Virtual Reality: Transforming Retail Experience

July 2016

With the emergence of Pokmon GO, the latest craze in augmented reality (AR) has found its way into unsuspecting brick-and-mortar stores. Pokmon GO, produced jointly by Nintendo and Niantic, allows smartphone users to seek out and collect virtual Pokmon characters around real world locations – some of which reside in retail stores. And, savvy retailers are embracing the trend by offering themed deals and specials to entice game-playing customers into their stores.

This is not the first instance of AR being harnessed for retail use. In fact, AR and virtual reality (VR) have been rapidly developing as viable business tools to connect with consumers in new ways and revolutionize business processes. While the gaming and entertainment sectors are likely to be the first beneficiary of VR and AR, retailers are also closely evaluating potential uses to sell products, boost their brand and engage the new age consumer.

What is Virtual Reality?

VR uses computer technology to create a simulated, 3-D environment that allows users to explore and interact. A user becomes immersed in the VR environment and is able to manipulate objects or perform tasks in what feels like an all-encompassing world. AR is a close cousin of VR, but enhances the existing visual environment instead of creating a new experience of full immersion.

The VR market is forecasted to generate $70 billion by 2020, according to market researcher TrendForce—a tenfold increase from anticipated revenues this year. A confluence of trends, including wearable devices, gaming culture and national security concerns, has generated significant appetite for innovation in virtual reality technologies.

How is Virtual Reality being used in Retail?

Top brands such as Toms have used VR headsets so that shoppers can undergo a video experience while in stores. Toms provided more than 100 stores worldwide with Samsung VR headsets for customers to view a video that depicts a trip to Peru, and in particular, panoramic views of a schoolyard where children are provided with boxes of new Toms shoes. This is part of Toms’ one-for-one campaign, in which the retailer donates a pair of shoes for each pair it sells.

Other retailers, like Lowe’s, have added a futuristic element to its shopping experience by creating virtual showrooms users can move through. In 19 stores around the country, Lowe’s installed what it calls the “Holoroom,” a simulated space that can be customized and enables shoppers to see a 3-D mock-up of a remodeled kitchen or bathroom. Shoppers can provide the dimensions of a room and fill it using a selection of Lowes products, including equipment, personalized colors and finishings. They then put on an Oculus Rift VR headset to experience the elements of the room. Finally, shoppers can view their design on YouTube 360 with a Google Cardboard viewer, which Lowe’s gives out for free through on-site vending machines.

But VR is not only for brick-and-mortar retailers: Chinese e-tailer Alibaba will soon allow customers to shop its mega online store via a VR headset or glasses designed to simulate being in a physical store. The e-commerce giant plans to launch a demonstration by the end of July and potentially a large-scale rollout by the end of the year.

AR has also been used for the in-app experience by large retailers such as Walgreens, which tested AR with Aisle 411, its loyalty app partner, and added 3-D technology to its in-store maps to help users locate products. The AR app enables personalized coupons, offers and rewards to ‘pop out’ of the shelf as shoppers explore a store, and also gives shoppers a 3-D image of their route.

The Future of Virtual Reality

While VR and AR may not be the easiest, nor the cheapest, to implement, it is an investment that retailers should consider as they plan store-wide promotions.  With the VR market set to grow by great lengths in the next few years, it’s one trend that is expected to continue to be popular among youthful, tech-savvy customers. In fact, according to research from Sonar, 80 percent of the coveted Generation Z (those currently aged 13 to 17) are more likely to visit a store offering VR and AR technology. As new innovations in VR and AR emerge that improve customer service or shopping experiences, retailers should take note and consider how they may be able to harness the opportunity they provide.