Can Augmented Reality and Virtual Reality Shake Up the Future of Retail?

Can Augmented Reality and Virtual Reality Shake Up the Future of Retail?

By Ian McCue, senior associate content manager at NetSuite 


In short:

  • Leading retailers like Lowe’s, Macy’s and Wayfair are investing heavily in augmented and virtual reality, betting that the technology can change how customers shop for home goods.

  • However, retail leaders like Jim Bonomo of Regina Andrew Design are skeptical that this technology can make a difference in the hands of consumers rather than professionals.

  • The overall success of virtual and augmented reality depends on market factors we’ve yet to see played out, along with companies’ motivations for using the technology in the first place. 



In the age of selling experiences, retailers are looking for creative ways to engage with customers. Think experiments with pop-up shops, live events and company-branded cafes.

And to that list, add the recent buzz around augmented reality (AR) and virtual reality (VR) in retail.

VR and AR can lend a fresh spin to shopping.


Furniture and home furnishings companies experiment with this technology especially well. Augmented reality allows shoppers to take a picture of their living room, for example, and place a new leather couch in it to see not only if it fits but also how the color and style suit the room. Companies like Wayfair, Target, Ikea and Overstock.com have smartphone apps with this feature.

Other retailers like Macy’s use virtual reality, where customers strap on headsets in a physical store. With the help of an employee, they first lay out a room or entire apartment and find their desired furniture for it, then put on the headset and take a tour. Consequently, Macy’s stores with VR can be much smaller because not every product needs to be on the showroom floor. 

The Macy's VR experience will be available in 60 stores by the end of the year. (credit: Macy's)
 

The potential uses for VR go beyond moving furniture around in a room. Last year, Lowe’s launched “VR clinics” at select stores. The “Holoroom How To” experiences walk visitors through home improvement projects like laying tile in a bathroom, painting or operating a hedge trimmer, showing them a realistic recreation of each process so they can more easily complete projects at home.

A Lowe's customer learns to complete DIY projects in an in-store "Holoroom." (credit: Lowe's)


The potential of AR and VR is obvious–it’s innovative and could attract more customers in a retail industry under constant transformation. 


But not everyone’s sold.


At the same time, it’s a nascent technology with limitations. 

Jim Bonomo, COO of lighting and furniture company Regina Andrew Design, explained that AR apps for furniture look more like video games than real interiors. He thinks AR works best for recreating flat surfaces like flooring, cabinets and tables or paint colors as opposed to 3D elements of a home. 

“[AR] looks fine, but it doesn’t look like the finished product,” Bonomo said. “Anything that uses natural materials, like crystals, alabaster, reclaimed wood, it’s very difficult to show realistic images that match the product. Anything pretty and complex requires a really high poly count.”

“Poly count” refers to the number of polygons needed to draw and display a 3D image. Realistic 3D representations of couches or chandeliers have higher poly counts, which requires a lot of computing power and usually a dedicated graphics processor, and even today’s leading smartphones can’t offer this. So Bonomo thinks VR is better suited for displaying items with subtle patterns and textures--like paint colors on a wall or flooring tiles in a living room--because it can give users a realistic effect and expectation. However, customers may be hesitant to wear virtual reality goggles in a store, and stores must clean and maintain them.

Some say AR is best suited for displaying surfaces with simple patterns, like a sink countertop. (credit: Lowe's)


That’s why Bonomo thinks 3D images are most valuable in the hands of professionals like interior designers and architects who use CAD (computer-aided design) software to turn their ideas into visualizations for clients to review. He noted these professionals have the tools and skills to draw realistic mock-ups of rooms.

“Unless you make it extremely easy for people to use, people have a hard time with spatial recognition and trying to figure everything out,” he said. “So I think it’s best for designers and architects because what you see right now in the space is kind of game-y.”


The future? It’s pixelated. 

 

And yet, several big players in the furniture industry think putting AR and VR in the hands of consumers could be a game-changer, and some have invested more than $100 million in it, Internet Retailer reports.

So what are the results of this spending spree? Houzz, a furniture and home improvement marketplace, saw its conversion rate spike by a factor of 11 and average order value increase among those who used the app’s AR feature, according to a recent TechCrunch article. Similarly, Overstock.com told Internet Retailer it saw conversion rates climb among those who tried out AR.

Overstock.com's AR app allows customers to virtually move furniture around a room. (credit: Overstock.com)
 

It seems clear that shoppers who use AR or VR are more likely to buy something. But it’s likely that only a fraction of customers are trying AR, which requires a smartphone with the right capabilities and in some cases a separate app. The businesses dumping resources into this functionality obviously expect that segment to grow.

But not everyone’s focusing on purely monetary returns. Ikea’s primary goals with its Ikea Place AR app are to empower customers and increase confidence in buying decisions rather than upping conversion rates, former Digital Development VP Michael Valdsgaard told Furniture Today. 

Overstock.com, meanwhile, is betting on the future.

“Our hope is that [augmented reality] will completely change the way people create their dream home,” Amit Goyal, senior VP of software engineering at Overstock.com, told Internet Retailer. “For us, the ROI is to be the leader when that transformation happens, when most of home furnishing shopping is in AR or VR.”

It’s far too early to say whether AR and VR will play a central role in the future of consumer retail. Much of it hinges on whether this technology will convince more customers to make major purchases online, without first seeing and feeling items in person. That’s a big bridge to cross, but e-commerce has changed the way people shop for plenty of other products. Maybe furniture is next.

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