FutureProof Your Small Business: Augmented Reality in Retail

on October 24, 2017

If augmented reality (AR) is the future, then the future is here. Apple’s release of ARKit in iOS 11 and Android’s new ARCore in its Oreo software update have sealed the deal. AR-enabled devices will be in the hands of millions by the beginning of 2018.

AR will transform retail in a number of ways, offering an improved customer experience and numerous operational efficiencies. Large retailers are already adopting AR technologies, and small businesses need to follow suit.

If you’re not preparing for AR at your retail business, you’re going to get left behind—which means you’ll hurt your bottom line. Customers will flock to your SMB peers and enterprise companies that are already ahead of the curve with AR capabilities.

We spoke with Brian Lange and Phillip Jackson, co-hosts of the FutureCommerce podcast, about their views on AR in retail. With their input and our analysis, we’ve put together this article to give you everything you need to futureproof your business now that AR is on the scene.

But first, what do we mean by “futureproof”?

To futureproof your business is to prepare for new technologies that will impact consumers and operations. It’s about learning how to ride the wave of benefits and competitive advantages coming with the new technology.

What Is Augmented Reality?

Augmented reality technology essentially superimposes digital imagery onto a view of the actual world. This is different than virtual reality, which inserts users into a completely artificial world that is projected around them.

For a retail-related example, imagine viewing a room of your home on a tablet. Now imagine seeing a new coffee table in the room by superimposing it onto the existing image of the room. This is actually a pretty common application of AR in retail, being utilized by Wayfair, Ikea and others.

Example of WayFair’s AR-enabled mobile app via Youtube

While this is currently the most common use of AR by retailers, there’s many more applications on the horizon. But, before we go too far, let’s take a look at the lessons learned from the first popular example of augmented reality, Pokemon Go.

What Can Pokemon Go Teach Us About Augmented Reality In Retail?

Pokemon Go was an AR-enabled app that took the world by storm in 2016. The premise of the game was to walk around the physical world with the app open on phones and “capture” Pokemon creatures within the app.

To do this, the app used phone cameras and GPS to display the world around users and then superimposed Pokemon on top of the real-time camera feed.

It also used GPS to create maps of the actual world with special Pokemon locations superimposed on top. These locations (called Pokestops or Gyms) provide places for players to gather and battle each other using their captured Pokemon.

This influx of players (read customers) provided real revenue bumps for businesses at or near these locations.

One such business was L’Inizio Pizza in Brooklyn, which claimed to have seen a 75 percent increase in revenue after “luring” Pokemon to their location, which drew customers in to catch them.

The hype around Pokemon Go has died down. But Lange says that Pokemon Go still taught us three critical lessons about AR:

  1. Consumers are definitely interested in and willing to try augmented reality experiences, even in public settings.
    1. If retailers want their AR implementation to “outlast the flash” (unlike Pokemon Go), they must find a way for it to consistently offer value to customers.
      1. “AR is here.” Pokemon Go may very well end up being a little tremor precursing the coming onset of AR in the next two years.

      Another crucial point Jackson made about Pokemon Go is that it allowed people to interact with public spaces through their phone, without feeling bad about it. This is crucial because AR in retail relies on people being comfortable using and navigating a public space with their mobile devices.

      So if Pokemon Go set the precedent for people using AR in public, what’s that going to look like for retailers?

      Augmented Reality Offers Numerous Benefits For Retail

      Augmented reality is going to represent a total paradigm shift in customer engagement and the overall shopping experience.

      Jackson points to Lowe’s Innovation Labs and their AR-enabled in-store navigation. This is a great example of how an assistive application of AR can improve the retail experience:

      Example of Lowe’s In-Store Navigation

      Along with in-store mapping, AR applications will enable shoppers to see detailed information by hovering their phones over a product. Stores can also send real-time notifications of new product/brand content to customers.

      Lange and Jackson both spent some time discussing the operational benefits that AR will provide to retailers. One such benefit will be using previous customer knowledge to improve/personalize in-store experiences.

      “[Facial recognition technology] scans customers as they come in the door and tags their location as they move throughout the store. Associates will have specialized information on consumers, whether in a headset [smart glasses] or on a pad.”

      Brian Lange, Future Commerce Podcast

      While this might seem farfetched, we’ve been using facial recognition for years. The technology was installed in airports over a decade ago, in the wake of the 9/11 attacks. And Lange points to Facebook’s highly advanced face-matching technology which identifies users in photos.

      Another operational benefit of AR in retail is the ability to reduce the amount of stock on hand. Instead of overloading their stores with physical products, retailers can input visual information into their AR platform about products and their variations.

      Customers can then use their AR-ready devices to visualize products and any detail variations. Once they make a purchase, the retailer can simply have it delivered from an off-site warehouse or even directly from the manufacturer.

      FutureProof For AR in Retail by Getting Your Systems in Place Now

      Gartner’s “Top Technology Trends for SMBs” research indicates that the majority of small and midsize businesses (SMBs) recognize the benefits AR can bring to their business.

      Perceived Necessity of Augmented Reality for Small Businesses

      necessity of augmented reality for small businesses

      Question: How necessary is Virtual or Augmented Reality to your business?
      Source (Gartner 2017)

      Small businesses looking to realize these benefits won’t be able to adopt some new AR-enabled app.

      To truly achieve the benefits of augmented reality, retailers need to first install and/or optimize critical, underlying systems.

      As Jackson says, without the proper integrations in place, retail deployments of AR won’t be able to surface any useful information.

      The underlying systems that SMB retailers must have in place include:

      • Inventory management: If displaying product information is a priority, then a detailed inventory/product database that the AR system can pull from is a must.

      Square for retail inventory screen

      Product details and inventory screen via Square For Retail

      • Customer management: To leverage augmented reality in personalizing customer experiences, retailers will also have to organize their customer relationship management (CRM) data integrate into the rest of their software/systems.

      Customer information and management screen via ShopKeep

      Customer information and management screen via ShopKeep

      • Point of sale: Retailers will need to integrate their point of sale systems (POS) if they plan on supporting innovative payment options through AR.

      Shopify POS ordering screen

      Example of a POS ordering screen via Shopify

      If you’re a retailer that needs to adopt any of these three technologies, then you should start immediately. Augmented reality aside, these tools will lead to greater operational efficiencies and improved customer experiences.

      As for augmented reality adoption, it’ll probably come sooner than you think.

      “An astute retailer is watching right now, and those that have some money to invest now will be ahead of the curve and eventually capture some consumers based solely on the technology.”

      Phillip Jackson, Future Commerce Podcast

      Must-Take Actions To Stay Alive in the AR Future

      Now you know what you need to futureproof your business and ride the coming wave of augmented reality to business success. But what’s your first step, aside from monitoring the progress of augmented reality in retail?

      1. Convene a task force and scout out what enterprise and SMB competition is doing.
      2. Complete a basic opportunities and threats analysis.
      3. Explicitly factor AR into your business strategy and budget.
      4. If your approach is wait and see, then define the conditions under which you will need to take action (such as when a particular competitor starts using AR) and keep vigilant for those indicators.

      Information on Gartner’s Top Technology Trends Survey
      Gartner conducted this survey in April-May 2017 among 699 US-based SMBs, with more than 10 employees and annual revenue of less than $100 million. The survey excluded not-for-profit organizations. The qualified respondents are decision makers, or have significant influence on the decisions related to purchasing technologies for their organization.

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