Making a Virtual Impression on Shopper’s Reality

By: Rishitha Vummaneni

Ishan Goel

Imagine stepping into a store where reality intertwines seamlessly with the digital world, where your shopping experience transcends the limits of traditional brick-and-mortar environments. As you walk through the entrance, a world of possibilities opens up before you, thanks to the incredible advancements in technology like Augmented Reality (AR) and Virtual Reality (VR).

AR allows you to overlay digital information and virtual objects onto the real world. You can try on clothes virtually, see how they look from different angles, and get a better sense of their fit without physically trying them on. With AR, you can explore an extensive range of products and make more informed decisions.

VR takes you on a virtual journey where you can explore a simulated environment and interact with virtual representations of products. You can visualize how furniture would look in your space or experiment with different styles without leaving the store. VR enhances your shopping experience by providing immersive and realistic interactions.

Figure 1: Augmented & Virtual Reality Infographic

These capabilities of technology allow it to transform the retail industry, an ecosystem of businesses – physical stores, online retailers, and e-commerce platforms along with millions of consumers. It is also important to note that both the supply side (retailers, both offline and online) as well as the demand side (customers) can leverage technology to improve their parts of the process.

 

Figure 2: Ecosystem of Retail Industry

Given the size of the industry, these technologies have already started creating an impact, however, this impact remains scattered and brings up disparities within different segments of this huge industry. To truly understand the potential of using technology to revolutionize and change the shopping experience, we aim to answer the following questions:

1. What is the current state of technology in the retail industry?

2. How do customers perceive the overall value proposition and future potential of AR/VR technologies in the retail shopping experience compared to the traditional brick-and-mortar retail environment?

3. What are some industry-specific recommendations that can be implemented by adopting technologies like AR/VR specific to customer experience and operational efficiency?

The Current State of Technology

To understand the current state of technology, we look at the already explored use cases of AR/VR and surrounding technologies that have been experimented upon from both the customer side and the retailer side. Our research showed various use cases already being implemented by segment leaders of the industry. These are elaborated upon in the case studies below.

Case Study 1: Amazon

1. For a corporate giant like Amazon, the process of warehouse management itself becomes complex with the area of a single warehouse stretching up to an area of 54 football fields.

2. The whole process of order fulfillment starts with products arriving at the inbound dock where they are cataloged according to their place of origin. This is followed by the Stow Process where the products are randomly stored in yellow, tiered “pods “. These pods are then transported to stow stations and are ready to be picked up as soon as an order is placed. The picking process is triggered whenever an order is received by Amazon. The robots do the first part of identifying the correct pods and bringing them to the picker team, which locates the correct item and places it into a ‘tote.’ These orders are then scanned for accuracy and sent to the packing station.

3. Managing this process manually, with only the basic level of automation caused numerous pain points :

a. High employee turnover: Amazon’s warehouse turnover rate is notoriously high, with some estimates putting it as high as 150%. This is due to a number of factors, including long hours, repetitive tasks, and demanding quotas.

b. Safety concerns: Amazon warehouses have been the site of a number of serious injuries, including falls, forklift accidents, and heat-related illnesses. In 2019, the Occupational Safety and Health Administration (OSHA) fined Amazon $60,000 for safety violations at one of its warehouses

c. Worker complaints: Amazon warehouse workers have filed a number of complaints about working conditions, including low pay, long hours, and lack of breaks. In 2020, Amazon workers in Alabama filed a petition with the National Labor Relations Board (NLRB) to unionize.

4. To combat these pain points, Amazon recently started heavy integration of robotics and is aiming to revamp the whole process with the use of newer technologies:

a. AR Wearable Goggles: The task of locating an item within an Amazon fulfillment center can present significant challenges, primarily attributed to the expansive dimensions of these facilities and the vast quantity of merchandise they house. By using smart glasses, employees can see exactly where items should fit on carts while they are picking orders. Furthermore, the utilization of these smart glasses ensures that the picking lists remain constantly visible to the order picker, while also providing them with the optimal route to navigate through the warehouse. This method represents a significant enhancement compared to the conventional approach, wherein order pickers rely on either a physical document or a handheld scanning device to manually choose products and subsequently transfer them onto carts.

Apart from the use of Augmented Reality technology, Amazon has also been a pioneer in using other automation technologies, to reimagine the future of warehouse automation.

b. Robotics: Amazon employs robots to assist with various tasks, such as transporting pods of inventory, optimizing the movement of goods within fulfillment centers, and increasing the speed of order fulfillment. These robots navigate through the fulfillment centers using 2D barcodes on the floor and collaborate with human associates.

c. Machine Learning: Amazon utilizes machine learning algorithms to optimize processes, such as determining the optimal location for each item in the stowing process, automatically tracking inventory, and suggesting box sizes for packing orders. Machine learning also helps in fine-tuning the overall fulfillment process by continuously analyzing data and making improvements.

Case Study 2: DHL

1. DHL, the world’s leading logistics company, carried out a pilot project testing smart glasses and augmented reality in a warehouse in the Netherlands in 2019. Developed in cooperation with Ricoh and wearable computing solutions expert Ubimax, the technology was used to implement ‘vision picking’ in warehousing operations. Staff was guided through the warehouse by graphics displayed on the smart glass to speed up the picking process and reduce errors. The pilot proved that augmented reality offers added value to logistics and resulted in a 25 percent efficiency increase during the picking process.

2. The pilot’s objective was to gain insights into the technology’s benefits and limitations. For three weeks, warehouse staff in Bergen op Zoom was equipped with head-mounted displays such as Google Glass2 and VuzixM1003 . The displays showed the respective task information during the picking process, including aisle, product location, and quantity. Overall, 10 order pickers used the equipment and picked up more than 20,000 items, fulfilling 9,000 orders within the given time frame. This led to faster and error-free operations. Currently, DHL and Ricoh are jointly evaluating the roll-out of the solution.

Having looked at some of the innovations at the back-end operations and how they have helped increase efficiency, let us now see the case of Ikea and how it has brought in a very innovative way to bring in AR and take a big leap forward into the customer experience.

Case Study 3: Ikea

1. IKEA’s AR app, IKEA Place, has revolutionized the way customers shop for furniture by allowing them to visualize and place furniture pieces in their own homes before making a purchase. Since its launch in 2017, this groundbreaking app has made a significant impact on the customer experience and IKEA’s business performance.

2. One notable achievement is the reduction in product returns by 30% . By using IKEA Place, customers can virtually position furniture items in their homes, enabling them to assess the fit, style, and compatibility of the pieces with their existing decor. This realistic visualization helps customers make more informed decisions, ultimately leading to a decrease in returns and exchanges.

3. The app has also played a crucial role in boosting online sales for IKEA. Since its introduction, online sales have experienced a remarkable increase of 35% . By providing customers with the ability to virtually see how furniture items would look in their homes, IKEA Place removes the uncertainty and guesswork associated with online furniture shopping. This enhanced visualization experience has increased customer confidence and trust, resulting in a significant uplift in online sales.

4. In March 2020, the popularity of the IKEA mobile shopping app further demonstrated its impact. The app was downloaded approximately 490,000 times from the Google Play and Apple App Store globally during that month alone. This impressive download figure highlights the widespread adoption and positive reception of IKEA Place among customers worldwide.

5. One of the key factors contributing to the app’s success is its exceptional accuracy. IKEA Place boasts a 98% accuracy rate in displaying 3D furniture at scale. The app’s true-to-life representations of texture, fabric, lighting, and shadows create a highly realistic and immersive visualization experience. Customers can explore the details and nuances of furniture pieces, ensuring that they make the right choices based on their preferences and the overall aesthetics of their spaces. By leveraging the power of augmented reality technology, IKEA has transformed the customer experience and set a new standard in the furniture retail industry. IKEA Place empowers customers to make confident and well-informed purchase decisions by providing an immersive, interactive, and personalized visualization of furniture items within their own homes. With its significant impact on reducing returns by 20%, increasing online sales by 35%, and being downloaded nearly half a million times, IKEA Place serves as a prime example of the potential of AR technology to revolutionize the way customers shop for furniture and envision their living spaces.

From the aforementioned case studies, we can see how Augmented Reality (AR) and Virtual Reality (VR) technologies have gained momentum in the retail industry, enhancing customer experiences and optimizing backend operations. Key players like Amazon and DHL use AR for streamlined warehouse operations. Ikea utilizes AR to enable customers to visualize furniture in their homes.

The future of AR/VR in retail is promising, with potential expansions in AR try-on options, AI-driven virtual shopping assistants, and sophisticated room mapping features. Seamless integration with social media may drive personalized marketing and user-generated content. AR/VR’s continuous evolution is set to revolutionize retail, creating immersive and interactive shopping experiences that redefine the industry landscape. Let us look at what are the various use cases powered by the new technologies that will mature to pave way for the “Next-Gen Shopping”.

Use Cases of New Technologies in Next-Gen Shopping

1. Virtual Try-On: By overlaying virtual representations of products onto the customer’s image or environment, AR enables customers to see how items look on them in real time. This eliminates the need for physical try-ons, enhances convenience, and boosts confidence in making purchasing decisions.

2. Interactive Product Visualization: AR enables customers to visualize products in their intended environment. For example, customers can use AR to see how furniture will look in their home or how a new appliance will fit into their kitchen. This interactive visualization provides a more realistic representation of the product’s size, style, and functionality, helping customers make informed choices and reducing the likelihood of returns.

3. Enhanced Product Information: AR can provide customers with detailed and interactive product information. By scanning a product or its packaging using an AR-enabled device, customers can access additional information, such as product specifications, reviews, and usage instructions. AR overlays this information onto the real-world view, allowing customers to make better-informed decisions and gain a deeper understanding of the product. For example, a customer might check a pair of shoes to find out their price and material, and, if the shoes are too big or small, check for another size in the store.

4. Virtual Showrooms and Experiences: AR can create virtual showrooms or experiences that allow customers to explore and interact with products in a digital environment. For instance, customers can virtually walk through a car showroom, examine different models, customize features, and visualize how the car would look and perform. This immersive experience enhances engagement, fosters a deeper connection with the product, and facilitates decision-making.

5. Gamification and Entertainment: AR can inject elements of gamification and entertainment into the shopping experience. Retailers can develop AR-based games, challenges, or interactive experiences that engage customers and encourage them to explore products and store offerings. This gamified approach adds an element of fun, keeps customers engaged, and strengthens brand loyalty.

6. Shopping Assistance: Virtual shopping assistants powered by AI and integrated with AR/VR can provide customized suggestions based on consumer preferences and past purchases. These assistants can provide customized recommendations, thereby assisting customers in discovering new products that match their preferences. This would increase customer loyalty and repeat purchases since customers get personal attention and assistance.

Benchmarking Offline Brick-and-Mortar Store to Next-Gen Shopping

In the ever-evolving world of retail, where technological advancements continue to redefine the shopping experience, benchmarking offline brick-and-mortar stores against the potential of next-generation shopping is essential. As consumers’ preferences and expectations evolve, traditional physical retail spaces must adapt to stay relevant and competitive in the digital age. The integration of technologies such as Augmented Reality (AR) and Virtual Reality (VR) has opened up new possibilities for retailers to create immersive and interactive shopping experiences. By comparing the current state of brick-and-mortar stores to the future potential of next-gen shopping, retailers can identify areas for improvement, adopt innovative strategies, and leverage cutting-edge technologies to revolutionize the customer journey. This benchmarking process will not only enable retailers to enhance customer satisfaction but also optimize operational efficiency, increase sales, and future-proof their businesses in a rapidly changing retail landscape. The table below presents a comprehensive comparison of various parameters between traditional brick-and-mortar stores and the transformative potential of next-gen shopping powered by AR, VR, and other innovative technologies. By ranking the feasibility versus need for each parameter, we aim to identify the transformative potential of next-gen shopping and the benefits it brings to both retailers and consumers.

 

Table 1: Comparison of Brick-and-Mortar Store with Next-Gen Shopping

The comparative study highlights the immense potential of next-gen shopping powered by AR, VR, and other innovative technologies. While brick-and-mortar stores provide strong product awareness and immersive shopping experiences, next-gen shopping surpasses them in various aspects, including expert assistance, ease of finding products, and hassle-free returns. As technology continues to advance, integrating AR and VR into the retail industry presents exciting opportunities for retailers to create personalized, interactive, and seamless shopping experiences that cater to the evolving needs of customers. By embracing next-gen shopping, retailers can elevate customer satisfaction, optimize operational efficiency, and stay ahead in the competitive retail landscape.

Recommendations for Next-Gen Retail Adoption

Fashion

Furniture

Consume Electronics

Envisioning the Next-Gen Shopping Experience: The Future of Retail

Picture yourself stepping into the store of the future, where reality and the digital world seamlessly merge to create an extraordinary shopping experience. As you cross the threshold, you’ll feel a sense of wonder as Augmented Reality (AR) and Virtual Reality (VR) technologies come to life. The store’s environment transforms before your eyes, blending the physical and digital realms in an immersive and interactive journey. The surroundings become a canvas for personalized experiences, and AI-driven virtual shopping assistants greet you, ready to guide you through this extraordinary shopping adventure.

In this future retail landscape, AR enhances your surroundings, allowing you to visualize digital information and virtual objects overlaid onto the real world. As you browse through products, AR enables you to try on clothes virtually, see how they look from different angles, and assess their fit without the need for a physical fitting room. You can even explore an extensive range of products and make more informed decisions as interactive product visualizations empower your choices. In the store of the future, VR takes you on captivating virtual journeys, transporting you to simulated environments where you can interact with virtual representations of products. You can envision how furniture would look in your living room or experiment with different styles without leaving the store. VR elevates your shopping experience, providing you with immersive and realistic interactions that go beyond traditional brick-and-mortar settings.

These AR/VR technologies have already begun to revolutionize the retail industry, and industry leaders like Amazon, DHL, and Ikea have embraced their potential. Amazon’s innovative use of AR wearable goggles streamlines warehouse management, improving efficiency and safety with real-time picking lists and robotic assistance. DHL’s successful pilot project with smart glasses and “vision picking” demonstrates the significant efficiency gains in their warehouse operations.

Ikea’s groundbreaking AR app, IKEA Place, has empowered customers to virtually position furniture in their homes, reducing product returns and boosting online sales. These case studies highlight how AR/VR technologies are reshaping the retail landscape, improving customer experiences, and optimizing backend operations.

In conclusion, the future of retail holds endless possibilities as AR/VR technologies continue to mature. The store of the future will be a captivating blend of the physical and digital worlds, where AI-driven virtual shopping assistants guide you, interactive product visualizations empower your decisions, and immersive experiences redefine the traditional shopping journey. As retailers adopt AR/VR technologies, they unlock the potential to offer customers unmatched convenience, engagement, and satisfaction. The future of retail is here, inviting you to step into a world where shopping transcends the ordinary and becomes an extraordinary adventure.

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