Virtual Reality is Changing Consumer/Brand Relationships in Retail

By Priyal Maheshwari  

Virtual Reality is no longer a “futuristic” technology, in fact, it has been in use for almost a decade now. VR, in  simple terms, is a simulated experience that creates a fictional world around the user. Augmented Reality (AR)  by contrast allows one to see different digital elements in our existing world. The first major hit of VR used  along with AR was the game PokemonGO. It used VR/AR technology to give their users a virtual experience  (VR) where they could catch Pokemon in real world locations (AR). Many companies have similarly started to  incorporate VR into their applications. Especially, retail and ecommerce companies have begun to integrate VR  into their shopping experience, making the consumer journey even more immersive and memorable.  

As VR and AR continue to grow, they provide retail and ecommerce businesses with opportunities to optimize  their consumer’s customer journey. When buying products online, consumers often find it hard to understand  the physical features of the product. This is where VR/AR technology comes in handy. These technologies can  give the consumers a visual experience of their purchase. In 2016, Ikea launched Ikea’s Place – an AR  experience that allowed users to view Ikea’s furniture in their homes using their phone cameras. As a late  entrant into the ecommerce market, Ikea was already playing catch-up. By launching an immersive and user friendly online experience, Ikea allowed users to go from blindly buying furniture online to having confidence  in the product and their decision after “seeing it” in their homes. The benefit of this change to the customer  experiences paid handsome dividends. In 2017 alone, Ikea’s app exceeded two million downloads and their  website had 2.3 billion visitors.  

Warby Parker, a luxury eyewear company that started off with a pure ecommerce model, differentiated  themselves from their competitors by using VR/AR technology. Their strategy was simple — by using AR  technology, they allowed consumers to “try-on” glasses before buying them. Similar to Ikea, Warby Parker  wanted to bridge the information asymmetry in online retail. NYU Stern’s Professor Jared Watson, who teaches  Consumer Behavior, shared his insights on the topic: “I think that’s [VR/AR] one of their [Warby Parker] core  competencies, that they are a technology first company.” When talking about how AR/VR is helping these  companies improve the adoption of e-commerce offerings, Professor Watson remarked, “It’s the risk of buying  stuff online – these technologies are helping to negate that risk. For example, ZARA is changing how we engage  with clothing.” ZARA’s new VR experience allows consumers to use the ZARA app to hold up their phone to  designated shop windows or sensors within a ZARA store – allowing them to see models wearing a selection of  outfits in 6–12 second clips. This makes the consumers’ decision process easier, as they no longer need to use  fitting-rooms to gauge a product.  

The main drawback, however, is that such technology can lead to false expectations and dissatisfied consumers.  As Professor Watson noted, “As we are talking about the clothing perspective, there’s a lot of subjectivity that  goes into our valuation of how things are. It wouldn’t be hard for the software to utilize a special filter to make  us look better. We can look into the technology and think that that cloth looks amazing on me but then we go  back home and think otherwise.” If it is just used to trick consumers into buying products by making their  surroundings look “better” or their faces “prettier,” with the help of filters, it might lead to consumer pushback  and a weakening of a given brand’s image.  

That being said, there is significant demand for VR/AR. A consumer research study conducted by product  visualization service Marxent suggests that 68% of consumers spent more time with a product if it had AR, and  72% of consumers bought a product which they weren’t planning on buying because of AR. These statistics  suggest that consumers are willing to try out new digital experiences and to retain customer loyalty, retailers may need to start incorporating such technologies. Furthermore, as the use of VR and AR grows in this market,  their demand in businesses that feature products traditionally bought in-person, are likely to go up. These  advances can in turn provide consumers with a more holistic shopping experience.