VR, AR, And MR: Not Your Grandfather's Retail

January 2017 Innovative Retail Technologies

By Steve Brown, Futurist and CEO, baldfuturist.com

Virtual reality (VR), augmented reality (AR), and mixed reality (MR) are changing retail as we know it.

Retail, as many have observed, hasn’t really changed that much in a century. A hundred years ago, Harry Selfridge brought us retail theater, and Piggly Wiggly popularized the self-service model. Since then, we have seen the emergence of department stores, malls, big box, memberships, and the mighty Amazon. But the vast majority of shopping is still goods-on-shelf retail. We pay with plastic — or our phones or watches — and we order some of our stuff online, but in-store retail looks much like it always has.

Big changes are on the way. Retailers should expect more change in the next decade than the last century. The future of retail will be very different from its past. Over the next five years, we will see dramatic changes to the shopper journey and to every aspect of retail operations, from merchandizing to marketing to fulfillment. Shoppers will browse differently, choose differently, and expect to communicate with retailers through a whole new range of channels, some of which don’t yet exist.

All brands need to understand how continued advances in computer science will combine with ever-plunging technology prices to provide them with new opportunities to differentiate and to disrupt their competition. Slow-moving retailers risk becoming the next Mervyn’s, Circuit City, or Linens ‘n Things.

In future columns, we will discuss how retail will be impacted by the Internet of Things, next generation social networks, chatbots, robots, and autonomous vehicles. In this issue, we’ll focus on one of the fastest-moving areas of innovation in computing today: virtual, augmented, and mixed reality. These platforms are already being embraced by major brands and will change the way shoppers interact with and experience retail. They will change how shoppers explore, browse, choose, and buy. Most shopper journeys today start online, but roughly 90 percent still end in physical retail. New technology may shift the entire journey online. Many shopper journeys will soon begin in virtual or augmented reality. If the virtual product discovery experience is compelling enough, and buying confidence is boosted as a consequence, shoppers will feel less of a need to make a trip to the store as the closing phase of their decision process. Retailers will need to follow the eyeballs. Every retailer needs to have a VR/AR/MR strategy in place. Now.

VR, AR, MR: A Primer
Before we explore the implications of VR, AR, and MR to the retail sector, let’s quickly define some terms. Some people still aren’t quite sure about the difference between these three flavors of technology. All three involve digital content being presented to a viewer via a headset. An easy way to think about this is to imagine a spectrum of realities with varying amounts of digital content. At one end of the spectrum is “physical reality,” our unmodified world, and on the other is VR where the viewer is immersed in 100 percent digital content. In the middle of the spectrum are AR and MR, which blend views of the physical and digital world together. Let’s look at each one in turn.

In virtual reality, as a user looks around, the brain is tricked into feeling immersed in a totally different place, or even a different universe. Brands have already been experimenting with VR as a way for customers to experience them in new ways. A diverse array of companies including Coca- Cola, Top Shop, Volvo, North Face, Lowe’s, Patrón, Marriott, and Merrill have created VR experiences that enable consumers to interact with their brand and products in new ways. Many people’s first experience of VR will likely be with a gaming platform such as Sony’s Playstation VR product, launched back in October of 2016. Other VR platforms include the Oculus Rift (purchased by Facebook in 2014 for $2 billion), HTC Vive, and headsets that use a smartphone as the display, such as the Samsung GearVR or Google Daydream.

Augmented reality blends digital content over the top of images of the physical world, giving the illusion that digital content is physically there in your living room, office, or wherever you might be. Pokémon Go, for example, uses AR to make game characters appear as if they are floating in your local park. Major brands have already experimented with AR. IKEA produced an app that allows people to see furniture digitally displayed in their living rooms, and McDonalds Australia used AR to promote its use of local ingredients with an app called “Track my Macca.” Both demos are on YouTube.

Mixed reality is perhaps the most compelling of these technologies but remains a few years away from being ready for prime time. MR is similar to AR, only better. MR headsets use sophisticated cameras to understand the world around the viewer and then add digital objects in a way that convinces the brain they are really there. Examples of MR platforms include Microsoft HoloLens, and a headset being built by secretive startup, Magic Leap. If you’ve not seen them before, you will be amazed at what these platforms promise to deliver.

How VR, AR, And MR Will Change Retail
VR allows you to envelop consumers in your brand. When used well, VR can be a marketer’s dream. Brands are ultimately about emotion, and the power of VR is its ability to engender strong emotion in customers.

VR is also great for browsing. Why check out a vacation destination on a boring old web page when you can “go there” using VR? Marriott’s experimental Teleporter booth allows you to look around a hotel and view potential destinations.

VR will be used to create entire end-toend shopping experiences. Alibaba’s VR shopping platform, Buy+, enables shoppers to browse and purchase products in a virtual store all from the comfort of their living room. Don’t expect Amazon to be far behind. Companies like Cappasity are building cloud-based software to help brands build their own VR shopping experiences, including creating 3D scans of products and adding VR capability to existing e-commerce business processes.

One of the shortcomings of VR shopping systems is the need to remove the headset when making a payment (on your phone or computer). This hurdle may soon vanish too. Alibaba is exploring the use of a “nod to purchase” gesture on their Alipay platform. Ultimately, retinal scanning technology may be incorporated in future headsets to make VR purchasing more secure.

AR is perfect for “try before you buy,” enabling you to see how objects will look in your home before you make your purchase. Home décor, remodels, and artwork sales will inevitably change.

Looking forward, the smart money is on AR/MR being much bigger than VR in terms of usage and impact. Once MR becomes mature enough for mass deployment, it could quickly displace mobile as the primary way people interact with digital information. Smartphones won’t go away, the same way PCs have not vanished from our lives, but the go-to method for digital interaction will ultimately shift towards mixed reality, voice, IoT, and artificial intelligence. I have called this the Fourth Era of personal computing, and it’s coming much more quickly than most people anticipate. In this era, our perception of the world will become a combination of both physical and digital, opening up the opportunity for all brands to sell both physical and digital goods. Most will be combinations of the two: a physical object that has digital content associated with it. A cereal box might have a cartoon that animates on it, flat pack furniture might come with AR assembly instructions, and your eggs might come with a virtual egg timer.

As the prices of these platforms drop, millions of consumers are going to be looking for VR, AR, and MR shopping experiences. In the mid-’90s, the first retailers to embrace online stores gained a sustained advantage over their competition. The same is true today. If you haven’t already, you should build your VR/AR/MR strategy right now.