Virtual Reality is driving speedy innovation and the market for virtual and virtual goods is in a period of massive growth. The market for virtual goods has reached $190 billion. Largely driven by the relatively new demand for virtual character (avatar) skins in games, we are now seeing the emergence and growth of non-fungible tokens or NFTs.
And have you heard the term D2A yet?
Well, digitally native or early adopter brands are quickly getting to grips with Direct-To-Avatar commerce and this is already creating socially engaging shopping experiences that are difficult to replicate.
Considering just how fast we are seeing the spread and adoption of things like AR and VR, and as we continue to see the rise of virtual commerce, it’s more than likely we are already crossing paths with some form of XR in all our mainstream retail experiences. It'll come down to the quality and interactivity of the offering that will set brands apart.
For any retail business looking to innovate, immersive experiences offered through things like 3D, AR and VR are offering seemingly endless possibilities for connecting with shoppers with unique, memorable and interactive experiences.
When deployed in real-world retail, VR is helping brands engage with their customers in completely new ways. It makes that relationship between brand and customer stronger and more emotive. When used in-store, it allows a customer to go beyond their imagination of how it might feel to use, wear or experience a product and allows them to see and try it for themselves in virtual reality.
That level of experience is only going to make for better, more innovative, exciting in-store shopping trips for us all!
If you'd like to discuss more on the future of VR technology and how your marketing strategy can accommodate these advances, we'd love to hear from you.