VR and AR and the new frontier in retailing

Virtual and augmented realities—staples for sci-fi fans and gamers alike— are finding a new home in retailing, disrupting the way goods and services have been traditionally marketed and sold

BY RANDY SCOTLAND

FOR a growing number of multinational players—Alibaba, Wayfair, Lowe’s, Under Armour, Decathlon and IKEA, to name a few—virtual and augmented reality technologies are being deployed strategically to enhance the customer shopping experience and build brands.

While virtual and augmented realities have been around for some time, their use in the retailing environment is relatively new and evolving, spurred by a drop in the cost of entry and the increasing sophistication of programs and applications.

Although often referred to in the same breath, virtual reality (VR) is the more complex of the two technologies. Jeff Tremblay, VR/AR Practice Lead at global digital agency Valtech Canada, explains it this way: “Virtual reality takes over your senses of sight and sound and displaces them. But in order to do that you need to be isolated.”

Hence the requirement for dedicated gamer headsets like the Oculus Rift, Samsung Gear VR and HTC VIVE, which can cost hundreds of dollars apiece depending on the model. Add to that the cost of a computer and custom graphics card and each user installation zooms in cost to thousands of dollars.

That is expected to change this spring when the highly touted Oculus Go standalone all-in-one headset is launched at a retail price of under $200.

Augmented reality (AR), on the other hand, “is simpler in its explanation and its usage,” says Tremblay. AR augments what you see in the real world with an overlay of added images (think Pokémon GO). An AR-enabled smart phone, now commonplace, is all the user hardware needed.

“WHAT WE HAVE DONE WITH DECATHLON VIRTUALLY IN 18 SQUARE FEET WOULD REQUIRE 5,000 SQUARE FEET OF PERMANENT SPACE IN ORDER TO SHOWCASE THE SAME AMOUNT OF PRODUCTS. TALK ABOUT FLOOR SPACE OPTIMIZATION AND OUTPUT!”

JEFF TREMBLAY
Valtech Canada

Decathlon’s virtual tents

Damien Lefebvre, President of Valtech Montreal, cites the work his agency did for its Decathlon client as an example of VR’s impact. The French sporting-goods goliath (stores in 26 countries and annual sales of €11 billion) sells camping tents as part of its offerings. The challenge was how best to display the wide selection of tents in stock.

The agency came up with a virtual solution, test piloted in Paris last year and is now rolling out internationally. (Decathlon’s first Canadian outlet is scheduled to open in Montreal in April.)

By donning a headset, a customer is immersed into a virtual camping world, Lefebvre says. “The customer is going to select a tent they may buy, and they’re going to be able to walk through the tent and have an idea of the spaces, the comfort of the tent and so on.”

Says Tremblay: “What we have done with Decathlon virtually in 18 square feet would require 5,000 square feet of permanent space in order to showcase the same amount of products.” He added: “Talk about floor space optimization and output!”

Lefebvre and Tremblay are also fans of the AR application that sporting goods company Under Armour is using to showcase performance gear.

“If you go to an Under Armour store in Orlando and download the Under Armour app,” Lefebvre says, “you’re going to be able to watch a Nike sneaker, and around the Nike sneaker you’re going to see a bunch of entertainment; Michael Jordan playing basketball and so on. So, you can showcase amazing stuff around a product—not just related to the product, the colours and so on.”

Adds Tremblay: “Valtech has been an advocate of contextualizing products inside augmented or virtual reality.” In other words, these technologies are much more than just another means for talking up product features—they represent an entirely new marketing platform for customer engagement.

Lowe’s innovation

Home-improvement and appliances chain Lowe’s is equally bullish on the ability of VR and AR to do just that, according to Josh Shabtai, Director of Lab Productions and Operations at Lowe’s Innovation Labs.

“For more than four years, Lowe’s Innovation Labs has developed a series of real-life applications of augmented and virtual reality visualization experiences, ranging from virtual design tools to immersive training applications,” he says.

“From debuting the first version of Holoroom in 2014, to bringing AR design tools to customers in 2016 with Lowe’s Vision, to introducing the Holoroom How To training simulator in Canada in 2017, Lowe’s has been leading the retail pack in AR/VR applications—and we’re just getting started with this technology.”

“VIRTUAL AND AUGMENTED REALITY REMOVES A SIGNIFICANT BARRIER FOR CUSTOMERS, BOTH IN HELPING THEM VISUALIZE HOW LOWE’S PRODUCTS WILL LOOK IN THEIR HOMES AND GIVING THEM CONFIDENCE IN THEIR PROJECT DECISIONS.”

JOSH SHABTAI
Lowe’s Innovation Labs

These technologies represent substantial potential value to Lowe’s bottom line.

“Approximately $70 billion of home improvement projects stall out every year because the customer can’t visualize the final product,” Shabtai says. “Virtual and augmented reality removes a significant barrier for customers, both in helping them visualize how Lowe’s products will look in their homes and giving them confidence in their project decisions.

“By making the renovations process easier, Lowe’s will differentiate itself, and build customer loyalty and engagement.”

And consumers are clearly eager to experience these technologies, Shabtai adds.

“Our experience has shown that customers are embracing AR/VR as part of their home improvement journey. Customers that participate in our AR/VR pilots say they enjoy designing and visualizing key rooms in their dream homes—and we’re seeing that many are actually developing new skills as a result of our work.

“For example, our studies have shown that unskilled DIYers who try the Holoroom How To project training simulator show a close-to-40 per cent greater recall than those who try to learn home improvement skills via YouTube.”

Try-ons score big

To take another example, Tremblay cites a recent trial by women’s fashion designer Kate Spade New York for women to virtually “try on” products before they make a purchase.

“Although they did not divulge any numbers as far as increases on sales, what they did say is augmented reality virtual try-ons—or product visualization—had a positive impact of 18 per cent in return decrease. It’s huge.”

Retailers can also accrue eye-popping value beyond the sales floor, Tremblay adds.

The implications for retailers going forward are numerous and profound.

Says Shabtai: “Augmented and virtual reality hold a lot of promise, not just for our customers, but also for our employees. Like any emerging medium, VR hardware has a number of current challenges that need technical proficiency to overcome.

“That said, while a number of our early pilots have been managed by trained technicians, we are making advances to make these tools easy and accessible for both our customers and in-store associates.”

Lefebvre and Tremblay caution that too many Canadian retailers are taking a wait-andsee approach when it comes to VR and AR, and risk being left behind as the technology improves and becomes ever more ubiquitous.

Not another fad

“What we’re trying to tell retailers is ‘don’t think this is another 3D TV fad,’” says Tremblay. “This is something else. This is the birth of a computing platform. This is making every single one of your products in every one of your client’s homes or locations a possible touchpoint to your store. We’re witnessing the birth of augmented commerce, which will transform e-commerce as we know it.”

Lefebvre’s advice? “Start with prototyping, a pilot project. And if you start today you might be ready in 18 months. If you don’t start today, you’ll never be ready.”

Adds Shabtai: “At the current exponential pace of technological advancement, expect trade and home improvement virtual reality education to look radically different over the next few years.

“Innovations like Holoroom How To and a few other things we can’t discuss today will soon enable instantaneous learning moments, massively scalable training opportunities and powerful new visualization experiences that empower both customers and employees around the world.”