The Augmented Reality of Retail

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In retail technology innovation, we have concentrated on how to pivot critical systems like inventory, supply management, and store operations. Our mission was to accelerate goods to market and adapt to the evolving ways consumers want to buy. The expansion and enhancement of these systems were critical, as we braced for the innovation waves and the changing landscape in the retail marketplace. While they continue to be an area of investment, we have now turned our attention towards the satisfaction of today’s demanding and tech-savvy consumer. Their entitled expectations demand simplistic retailer interactions to locate and purchase products while being rewarded for their loyalty.  Thus, consumer satisfaction standards are at an all-time high. The technologies that will deliver the experience necessary to satisfy tomorrow’s new retail consumer are changing. Moreover, users are not just expecting intuitive and simple, they want an enhanced experience. In a highly competitive marketplace, we will continue to see consumers reward retailers equipped to meet their needs, with their personal data, loyalty, and most importantly purchasing power.

Until now, the traditional core platform for consumer engagement has been mobile apps. Unfortunately for most mobile-first companies, 2016 confirmed the trend that a traditional mobile approach no longer drives consumer influence and behavior. Consider that 65% of US smartphone users don’t even average one new app download per month and app downloads have dropped overall year over year by more than 20% according to recent comScore and Nomura research. Consequently, if you are a retailer reliant upon your mobile first strategy to create a digital competitive advantage, you are in for a disappointing 2017. Most retailers are quickly discovering that they need to continuously challenge their strategy and approach if they want to stay relevant to the new complex digital consumer. This push to keep pace with a savvy consumer has challenged retailers to embrace the latest in the experience driven technologies like augmented reality (AR), virtual reality (VR) and mixed reality (MR).

It is important to quickly define these technologies, but in this article, we will be focusing on AR and its potential for the enterprise:

  • Augmented reality (AR): Software, devices and/or wearables that utilize the area around a user to display information, location, and content. The information will typically use visual keys like barcodes or markers to display video, 3D content, and or audio to the user. One of the best examples of AR would be smart glasses, however, smartphones and tablets are also great AR platform examples.
  • Virtual reality (VR): This area is much more equipment intensive and the experience is completely immersive. For this reason, it does not translate well to the enterprise for mass use since it costly to develop and also requires expensive devices to deliver to the user.
  • Mixed reality (MR): This area is really the next level in AR and is represented best by the Microsoft HoloLens with a holographic display. It anchors digital objects to physical points in the real world so users can interact digitally with a physical world. The possibilities with MR are endless, but the production platforms are still a few years away from being ready for an at scale deployment.

One day soon, we will look back at the summer of 2016 and talk about how Pokémon Go went viral and finally validated augmented reality as a technology that can quickly impact both brands and consumers. As Pokémon surged in popularity, so did the interest from companies looking to replicate the same instant success by incorporating gaming, context, and AR into their digital strategy. As a result, it’s not surprising how much attention VR and AR have received and how many retailers now present this as part of their core 2017 digital investment plan.

Understandably, the excitement around AR and VR is also being confirmed by the analyst community. The predicted AR/VR market growth is staggering and expected to be well worth over $150 billion by 2020. According to early estimates, the clear winner in the enterprise will be AR since it is expected to comprise almost $120 billion of the total market value projections. Considering AR experts are still in the startup phase, AR will be one of the most exciting and explosive investment areas to watch in the digital marketplace over the next three years.

The reason AR possesses so much potential is that its value stretches far beyond just simple games and apps. There are countless business cases and consumer benefits to using AR in areas of training, maintenance, field service, and context aware marketing. For example, consumers can see specific data about a product on a shelf or get help from an AR app in locating something in store. In regards to service, technicians can access real-time tickets and messages and get critical data readings from machines as they repair them. Back office employees can increase productions as they quickly locate products to move or ship from within a warehouse. The list continues to grow as the enterprise aggressively invests in AR innovations and determines how best to apply them to different work streams. Although AR’s value has huge potential, it cannot produce massive gains in value on its own. While it is a core component of a comprehensive digital strategy, it is dependent and requires supporting devices and technology to effectively deliver a truly amazing AR experience. While mobility first is fading as a strategy for retailers, mobility as an experience platform is just beginning. The consumer market is ready and willing to embrace AR since users don’t have to invest in anything new to take advantage of AR offerings. Moreover, it is incredibly convenient since almost anyone with a smartphone can launch an app, turn the on their camera, and begin to experience a personal, context-aware AR experience. So much so, that device manufacturers are already working on supporting advanced camera technology that will further enhance the average consumer’s AR experience.

As you push ahead for 2017 and want to incorporate AR into your digital strategy, here are three critical questions to answer:

  1. Outcome: How can AR enhance your business and consumer community in the areas of brand awareness, consumer experience, and operational efficiency?
  2. Context and environment: What types of environments will users be interacting with, and how do you best take advantage of location-based AR capabilities?
  3. Dependent technologies: Which other technologies will you need to deliver an amazing AR experience and do you have an integration plan?

In addition to identifying these answers, companies need to also challenge their organization’s readiness to embrace the next generation in the experience driven technologies. Warning- they can be extremely disruptive to traditional technical architectures which can cause cost overruns and costly project delays. Worse, if not properly designed, they won’t deliver a great user experience rendering all investments pointless. Simply put, retailers need to make sure they have the end in mind before beginning their AR journey.

Todd J. Carey,
SVP Global, S.M.A.R.T. Group,
UST Global.

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