Study: AR’s potential for retailers lies in driving efficiencies, not sales

Brief:

The retail industry will adopt augmented reality (AR) technology in ways that are more likely to change how in-store employees function than how customers shop, according to a new report by ABI Research.
Online, AR has a greater potential to drive sales, according to ABI, which forecasted that 3% of e-commerce revenue will be generated because of AR experiences, or $122 billion in revenue worldwide, by 2020.
By 2022, more than 120,000 stores will be using AR smart glasses globally, with deployments evenly split across Europe, North America and Asia-Pacific.

Insight:

ABI Research's new study provides interesting insights into how today’s much-hyped AR technology will actually find applications in the brick-and-mortar retail setting. The company asserts that the technology doesn’t add much value to the sales process for in-store shoppers who can see, touch, try on or taste products before making a purchase and could, in fact, be distracting.

However, store employees are likely to use AR technology for a variety of applications, such as managing front and back-of-store operations, looking up more information about products and handling store inventories. For example, Vuzix’s smart glasses have scanners to read UPC symbols or QR codes on packaging, and provide a heads-up display of product information. The adoption of the technology for store employees will be driven by the need for efficiency savings to compete with rival retailers and e-commerce providers.

When it comes to driving sales, AR is more likely to help e-commerce sites provide an interactive experience with online customers who are unable to see and touch physical products they may want to buy, per ABI.

Retailers are currently testing the technology in various ways. Target, for example, last week showed off its “Target Beauty Studio” developed with Perfect’s YouCam Makeup app that uses AR filters to overlay cosmetics on a customer’s face. The advantages of the technology include improved hygiene compared to cosmetics testers, less waste and greater convenience for customers who don’t need to try on a variety of products like lipsticks.

The challenge for retailers and AR solution providers will be to navigate the changing perception of AR from a novelty gimmick into a technology which can truly engage customers online and improve the bottom line in-store, per ABI.