5 Ways Augmented Reality (AR) Is Transforming Retail

Augmented reality (AR) is rapidly moving from a niche technology to a mainstream tool redefining the retail industry. By overlaying digital content into the physical world, AR creates engaging, immersive experiences that bring products to life like never before.

While AR has been around in some form for years, the retail applications have exploded recently. In 2022, the AR market was valued at over $30 billion, with some estimates projecting it to surpass $500 billion by 2030. As many as 75% of consumers now expect retailers to offer AR experiences.

AR is transforming nearly every aspect of the retail experience, from product discovery and selection to purchase and post-purchase support. Let‘s examine five key areas where AR is making a major impact and explore some real-world examples. We‘ll also look at how you can develop an effective AR strategy for your own retail business.

1. Virtual Try-On and Product Visualization

One of the most popular applications of AR in retail is virtual try-on for products like clothing, accessories, cosmetics, and home goods. Using AR, shoppers can see how products will look on them or in their space without physically trying them on or making a purchase.

Virtual try-on tackles one of the biggest drawbacks of online shopping – the inability to touch, feel, and test products before buying. It gives shoppers greater confidence in their purchases, reducing the likelihood of returns. Consider these stats:

  • 71% of consumers would shop more often if a retailer offered AR (Snapchat)
  • 61% of consumers prefer making purchases from sites that offer AR over those that don‘t (Invesp)
  • AR can increase conversion rates by up to 250% (Shopify)

Sephora is a pioneer in AR-powered product visualization. The beauty retailer‘s Virtual Artist tool lets shoppers virtually try on thousands of different shades of lipstick, eyeshadow, and more using their smartphone camera or a photo. Sephora has seen incredible results from this feature – users engage with it for an average of 6 minutes per session, and it‘s driven over 200 million shades tried on.

Home goods is another category where AR visualization shines. Wayfair‘s View in Room 3D mobile feature lets shoppers place true-to-scale 3D models of furniture into their rooms to see how it will fit and coordinate with existing decor before making a purchase. Wayfair reports a 3.4x higher conversion rate for shoppers who engage with AR versus those who don‘t.

2. In-Store Navigation and Product Information

Brick-and-mortar retail stores are sprawling, often chaotic environments that can be overwhelming for shoppers to navigate. Where exactly are those organic snacks located? Is this sweater available in another size or color?

AR can provide a virtual map and guidebook for physical stores, helping shoppers find what they need efficiently. Home improvement giant Lowe‘s is putting this idea into practice with its Lowe‘s Vision app. In-store shoppers can use the app to search for products, see detailed product information, read reviews, and navigate to the exact shelf location.

The app uses computer vision and augmented reality to recognize items through the smartphone camera. Lowe‘s says the app has been used in-store over 3 million times, with 90% of users stating it improves their shopping experience.

AR navigation doesn‘t just benefit shoppers. It also provides retailers with valuable data insights into in-store browsing and searching behavior. This data can inform decisions about store layouts, product placement, inventory planning, and more.

Beyond just wayfinding, AR can also surface contextual information and details about products on store shelves. Imagine simply pointing your phone camera at a video game to instantly see player reviews, gameplay videos, and specs. Or scanning a bottle of wine to see tasting notes, food pairings, and critic ratings.

The AR applications are endless – virtual store tours, gamified product quests, personalized promotions that pop up as you walk by relevant items. These experiences can make in-store shopping more fun, engaging, and efficient. 73% of consumers say they would shop at a retailer more often if it offered in-store AR features.

3. Contactless, "Hands-Free" Shopping

The COVID-19 pandemic dramatically accelerated the adoption of contactless retail technologies like mobile payments, QR codes, and AR. With many physical stores closed or restricting capacity, AR provided a way for shoppers to still have interactive, personalized experiences without physically handling products.

Virtual try-on and 3D visualization are inherently contactless – you can "try on" a shirt or "sit" on a couch without actually touching those items in a store. AR can also enable contactless payments by allowing you to visualize and purchase products using your smartphone, even from outside the store.

For example, American Apparel‘s AR app lets shoppers scan in-store signage to see product information and make direct purchases from their phones. Zara has used AR displays in store windows that shoppers can scan to see models virtually wearing the displayed fashions and make a purchase.

These experiences reduce physical touchpoints without sacrificing engagement and interactivity. As consumers remain hygiene-conscious even after the height of the pandemic, hands-free AR shopping will likely continue to grow in popularity.

AR can also streamline and personalize the in-store experience in other ways, like:

  • Virtual queuing systems that let you reserve a place in line or book a service without physically waiting
  • Mobile AR apps that can recognize your face/body to surface product recommendations based on your tastes
  • Smart mirrors and displays that can detect items you‘re holding to provide product details and comparisons

4. Immersive Brand Storytelling

At its core, great retail is about telling compelling brand and product stories. It‘s not just about the features and specs, but the emotional resonance, the lifestyle aspiration, the values and purpose behind it all.

AR provides dynamic new ways to bring these stories to life. Unlike flat images or video, AR is uniquely interactive and participatory. It puts the consumer directly into the story, making them an active character rather than a passive observer.

Nike is using AR to powerful effect in its brand storytelling. The Nike AR app allows sneaker fans to go on immersive branded "journeys" activated by scanning special posters or products. These experiences combine video, 3D animation, mini-games, trivia, and Easter eggs into multi-part narratives that reward exploration.

During the 2018 NBA playoffs, Nike used AR to let fans step inside a virtual "pop-a-shot" basketball game and compete in drills alongside their favorite players. Over 2.4 million people engaged with the experience, with the average user spending over 1 minute playing. That‘s a massive amount of opt-in branded engagement.

AR-enhanced packaging is another growing medium for immersive storytelling. Instead of just reading a label, shoppers can scan a product to launch animated graphics, videos, mini-games and other bonus content that educates and entertains.

19 Crimes wine comes to life through the Living Wine Labels app, which animates the characters on the bottles to tell stories of the infamous criminals pictured on the labels. This AR storytelling has become a core part of 19 Crimes‘ brand identity and packaging.

The key with branded AR content is to make it meaningful and story-driven, not just tacked on for novelty. When done well, it can forge deeper emotional connections between consumers and brands.

5. Social AR Shopping

Social media has become a core part of the shopping journey for many consumers, especially younger generations. Platforms like Instagram, Snapchat, and TikTok are where people discover new products, get inspired by influencers, and share their own purchases.

Many social apps now have AR features like filters and lenses that let users virtually try on products. These AR experiences can link directly to purchase, removing friction from the buying process. AR-enhanced "unboxing" and review videos also add a new dimension to social proof.

In 2022, Snapchat and American Eagle teamed up to create an AR shopping experience targeted at back-to-school shoppers. Using the self-facing camera on Snapchat, users could browse American Eagle jeans, see them on their own bodies, and click through to buy. The campaign reached over 17 million users, generated $2 million in incremental sales, and had a 3.7x higher return on ad spend compared to goal.

Luxury fashion brand Dior created "AR lenses" for Instagram and Facebook that let users virtually try on its DiorSoLight sunglasses and headbands. Paired with an influencer campaign, the lenses reached over 7 million users. They had an average dwell time of 28 seconds, indicating high engagement.

AR-powered social commerce is still an emerging space, but one poised for major growth. As social media becomes more immersive and experiential, AR will be a key part of delivering entertaining shoppable content to users.

Getting Started with AR in Retail

These examples show that AR is much more than a gimmick – it‘s a transformative technology that can deliver real business results. But how can you get started with AR in your own retail operations?

Here are some key steps and considerations:

  1. Identify your goals and use cases. What challenges are you trying to solve with AR? How will you measure success? Common starting points include virtual try-on, 3D product visualization, and AR-enhanced packaging.

  2. Evaluate your technology and content needs. AR experiences require 3D models of your products and a mobile app or web-based viewer. You may need to invest in 3D modeling capabilities or work with an experienced AR technology partner. Platforms like Apple‘s ARKit and Google‘s ARCore provide accessible tools for AR development.

  3. Consider your target audience. Are your customers tech-savvy early adopters or more mainstream? Their comfort level with AR will inform your user experience and education needs. Clear onboarding and intuitive UI are essential.

  4. Start small and iterate. Don‘t try to boil the ocean with an overly ambitious AR project. Test and learn with a focused initial use case and build from there based on user feedback and results. Regularly assess the ROI of your AR initiatives.

  5. Integrate AR into your broader retail strategy. AR shouldn‘t be siloed – it should complement your existing digital and in-store touch points. Promote AR features across web, mobile, email, social, and in-store. Make it a seamless part of the omnichannel journey.

AR may seem daunting, but it doesn‘t have to be. By taking a phased approach and focusing on genuine customer needs, retailers of all sizes can find success with this transformative technology.

The Future of AR-Powered Shopping

As powerful as the current retail applications of AR are, we‘ve only scratched the surface of what‘s possible. In the coming years, several key developments will accelerate AR‘s impact:

  • 5G networks will enable richer, more photorealistic AR content that loads near-instantly. Remote rendering will allow for more detailed 3D models.
  • Wearable AR glasses like Apple‘s long-rumored device will free AR from the constraints of the smartphone screen, enabling more natural and immersive experiences.
  • Artificial intelligence will make AR content more personalized and adaptive to each user‘s needs and preferences. Virtual assistant avatars will become more believable and emotive.
  • The Metaverse – persistent, shared virtual spaces – will blend with AR to create new "phygital" retail environments that span the digital and physical.

We may even see entirely new types of products and services enabled by AR. Digital-only fashion and decor could become a booming new market as virtual self-expression becomes more important. AR could also revolutionize product support and customer service through interactive step-by-step guides.

At the same time, the growth of AR will raise important questions and challenges for retailers:

  • Data privacy and security: AR collects huge amounts of intimate data about shoppers‘ bodies and behaviors. Retailers will need strong governance and protection to maintain consumer trust.
  • Impact on the retail workforce: As AR automates and virtualizes more of the shopping experience, how will the role of human retail associates evolve? Upskilling and change management will be critical.
  • Ensuring accessibility and inclusivity: AR can‘t leave behind shoppers who are less tech-literate or economically advantaged. Experience design must account for diverse needs.
  • Environmental impact: The energy demands of AR computation and data transmission could have sustainability implications that retailers will need to address.

Despite these challenges, it‘s clear that AR will be an integral part of the future of shopping. Retailers who embrace it thoughtfully will be well-positioned to thrive in a world where the lines between physical and digital are increasingly blurred. By staying focused on customer needs and taking a measured approach, you can harness AR‘s incredible power to transform the shopping journey.