Forget building new stores. Retailers are using invisible shopping centers and other "augmented reality" to boost sales. ·CNBC
CNBC
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Some of the largest retailers have been looking at augmented reality (AR) for years as one of those technology advancements with huge potential to reach shoppers who are constantly on their mobile devices, aiming to connect with shoppers while either in the store, or even while outside the store to bring them into the store. AR can touch everything from shopping aisles to product displays to even fully immersive stores, creating a series of virtual assets that retailers are experimenting with in a big way.
Retailers are exploring AR's huge potential to boost sales, doing so by purposely blurring the lines between online, mobile and the real world. Since consumers visit physical stores to touch, feel and see products before making a purchase, there is no longer a clear line of differentiation for retailers looking into implement AR within the four walls.
And it goes beyond AR. Google (NASDAQ: GOOGL) has partnered with investors to put a reported $500+ million investment into Magic Leap, which has filed patents for a device called a WRAP, a Star Trek like AR device with the space age sounding name standing for Waveguide Reflector Array Projector (WRAP), and shows how the tech giant aims to help change the way consumers purchase products through 3D in-store advertising and interactive entertainment.
As more AR proponents aim to make the technologies more mainstream, here's a look at four ways that big-name retailers are bridging the digital experience with the real world to enhance the shopping experience.
Location, location, location. AR today is used for many practical applications, and can be one of the least expensive ways to expand a business to new locations, doing so without the enormous costs of constructing a physical entity or paying for real estate.
China's largest online grocer, Yihaodian (51 percent owned by Wal-Mart (NYSE: WMT)), is using AR to bring its products to the people, doing so where they live, and work, and play - without building a single store. The retailer has set up 1,000 "virtual" stores in parking lots, parks and in front of famous landmarks. These stores are completely invisible to passersby's who aren't connected to a mobile device. But, bring up the Yihaodian app on your smartphone, and suddenly you'll be able to see an entire grocery store through your screen. Shoppers can walk through the virtual aisles, selecting items simply by tapping on the screens of their devices, then arranging to have their groceries delivered directly to their homes when they're done.
Yihaodian will likely expand their focus and refine their AR to other product categories, especially due to the renewed competition with Alibaba (NYSE: BABA), China's largest e-commerce company, that made headlines for having the largest IPO in the world when it went public on September 19, 2014, and had an incredibly whopping market value measured at $231 billion in U.S. dollars.
With added aspects on the consumer-facing side of things, American Apparel (NYSE MKT: APP)is showing how AR can be used to enrich the shopping experience inside the store and provide information and options to help clinch - or save - a sale. The app works on a smartphone, so the in-store shopper is carrying around a selling device, so to speak, with the retailer leveraging it to that advantage.
The clothing retailer has introduced an app that allows shoppers to use their smartphones to see how items on the rack would look in different colors. If a shopper sees a sweater they love the look of, but isn't fond of the color-they can point their own smartphone at the product, and then display and watch the sweater change colors. At the same time, options to view customer reviews and additional product details-and to even buy the sweater online, rather than there in the store, in the color and size of their choice-can pop-up alongside the display. This allows the store to grab that purchase even when the stock in the store might not have matched the consumer's desired choice.
With its ability to allow users to see products beyond the box or showroom, AR can also boost conversion, while minimizing returns - and reduce the number of unhappy customers.
Furniture retailer Ikea has integrated AR into its catalogs, allowing smartphone and tablet users to see products in their homes before they actually buy them. Consumers start out by placing Ikea's print catalog where they want to see a piece of furniture. Then they scan the catalog with Ikea's AR app, choose an item to view and watch as it virtually appears in their home in true-to-life size. Shoppers can view the furniture from different angles and try out different colors. No more arriving home from the store only to find your new couch is too big for your space or the dining room chairs you bought are too short for your table.
Using a mobile device while inside the store, and even before going to the store, plus after visiting a store, has becoming increasingly common. According to a study undertaken by Google and conducted by Media CT and Sterling Brands, their findings indicate that 87 percent of shoppers consult their mobile device for pre-shopping information, then 79 percent do so while shopping, and 35 percent do so post-shopping as a result of something that occurred during the shopping experience.
Ironically, some shoppers are even becoming perhaps overly preoccupied with a mobile device while shopping. Even if shoppers are using a retailer's app, they may become more focused on their screens than the products around them. Walgreens (NASDAQ: WBA) is attempting to combat this by adding AR into the mix to help boost shopper engagement.
Shoppers pick up an AR-enabled tablet inside the store, rather than having to supply their own device. When they hold the tablet up to aisles and shelves, items on sale appear to pop out in front of them. Special icons for bonus rewards points also hover over certain aisles, encouraging shoppers to browse and earn extra points. When a shopper is looking for a particular product, the tablet creates a 3D arrow that tracks along the floor, highlighting the route to follow.
Commentary by Lance Eliot, is the vice president of IT for Interactions, a company that specializes in retail solutions and experiential marketing.
Disclosure: Lance Eliot has no investments in or business relationships with any of the companies mentioned in this article.
