Augmented reality (AR) is rapidly transforming the retail landscape, blurring the lines between physical stores and online experiences.
Asam Malik, partner, Technology & Digital Consulting at Mazars, a leading professional services firm, tells Retail Insight Network how AR is impacting customer journeys, boosting sales, and shaping the future of retail.
Bridging the physical and digital divide
While AR isn't entirely new, Malik highlights a recent surge in its adoption within retail.
“AR has transformed the retail sector by allowing retailers to bring their products into people’s homes, whether that is furniture retailers using AR to show how their items could look in a room, cosmetic retailers applying their products directly to people’s videos or clothing retailers allowing customers to try on their latest fashion items at a click of a button.”
However, the full potential of AR remains untapped. "There is more space to grow the technology in in-person stores," says Malik, citing smart mirrors and AR-powered supermarket aisles that showcase nutritional information or recipe suggestions.
“The key to growing AR’s capabilities is integrating this in the business strategy and ensuring that it’s part of Marketing and IT strategies – helping other departments understand how the technology could transform operations and customer experience,” explains Malik.
Enhancing customer journeys and boosting sales
The seamless integration of online and in-store experiences is a challenge for retailers. AR offers a bridge.
“Bridging the gap between in-store and online shopping is not an easy task for retailers, as the two experiences differ by their nature,” says Malik.
“However, they can make the experience more seamless. For example, you look at a product at home, and walk directly into the store and buy it, or see something in store and buy it directly to be delivered at home.” This creates a smoother customer journey, potentially leading to increased sales.
Malik cites successful examples like L'Oreal's virtual makeup try-on app and IKEA's AR app that allows furniture visualisation in a home environment.
Best Buy is also leveraging AR technology to introduce a new shopping experience for Apple Vision Pro users. Launched on 18 April, the Best Buy Envision app allows customers to virtually place 3D models of products directly into their homes before making a purchase.
“We can expect to see AR only retailers in future, which would greatly impact customer interaction as it moves every step of the experience into the virtual space,” Malik predicts.
Furthermore, AR goes beyond just boosting sales. It fosters customer satisfaction and brand loyalty.
“Often customers will stick to the products they are familiar with, so AR is providing the opportunity for brands to introduce new things for customers to try before they buy – translating into more potential sales and customer loyalty,” says Malik.
Challenges and considerations
Despite its potential, AR adoption in retail faces hurdles. Malik highlights the generic nature of AR compared to personalised AI experiences. “This limits the businesses use cases, and the opportunities to differentiate between brands,” highlights Malik.
Additionally, measuring the return on investment (ROI) of AR solutions can be challenging. “Whilst some AR applications are linked to retailers’ website or app, there needs to be detailed data measurement in place in order to track how the two are connected,” says Malik.
Malik asserts that this “can, however, be met by data privacy challenges which can limit how much retailers can track of their customers’ movement to improve their business applications.”
Hardware affordability is another roadblock. While AR applications exist, widespread adoption relies on accessible hardware. “Therefore, until there is more mainstream adoption, there will be barriers to implementing wider AR applications.”
The future of AR in retail
The future of AR in retail is bright. Malik envisions a future where AR merges with AI to create truly personalised experiences.
“This could change the face of retail by bringing in a highly tailored approach to each customer’s preferences, rather than customer segments. This would improve customer loyalty, brand recognition and emotional connection between brand and customers,” says Malik.
Data privacy and security
Data privacy remains a concern with AR applications. "It’s important that retailers look at the opportunities versus the risks," says Malik, emphasising the importance of robust AR governance. This includes “building a multi-disciplinary team to deal with things such as data privacy, training, regulation and development.”
The integration of AR in retail is no longer a question of if but when. By embracing this technology and its potential, retailers can create a more engaging, personalised, and ultimately successful shopping experience for their customers.
