Bringing a New Reality to Retail

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Retail is only in the early stages of virtual reality, but many in the industry say widespread adoption could be here within a decade. In his opening remarks at NRF’s annual convention in January, NRF President and CEO Matthew Shay told attendees that virtual reality, augmented reality and artificial intelligence have the potential to bring about “dramatic changes in the customer experience.”

The technology made big strides in 2016: VR goggles flew off shelves during the holiday season — with low prices and the ability to integrate with smartphones, entry-level headsets like Google Cardboard and Samsung Gear have led a charge to more widespread adoption. Premium headsets like HTC Vive and Oculus Rift are continuing to drive fully immersive experiences.

Forrester Research analysts say that consumer demand for these mid-range and high-end products will reach 24 million by 2020, compared with only 2.4 million in 2016.

Almost every major technology firm is working on virtual or augmented reality applications or technologies. Facebook recently acquired Oculus, Sony is releasing the PlayStation VR and Microsoft is developing the HoloLens which features advanced optics and a custom holographic processing unit that allows users to project holograms in their physical world.

Mark Hardy, CEO of InContext Solutions, says 360 video, AR and VR are working toward creating a world of “immersion” that could totally change the economics of retail. He says while consumers still shop on price and selection, they’re increasingly looking for “unique experiences” that bridge the gap between the digital and physical worlds.

Oracle recently released a report about virtual experiences, saying that by 2020 the majority of online retailers will look to develop VR and artificial intelligence to improve the customer experience.

“From trying on clothes in a virtual dressing room to products that come alive in your hands, these emerging technologies offer brands new opportunities to differentiate themselves with campaigns and services that will excited and engage online shoppers,” says Mark de Groot, digital customer experience marketing director for Europe, the Middle East and Africa at Oracle.

Online apparel retailer Rent the Runway recently opened a flagship store in New York with transparent digital mirror displays that enable shoppers to virtually try on thousands of clothing options and colors. RTR says it makes the shopping process more efficient for customers, offering access to an “endless aisle” of clothing options.

Sephora is also experimenting with AR through its Virtual Artist tool, which allows customers to try on different shades of makeup and lipstick with the front-facing camera. L’Oréal has a similar application with its MakeupGenius; according to a study by Demandware, 72 percent of U.S. beauty brands are using a form of guided selling to push sales.

Testing and improving store layout

VR is already being used by some innovative brands and retailers to create and test everything from store layout to product placement.

John Hennessy, chief revenue officer for Kantar Retail, says VR comes in many forms and is a “tool by which all users can share a vision” that can be manipulated and used to give feedback.

He says using VR to test store layouts can save time and cost while expanding the customer experience and enabling greater retail collaboration. “Anyone who wants to lower their cost and shorten their time to understand what something will look like in a store is a good candidate for the use of VR,” he says.

InContext Solutions is leading the retail business-to-business virtual charge with solutions that create store simulations and offer a new level of shopper intelligence. Retailers use its ShopperMX virtual platform to visualize new retail concepts and test planograms, packaging, signage, display and advertising copy.

Hardy says the software gives retailers the tools to ideate, visualize and test multiple in-store concepts before taking them to market. InContext is used by such retailers and brands as Walgreens, Coca-Cola, Dannon, Nestlé, Kellogg’s and Smucker’s.

“For years, retailers have been resetting shelves, doing promotions, redesigning stores,” Hardy says. “In a virtual world, I can do that all on the fly, tell you what the impact is going to be — for a fraction of the cost — and I can give you that response in days.”

Hennessey says the technology now enables brands to nearly eliminate field testing and replicate an experience in a highly detailed virtual environment. Brands can test options by sending confidential links to consumers at home, allowing them to navigate a defined trip through the virtual store and measuring their activities.

The testing can also be done at a controlled location where visitors can virtually shop and walk the store by touchscreen or using a joystick. Kantar can use headsets to monitor virtual eye tracking to see how consumers might view layouts and what they look at as they move about the store.

“You can figure out the best options without building a display, going out in the field or disrupting service in the store,” Hennessey says. “It can be done [virtually] in multiple ways depending on the objective, the budget, time and normal considerations.”

Hardy says InContext sends participating consumers on simulated “missions” in virtual stores and tracks their behavior, what products they pick up and how long it takes them to find things. He says there is a “very high degree” of accuracy between simulations and real world results.

Retailers can even use visual attention analysis with heat mapping to understand how changes in the virtual store affect where shoppers look in the real world. InContext users gain access to custom indicators and learn exactly how to optimize their spaces.

“We marry the attitudes and behaviors together,” Hardy says. “And the correlation between virtual store and physical store sales is about nine-tenths or higher, depending on category.”

Bridging the gap

While brands are already testing VR for business applications, it can also be used with consumers to bridge the gap between physical and digital spaces. Consumers can virtually walk through a store by using goggles from the comfort of their own home, or they can use kiosks to tap the virtual world while in a store.

Hennessey envisions a virtual shopping scenario where, instead of going to Amazon and flipping through a list of products, a consumer may “walk” through a store from the comfort of their living room. Retailers will be able to individually customize these experiences to consumers’ tastes and preferences: A person interested in camping equipment might be able to walk through a campsite staged with items like stoves, tents, sleeping bags and lanterns.

When combined with analytics, Hennessey says VR offers the opportunity to create highly “personalized stores.”

“It’s very early stage but it does have promise,” he says. “It can take data-driven targeting and put it in a [customized] virtual store. It simplifies your selection, while at the same time giving you visual cues and making it easier for you to pick.”

Gabe Weiss, digital experience and transformation leader at SapientRazorfish, says the company is already working on multiple proofs of concept that include CGI-based interactive experiences: The Apartment VR experience featured a curated apartment where consumers could walk around and add items to their cart with a tap of the VR headset. After leaving the virtual reality set, they’re directed to an online checkout page.

“We added an augmented user experience inside the virtual reality movies where you can navigate it, learn about products and add them to a cart just by gazing at them,” Weiss says. “It allows the user to simply use [looking] as a mode of engagement.”

Considering adoption

While the technology is already here, retailers are still experimenting with and refining their VR concepts. Robert Haslehurst, managing director and partner with L.E.K. Consulting, says while VR is in a “primordial” phase, there’s enough development in the technology that retailers “should at least be considering it.”

Weiss says while VR is currently being led by the gaming and entertainment industries, much of the technology and software being developed will easily replicate and transfer the experiences to retail. He anticipates “an incredible explosion” in the use of these tools and applications in the retail industry within the next 12 to 18 months; many of SapientRazorfish’s clients are now focusing on proofs of concept and trying small things that aren’t that expensive.

Experts say the real power in VR will not just be the technology but in how retailers position it and leverage content in the customer experience. SapientRazorfish is already working with developers, designers, coders and media producers to create rich and customized VR experiences. Weiss says some VR content will be developed in a fashion similar to traditional media where clients will partner with creative directors or production companies to produce their vision.

Haslehurt says much like mobile adoption evolved, we could be at a point in the near future where there are virtual reality goggles in most homes. “It’s a difficult question and I’m not here to say VR will come into retail today or in 10 years,” he says, “but I think there’s a material chance it will. It could happen quickly depending on the device and application.”

Retail and brand marketers will also have to think about engaging customers in new ways, as the virtual world allows customers to pick up items, test them and become more involved. Hardy says marketers may have to invest more in such VR digital content, which could also have a big impact on commerce itself.

“The engagement from a marketing point of view will change considerably because it will be completely interactive,” he says.

Craig Guillot is based in New Orleans and writes about retail, real estate, business and personal finance. Read more of his work at www.craigguillot.com.

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