The future of the retail industry will be shaped by a range of disruptive themes, with augmented reality (AR) being one of the themes that will have a significant impact on retail companies.
AR technology allows the user to see the real world overlaid with digital data. AR could completely change the way we shop. The retail industry is evolving at a staggering rate, and retailers that offer a truly omnichannel experience will emerge as winners. AR is essential for retailers to merge the physical with the virtual and adapt to the new retail model.
From warehouses to ecommerce sites and stores, AR can be used by retailers to address some of the challenges they face today. We are still waiting for a killer use case for AR in the retail sector, and this will likely come as and when AR smart glasses become widely adopted. In the short term, retailers should focus their investments on developing mobile-based AR, such as 3D product visualisation, and store-based AR experiences, like magic mirrors.
However, not all companies are equal when it comes to their capabilities and investments in the key themes that matter most to their industry. Understanding how companies are positioned and ranked in the most important themes can be a key leading indicator of their future earnings potential and relative competitive position.
Insights from top ranked companies
IKEA was one of the early adopters of AR, with an app that overlaid images of its furniture onto a phone or tablet’s camera view, using a mobile app. The app, launched in 2013, required the user to have a physical IKEA catalogue and place it in the room where they wanted the furniture to ‘appear’. In 2017, IKEA upgraded the technology, launching a new app called IKEA Place, which does not require the catalogue to work and contains 3,200 separate items. It also uses sound when an item is dropped into place as well as haptic feedback in proportion to the size and weight of the furniture to give a fuller AR experience of the product. The app also contains a visual search feature, where users scan an item in the real world, and the app suggests IKEA products that are like it.
JD.com has developed an AR app called the AR styling station, which allows its users to ‘try-on’ cosmetics from major manufacturers at home using AR to overlay a visual representation of the make-up on the camera selfie view of the users’ smartphone. This has the potential to remove one of the key barriers to online sales of cosmetics and has the potential to improve upon the physical store experience as trying on many different styles in a store is costly, timely, and inconvenient. The company has also launched a feature where customers can virtually try on footwear and is working alongside Sony to allow customers to measure their foot size with a smartphone. This function will use Sony’s Time of Flight (ToF) distance measuring technology.
Home Depot rolled out AR capabilities within its mobile app six months prior to the Covid-19 pandemic in September 2019. The app allows users to see items in the context of their own homes. With the pandemic forcing people to buy more online, AR has allowed Home Depot to improve customer engagement and conversion. According to the company, consumers who engage with Home Depot’s augmented reality feature typically convert two to three times higher than those who do not use it, the retailer says.
To further understand the key themes and technologies disrupting the retail industry, access GlobalData’s latest thematic research report on Augmented Reality in Retail.
- The Kroger Co.
- Foot Locker
- FNAC Darty
- Seven & I Holdings
- Marks & Spencer
- Bed Bath & Beyond
- El Corte Inglés
- Fast Retailing
- Hennes & Mauritz
- dm-drogerie Markt
- CK Hutchison
- Walgreens Boots Alliance