In-store technology to transform Canadian retail experience - Retail Council of Canada
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In-store technology to transform Canadian retail experience

January 14, 2019
In-store technology to transform Canadian retail experience

In-store technology, such as virtual and augmented reality, is changing the way that consumers interact with retailers. It’s part of an effort by retailers to drive sales and improve the customer experience by creating more immersive physical environments, at a time when some retailers are experiencing a downward trend in foot traffic.


AUGMENTED reality involves an interactive experience in a real-world environment where in the case of a store for example, products are “augmented” by computer-generated perceptual information, sometimes across multiple sensory modalities. The idea is that augmented reality will alter one’s perception in the real-world environment, and by adding technology such as computer vision and object recognition, information about the physical surroundings can become interactive and digitally manipulatable. Ultimately, the goal for retailers is to create a useful educational experience that will also impress the consumer.

Engaging physical stores are critical to retail success—while some may have predicted that physical retail would die as e-commerce gains traction, studies now indicate that physical and online channels drive sales to each other. When a retailer with online and brickand-mortar stores opens physical locations, for example, it’s often the case that sales increase across both channels, while the reverse is also true—if an omni-channel retailer closes stores, online sales will suffer.

Brick-and-mortar retailers in Canada may be disadvantaged to a degree initially, however. Online shoppers have become accustomed to streamlined, curated experiences that, when executed properly, are essentially frictionless from start-to-finish. In-store experiences are often the opposite—lineups, out-of-stock product, distractions as well as other disappointments and hurdles may help drive customers online. Experts are saying that Canada is on the cusp of massadoption of augmented reality and related technologies that are being tested in the United States as well as in other markets.

Virtually fitting

Companies such as Bodymetrics are installing dressing booths in stores that offer customers full body-scanning. Using the body scan, customers can view different outfits on themselves without the need to ever physically try on the clothing. In the United States, for example, Bloomingdale’s is using these ‘virtual dressing rooms’, while Neiman Marcus offers consumers the ability to see their outfits in a 360-degree view with a ‘memory mirror’. This is proving to be a hit with consumers for the fact that it is convenient, not to mention experiential to those who have never encountered such technologies.

Retailers such as TopShop and Uniqlo, both operating in Canada, are testing out similar ‘magic mirror’ technologies with plans to eventually bring the technology to its Canadian stores.

Zara, which also operates a vast network of stores in Canada, is testing out an innovation where customers hold up their smartphones to sensors on shop windows to view models wearing selected outfits.

Fashion brand Timberland created a ‘virtual fitting room’, turning the installation into one of the store’s main window displays. The company says it drove a significant amount of foot traffic into the store.

Smartphones are key to much of the augmented reality being tested in stores. And, in some instances, the use of smartphones is blurring the lines of physical and online retail as apps allow users to shop and experience brands almost anywhere. Some beauty brands are using augmented reality in stores with great success. Sephora’s “Virtual Artist” technology allows users to see what makeup might look like on them without trying it on.

Other brands such as UK-based Charlotte are using ‘magic mirror’ technology as well. It partnered with software provider Holition to install augmented reality-enabled mirrors in its store. Customers can sit in front of the mirror that scans an image of their face, and then see their face with ten of the brand’s top looks in under a minute, without physically wearing any makeup.

Virtual and augmented reality technology adds layers to the retail experience and provides another way for customers to interact with retailers.

In early 2018, French conglomerate L’Oreal acquired Canadian innovator ModiFace. The firm is now part of L’Oreal’s Digital Services Factory, which is a dedicated network that designs and develops new digital services for the group’s brands. The ModiFace technology, specifically, can be used on one’s mobile device anywhere, which means its usefulness extends beyond that of a physical retail space.

The comfort of your home

The same could be said of augmented reality technology being used by furniture retailers such as Ikea and Wayfair. Apps allow consumers to view products in their homes prior to making a purchase—in 2017, Ikea launched its ‘Ikea Place’ app that makes it possible for consumers to view 3D and true-to-scale models of furniture in their living space by using the app and their camera. Ikea said that because customers are not shopping in stores as often anymore, the Ikea Place app is a way for people to see furniture in their homes before they either come to the store to make a purchase or make a purchase online. Macy’s also implemented an immersive furniture shopping experience that allows for browsing and visualization of a much larger assortment of furniture than that found in a typical store.

Sporting goods retailer Decathlon is working with Valtech to create a virtual reality experience for Decathlon’s range of tents. The retailer has more than 200 varieties of tents but didn’t have room at its Montreal store to display all of them. With the help of virtual reality goggles, shoppers can view the tents in a variety of locations that wouldn’t be possible with simple store displays.

Leveling the playing field

Manolo Almagro, Managing Partner of Q Division provides examples of how technology such as augmented reality can be used to enhance the physical experience. One of the most cost-effective examples is Lightform, which is essentially a design tool that can be used to project augmented reality in physical spaces. Technology such as that can put in-store augmentation in the hands of smaller retailers for the first time.

For less than $2,000, Lightform allows endusers to create visuals for projected augmented reality using content creation software powered by computer vision hardware. The process has been simplified to the point where no experience is required by the end-user in order to project graphics into spaces that can make them appear to be almost magical. For example, a store selling camping gear could project a burning campfire, then create a light-induced ‘rain storm’ that turns into snow—this unique and variable experience is not only impressive to customers, it can also be used to demonstrate and educate.

Transforming the retail space

Technology such as Lightform can also activate retail spaces and even shopping centres. And each activation can be unique to keep things fresh. It’s a cost-effective way to temporarily transform a space. Given the popularity of Instagram, according to Almagro, such technology can serve to expand retailer awareness through social media shares and related interaction.

Almagro explains how footwear brand Airwalk hosted ‘virtual pop-ups’ in the United States where consumers downloaded an app and went to locations in major cities where they could hold their phones and tablets in the air to see the ‘invisible store’. The technology, in essence, created a retail space where there wasn’t one, and the pop-ups resulted in a huge spike in sales for Airwalk as well as approximately $5-million in earned media.

Augmented reality glasses are expected to gain hold in Canada and the impact on retailers could be substantial if the technology is widely adopted. ‘Focals by North’, a subsidiary of Waterloo-based Thalmic Labs Inc., opened a retail space in November of 2018, showcasing a range of custombuilt smart glasses with a holographic display that only wearers are able to see. The technology might eventually be integrated into physical experiences such as shopping in retail stores, which could further help create immersive physical retail experiences in Canada as well as globally.

Augmented reality technology is increasingly being used by retailers and landlords to help guide consumers through spaces. Home improvement chain Lowe’s, for example, is testing its ‘Navigation One’ technology in two of its stores. An in-store navigation app, powered by Google Tango, uses augmented reality technology to create a mobile experience that guides shoppers through the store. Shoppers can create a shopping list and the app identifies the quickest route on foot to find all of the items. Shopping centre landlords and airports are also testing out similar technology.

Jeremy Bergstein, CEO and President of The Science Project, explained how in-store technology such as augmented reality is there to influence consumer behaviour, which can be extended to include food-related retail. For example, a customer may, using technology, be able to virtually see a meal in a restaurant, or items in a grocery store, including how they may be prepared and how they would otherwise look on the dinner table. In-store technology presents the opportunity to better optimize physical retail spaces as centres of consumer behaviour, driving retail sales across both channels.

Augmented reality technology has the potential to transform the physical retail environment.


3D brand interaction

Shopping in stores has always been a visual experience, and in-store technology is taking that to a new level. And while it’s in its early days, augmented and virtual reality is able to help retailers deliver more engaging, immersive experiences in custom-created surroundings that tie together physical and online channels with 3D experiences. And from a marketing perspective, this can help retailers engage consumers in more meaningful ways while increasing the amount of time a customer interacts with a brand while creating more rememberable experiences.

According to Greg Jones, Director of Augmented Reality and Virtual Reality at Google, augmented reality is going to “reconnect physical and digital retail”. He believes that augmented reality is going to be extremely significant to the future of retail. And it seems that the future isn’t far off. Research from Digital Bridge shows that 69 per cent of consumers now expect retailers to launch augmented reality apps within the next six months. And recent research from Google shows that 61 per cent of consumers say that they would prefer to shop in stores that offer augmented reality. Given statistics like that, retailers in Canada should seriously examine operations to see where such technologies can be implemented, although not all are convinced.

In-store navigation apps can help remove friction from the shopping experience by offering convenience.



Potential problem solver

In-store technology must, “solve a problem in order for it to be successful,” says David Ian Gray, Retail Strategist and Founder of consultancy DIG360. “Experiential in-store technology, including augmented reality, needs to serve a purpose, otherwise it is a gimmick.”

Gray explains that he’s seen numerous attempts by retailers to leverage a technology to make their stores interesting. Some of these technologies might have been fun at first yet missed the mark over the long-term. “It should be useful, and the consumer should receive value. The business must also receive value. Thought is required before an investment is made” .

Ultimately, if a retailer isn’t addressing the fundamentals, augmented reality might not be the answer. Gray explained that a store should carry at least the core product that people want, in stock, and offer an experience where the consumer can find it and get in-and-out of the store with minimal hassle when they do not want to explore. Product stock-outs and long lineups could end up driving consumers to competitors—including online.

Amazon, too, is experimenting with technologies in their recently opened physical stores. It’s most tech-heavy store concept to date is ‘Amazon Go’, which is essentially a convenience store concept with technology that allows consumers to make a purchase by simply picking up items and leaving the store without waiting in a checkout line. The back-end is far more complicated than it appears, however—stores include computer vision, deep learning algorithms, and a sensor fusion to automate much of the purchase, checkout and payment steps associated with the retail transaction. Amazon Go is being hailed as a revolutionary model that relies on the prevalence of smartphones and geofencing technology to streamline the customer experience, as well as supply chain and inventory management. There have been some glitches, however, and Amazon says that it is still learning.

In November 2018, Amazon launched its own augmented reality app for smartphones. While the technology isn’t initially geared to be used in physical retail spaces, Amazon is expected to further integrate its new technologies as it continues to roll out brick-and-mortar retail spaces.

Retailers are seeking out any advantages to get ahead at a time of unprecedented retail competition in Canada. In 2017, more than 50 international brands entered Canada by opening stores, and the momentum continues as the world increasingly globalizes and brands become international. Humans by their very nature are tactile and social and thus, even as e-commerce continues to gain a share of retail sales, physical retail is ultimately still the primary revenue driver for most retailers operating in Canada today. In-store technology will help retailers create more engaging and otherwise better retail spaces offering consumers a positive retail experience where they are served with convenience and speed in whatever mode they choose.