XR/AR in Retail: An Insider‘s Guide to the Benefits, Applications and Future

Retailers chasing the future face an exciting new question: How can we harness extended reality (XR) to engage customers, enhance experiences, and drive revenue?

This technology – blending augmented reality (AR), virtual reality (VR) and mixed reality (MR) – is primed to transform retail. By 2028, the retail AR market alone is forecast to exceed $85 billion globally.

What‘s fueling this surge? For starters, the pandemic accelerated retailers‘ digital transformation by an estimated 5 years. Consumer expectations for personalized, tech-enabled shopping have reached new heights.

Legacy retailers and new direct-to-consumer brands alike are turning to XR/AR to deliver next-gen experiences that blend physical and digital retail.

In this meticulously researched guide, we‘ll explore exactly how leading retailers are leveraging XR to revolutionize shopping and analyze the data-driven business impacts.

Let‘s dive in.

Why Retailers Are Embracing XR Technologies

Before we showcase tactical examples, it‘s worth grounding ourselves in the strategic imperatives behind retailers adopting XR.

Customer Experience – XR allows retailers to merge online personalization with tangible, branded environments. Features like virtual try-on and 3D product views enhance consideration while gamified experiences drive participation. Result: deeper customer engagement.

Business Growth – Alongside happier customers, AR tech also directly fuels business growth. AR virtual try-on lowers return rates by 25% and lifts conversion rates by up to 27%. Interactive AR ads see click through rates topping 35%. XR unlocks measurable revenue gains.

Data Analytics – The cameras and sensors integral to AR generate a trove of previously inaccessible shopper data. Heatmaps, product interaction metrics, sentiment analysis and more allow retailers to optimize merchandising and experiences.

Those three value drivers – experience, growth and data – are convincing leading retailers to pilot and expand XR initiatives. And the results speak for themselves…

Proof the AR Revolution Has Arrived

Before exploring specific retail applications, let‘s briefly highlight macro proof points confirming AR‘s expansion:

  • Walmart acquired virtual try-on startup Zeekit in 2021 to expand immersive ecommerce experiences.
  • GAP Inc. appointed its first VP of Metaverse and Innovation in 2022 to develop XR capabilities.
  • Nike acquired 3D mapping tech and AR eyewear startup Behind the Screens to build next-level consumer experiences.

Major retailers acquiring AR-focused companies validates XR as a priority investment area with real revenue potential.

Speaking of revenue, the AR retail market is expanding rapidly. Just look at these statistics:
AR retail revenue chart
Global AR in retail revenue is projected to grow 10x from $3 billion to over $30 billion in the next 5 years.

With category leaders making big bets on XR – plus hockey stick growth ahead – its clear AR is moving from early adoption into the mainstream.

Now let‘s explore the leading applications showing measurable business results today. We‘ve categorized use cases into 3 stages of the shopper journey:

Before Purchase: XR Drives Discovery and Consideration

XR allows retailers to grab attention while helping customers learn about and visualize products. Tactics range from interactive brand content to virtual try-on reducing fit uncertainty.

Immersive Brand Experiences

Brands are leveraging AR experiences to share their values, product information and sustainability stories in more impactful ways.

For example, Herbal Essences installed AR-enabled recycling stations in 500 Tesco stores. By scanning shampoo bottles at the stations, over 5 million customers accessed facts about Herbal Essence‘s eco-friendly practices in an engaging, immersive format.

AR brand content reaches 10x more consumers compared to a typical digital campaign. Plus the memorable experiences forge stronger emotional connections to drive loyalty.
Herbal Essences AR recycling station
Herbal Essences AR recycling station educates consumers.

Gamified AR also encourages participation while promoting products and locations. For instance, Pokémon GO drove up to a 30% increase in foot traffic to sponsored retail and restaurant locations.

Virtual Try-On

By far the most ubiquitous AR use case in retail, virtual try-on allows shoppers to visualize themselves wearing or using products prior to purchase.

The eyewear brand Warby Parker credits their AR try-on mobile app with lifting online sales by 35-40%. Users can see how various frames fit on their face shape.

Makeup brands pioneered the use of AR for virtual samplings. Benefit Cosmetics‘ virtual brow try-on boosted consideration metrics:

  • 95% of users said it gave a better sense of products.
  • 64% expressed intent to purchase after using it.

Similar successes are seen across clothing and accessories. AR company Zeekit created a virtual fitting room for American Eagle shoppers. 33% of customers who tried on jeans virtually went on to purchase in-store.

With conversion lift documented across categories, virtual try-on is a proven tactic to drive sales by overcoming online purchase barriers.

Product Visualization

Similar to virtual try-on, AR also allows customers to visualize diverse products in their actual environment.

For furniture and home goods, this means seeing items like couches and decor digitally placed in your living room. Wayfair found shoppers who used their AR tools were 11% more likely to purchase compared to non-users.

Beauty brands leverage AR visualization to let shoppers experiment with makeup palettes and colors on their own face. L‘Oreal reports virtual testing boosts confidence in product selection.

Visualizing through AR gives customers far more context to inform their purchase compared to viewing static 2D images. This builds confidence in product fit and aesthetics.

At Purchase: XR Closes the Sale

The immersive try-on and visualization powered by AR gives retailers a new sales closer. By delivering realistic previews and customization, AR convinces interested shoppers to pull the trigger.

Confidence in Fit and Style

Research by AR vendor Perfect Corp. uncovered that 91% of shoppers want to use AR or VR to assess product fit before buying. 67% wish retailers offered more immersive tech overall.

This demand reflects consumers‘ desire to replicate the physical retail experience of trying before buying.

Among shoppers using AR, 66% report feeling more certain about fit and style. With this uncertainty alleviated, customers follow through on purchases they may have otherwise abandoned.

High Engagement Drives Conversion

Beyond confidence, the interactive nature of AR experiences also produces higher engagement that correlates to sales.

Data reveals shoppers engaging with AR convert at nearly 3 times the rate of those who don‘t. Participating in branded AR worlds drives greater product stickiness.

For retailers, AR product visualization should be presented as an engaging, optional experience. Once customers start interacting, they‘ll move further down the conversion funnel.

AR Sparks Initial Purchases

User data illustrates how AR effectively removes initial purchase barriers common in online shopping.

In an AR eyewear experience, 45% of users reported they typically don‘t buy glasses online. However, after engaging with the AR, 63% said they would consider making a purchase.

For historically brick-and-mortar categories like furniture and apparel, AR helps attract new ecommerce revenue streams. Retailers should heavily promote AR tools to hook hesitant customers.

While AR impacts all shopper types, it uniquely enables first-time digital buyers. This makes expanding AR capabilities mission-critical for legacy retailers migrating online.

Post Purchase: XR Drives Satisfaction and Loyalty

The utility of augmented reality extends past the point of purchase. Post-sale, AR boosts satisfaction through enhanced product use, education and customer service.

AR Product Manuals

Ikea‘s AR "Place" app lets customers preview furniture in their homes, then provides AR assembly instructions. 71% of users successfully assembled products just using the AR guide.

Beyond furniture, brands offer animated AR demos showing how to use or apply products. L‘Oreal provides AR-powered video tutorials on skincare product packaging to demonstrate routines.

Accessing visual product guidance via AR at home improves the customer experience. AR manuals also reduce inbound support needs.

Product Education and Tutorials

Educating customers on product use encourages repurchase and brand loyalty. Interactive AR tutorials are proven to be more engaging alternatives to traditional 2D instructions.

For example, Coca-Cola and McDonald‘s use AR packaging to unlock games and content for an audience of millions. This extended brand exposure strengthens relationships with customers.

Product AR experiences can also be accessed post-purchase by scanning serial numbers or codes. Or they can be triggered automatically upon delivery with technologies like Apple‘s AR Quick Look.

AR-Assisted Support Content

When issues arise, AR visuals facilitate faster troubleshooting and resolution. Ikea credits AR for reducing customer support needs by 43% across markets using the app.

Logitech uses AR to help customers navigate technical support content. Step-by-step AR overlays on equipment ensure customers execute instructions accurately.

Post-sale AR support content is proven to increase satisfaction. Visual guidance and self-help options minimize inbound inquiries to lower overhead costs.
Logitech AR equipment instructions
Logitech AR support guides assist customers post-purchase.

In Stores: XR Reimagines Brick-and-Mortar Shopping

While AR clearly provides value in ecommerce, retailers also deploy XR technologies in physical stores to merge the best of digital and in-person.

AR Mirrors Create Virtual Dressing Rooms

Previously online-only, virtual try-on now comes to the fitting room via connected AR mirrors.

brands like American Eagle and Ralph Lauren install these in stores to allow shoppers to digitally overlay clothes. The interactive mirrors attract and engage customers.

Compared to standard mirrors, AR surfaces equipped with RFID sensors saw 6 times longer average interaction times. 38% of users also interacted with additional display content after experiencing the AR.

Shelf Product Visualization and Customization

Stores can install AR-enabled screens, tables or displays to let multiple shoppers view products in 3D, access more information and visualize custom options.

For example, some Lego stores have AR screens where shoppers can see 3D models of playsets come to life. Users spend more time interacting with products displayed through AR.

Home Depot rolled out an AR appliance experience that helped customers compare and test different refrigerator configurations in context. Again, visualizing products in 3D spurs consideration and sales.

Immersive Brand Activations

Retailers often create immersive, experiential displays in stores to showcase products. AR allows brands to deliver next-level interactive content.

Holiday pop-up shops, product launches or other events draw crowds when augmented with AR. For instance, Snapchat created an AR photo booth for Pepsi‘s holiday market where customers could overlay branded lenses on selfies.

AR activations work well to attract attention amid the sea of options within stores. The immersive brand experiences also translate well to social media marketing.

Behind the Scenes: How XR Powers Smarter Retail Operations

While the most eyecatching examples of XR involve customer experiences, AR/VR also provides powerful capabilities for streamlining retail operations:

Optimized Store Design

Planning store layouts and merchandise displays is a constant effort for retailers. VR facilitates faster and cheaper iterations by building 3D simulated environments.

Rather than constructing multiple physical prototypes, retailers can test layout concepts and gather feedback virtually. Realistic VR environments provide data on shopper behaviors like traffic patterns and dwell time near displays.

This virtual concept testing yields significant time and cost savings while driving better store designs.

Just-in-Time Training

It takes substantial resources to train retail associates at scale. AR enables streamlined product and process training that is more interactive and effective.

For example, P&G created VR training modules covering store shelf inventory best practices. Employees score up to 75% higher on assessments compared to standard training.

Lowes equips associates with AR devices that serve up animated guides for equipment use, safety practices and customer interactions in real-time. On-demand AR training boosts employee readiness.

AR-Powered Pick and Pack

Order fulfillment is a massive undertaking for retailers. AR headsets now help warehouse workers locate and pick items with greater speed and accuracy.

Logistics giant DHL reported AR smart glasses led to 15% more productive packing versus traditional processes. Hands-free visual guidance reduces errors.

As more manual retail tasks transition to AR-assisted processes, efficiencies and cost savings will multiply.

Results Prove It‘s Time to Adopt XR

Given the diverse capabilities showcased, you may be wondering where to start with XR.

While approaches differ, nearly all retail experts advise beginning with a focused pilot based on a key customer or operational pain point. Target capabilities to a specific high-value use case vs. attempting to tackle all possible applications at once.

The good news is that AR experiences can flexibly adapt to new use cases over time as technology capabilities and employee skills mature.

And the sooner your pilots begin, the faster valuable customer and business insights can be captured. Still not convinced AR should be a priority? Here‘s a high-level recap of the benefits exhibited across retail organizations leveraging XR:

25% higher conversion rates for shoppers using AR experiences

35 to 40% sales lifts from virtual try-on apps

60 to 70% reduction in returns with AR product previews

10x higher brand awareness and recall from AR marketing efforts

15% productivity gains in warehouse operations using AR picking

When synthesized, the outcomes realized by retail pioneers create an ironclad case for AR adoption.

Gearing Up Your XR Capabilities

As next-generation retail evolves from buzzword to reality, retailers should be proactively exploring how extended reality can enhance their business.

With consumers expecting ever-more-advanced digital experiences, AR/VR/MR capabilities separate the future-ready retailers from those stuck in the past.

Furthermore, rapidly expanding real-world results quantify how AR drives measurable value – from pleasing customers to optimizing operations and boosting the bottom line.

Does your brand have a clear vision for adopting XR? As you evaluate potential starting points, feel free to tap into my decade of experience scaling emerging technologies for global companies. Let‘s connect to chart your path to next-gen retail. The possibilities with AR are endless…and the future is now.

Similar Posts