AR: the next big step for retail


Cimagine, John Lewis, augmented realityAs the internet of things advances, the very notion of a clear dividing line between reality and virtual reality becomes blurred, sometimes in creative ways.

Geoff Mulgan

From augmented reality (AR) to virtual reality (VR), drones to chat-bots – technology is rapidly changing the retail sector faster than ever before. When growing your retail ecosystem, it can be hard to know what to adopt and what to ignore within all the hype.

So many retailers face an increasing risk of spreading themselves too thin when not having a defined strategy based on predicted consumer behaviour.

We continue to work with many retailers to gain a stronger understanding of their consumer’s behaviour by utilising the power of neuroscience. This allows a retailer to gain an understanding greater than standard demographics; profiling their customers by personalities, understanding subconscious drivers, consequently allowing them to know what technology is right for their audience, and where to allocate spend ahead of the new year.

For this week’s column, we take a closer look at why we predict AR will be bigger than VR in 2017.

While the heavyweights such as Facebook, Sony, Samsung and Google have all invested heavily in VR in 2016, the adoption and behaviour towards this technology by society suggests that from the viewpoint of retail, AR is the platform to watch in the next 12 months. We are yet to see where big tech players Microsoft and Apple will place themselves in the AR/VR game, however Tim Cook has dropped many hints that Apple is interested in AR in 2017.

So why do we predict AR will be the next big leap for retail?

The answer is the social factor.

One of the defining phenomena of the world today and shaping the retail sector on a daily basis, is the rapid growth and adoption of digital communications and social media…and it’s still growing. The number of worldwide users of social media is expected to reach some 2.95 billion by 2020, around a third of Earth’s entire population. The most popular social network worldwide today is Facebook with more than 1.5 billion monthly active users.

We are humans after all, constantly seeking human to human engagement in order to survive. Digital communications and social media have only enhanced this. Removing all boundaries such as time zones, distance or location, that may have stood in our way in the past. Now allowing us to communicate with our peers, loved ones, and even strangers when we want, wherever we want and how we want.

Exploring this in retail, recent studies have shown that today, especially amongst millennials, word of mouth is the primary influencer of purchase decisions, followed by its digital equivalent – social media. A recent study of millennials (age 19-32) found that nearly 75 per cent of respondents said that they were more influenced in their buying decisions by social media recommendations than TV ads.

VR, usually experienced via a VR headset, is fully immersive experience. In the majority of cases, you’re within the experience alone, and shut away from all other forms of communication. We are yet to see many VR experiences which you duck in and out of, in order to share the experience with your friend on your Facebook feed at the same time.

VR offers what some call a ‘lean back (and enjoy the ride!)’ paradigm which does not align within a society with a growing attention deficit. Compared to the AR paradigm which is described as more ‘lean forward’ as it is active and participatory.

When a platform is communal, network effects take hold and with AR, this means it’s going to reach mainstream adoption far faster.

The growth of Snapchat and Pokemon Go that utilise AR filters are great examples of this. They are also great examples of how any smartphone can be a platform for AR, whereas VR is restricted to those with specific VR devices.

Ultimately AR’s less hermetic, lean-in characters are far more in keeping with today’s media consumption culture. People might be distracted and mesmerised by the VR experience, but AR looks to be a dominant medium in our lives in the very near future.

Some projections put AR and VR investment in retail at close to $30 billion by 2020 (from nothing today).

However once again, don’t let this column sway you to invest in AR. It’s a growing platform and we are excited to see how it evolves, but is it right for your business? Listen to your consumer, they will tell you.

Brian Walker is founder and CEO of Retail Doctor Group and can be contacted on (02) 9460 2882 or [email protected]Vikki Weston, co-author of this column, is part of Retail Doctor Group’s Retail Insights team and can be contacted via email at [email protected].

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