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Why Augmented Reality Will Be the Next Revolution in Retail

28 February 2017

From Strategy + Business:

In the summer of 2016, pedestrians on New York’s Fifth Avenue encountered crowds of (mostly young) people, hastily running into Central Park, smartphones in hand, shouting out Pokémon names and cross-street locations. Within days of its release on July 6, 2016, Pokémon Go, an app that brought the 1990s gaming craze to virtual life, became a phenomenon. Its 40 million daily active users (at its peak) surpassed those of Tinder, Snapchat, and Twitter and created a level of in-app engagement that Facebook could only envy. It took complete control of the commutes, lunch breaks, and social gatherings of legions of people around the world. Intent on “catching” Pokémon in the wild, gamers thronged into museums, streets, even Arlington National Cemetery.

Although the Pokémon Go fad now has predictably faded, it holds important lessons for companies intent on reaching and engaging consumers where they are, especially retailers: The game, the first truly social augmented reality (AR) experience, enthralled the new breed of omniconnected consumers as nothing else had done previously. Players not only shared an insider world where they could fight each other, but they also walked together and gathered at PokeStops in the middle of the night. The people who embraced the augmented reality of Pokémon Go live in a world where the line between real and digital is so blurred that they essentially became one and the same — constantly augmented and improved by invisible technologies. And they are hungry for better, more personalized experiences.

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Lego’s AR Digital Box in-store kiosk allows customers to “see” finished products by holding the product box close to a screen (they can watch on the screen as a digital constructed Lego truck seems to spring out of the box it comes in, for example), and IKEA’s app allows shoppers to “place” digital furniture and other products from the catalog in pictures of their rooms at home.

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E-commerce has been steadily gaining a share of sales at the expense of local stores because online shopping is cheaper, is more convenient, and allows for easy in-depth research and comparison of products. However, physical stores still possess one major advantage: the ability to let customers see, try, smell, or taste the product live. For many digital-native brands, such as eyewear retailer Warby Parker, stores have evolved into “showrooms.” Augmented reality allows brick-and-mortar retailers to take these showroom experiences to the next level, creating unique experiences that blend digital and physical shopping. The virtual layer can provide a platform that allows improved communication, deeper engagement, and better personalization. As a result, brands deploying AR effectively will be able to provide differentiated interactions with physical products and customer experiences that seem richer than the ones provided by their online competitors.

. . . .

The essential effort of creating consumer awareness about brands and products often devours the majority of a retailer’s marketing budget, and much of it is wasted by reaching non-target consumers. AR represents a singular opportunity to adjust what is presented to a shopper based on demographic profiles and past in-store behavior, and allows companies to link typical awareness-raising efforts to a live recommendation engine. For example, for Tom, who typically buys a US$4.99 gel laundry detergent, Target could display an AR ad on his phone of a new, more powerful $5.99 gel, instead of posting a static endcap display in-store for a $9.99 laundry powder. The result is a more refined level of targeting that presents a benefit to retailers, brands, and consumers.

Link to the rest at Strategy + Business

PG tried to visualize a book signing via augmented reality.

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7 Comments to “Why Augmented Reality Will Be the Next Revolution in Retail”

  1. Yeah, they lost me at this:

    The people who embraced the augmented reality of Pokémon Go live in a world where the line between real and digital is so blurred that they essentially became one and the same — constantly augmented and improved by invisible technologies.

    Everyone I know who plays Pokemon–and I know most of the RVA-area power players–knows it’s a game. There are no blurred lines. Do we find it amusing that we know where all the Pokestops are even if we don’t have the game up on our phones as we drive past? Yeah. Do we do crazy things to find that perfect Pokemon? Definitely. Do we live in “a world where the line between real and digital is blurred”?

    Ah, no. Game. It’s a game. We pretty much know that.

    That said, the first company to come out with a good AR Harry Potter game wins.

  2. Because everyone wants even more adds pushed into their lives.

  3. Pokemon who?

    Now when they create a holo-suite where I don’t need a headset/goggles can’t walk through the projected props, can feel the rough bark and can smell the pine needles and taste a cold root-beer float — then you might be on to something.

  4. i have hard enough to just deal with reg reality, let alone augmented.

    just cuz we can, doesnt nec mean we should

  5. Much of the OP seemed to possess the unconscious assumption that shopping is an entertainment and that increasing the entertainment value of the activity would yield better results for a retailer’s bottom line. While I recognize that many people do shop for the purpose of amusing themselves, I am not one of them. I shop merely to obtain goods and services that I need or want to use, and the more efficiently I can do so, the better. I doubt I am the only person with this agenda. Just sayin’.

  6. I’m sure there will be retail uses for it, but all of those examples seem underwhelming.

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