How AR is set to change the face of the retail industry

Kelly Goetsch, Chief Strategy Officer, commercetools
By Kelly Goetsch, Chief Strategy Officer, commercetools

As it stands, the global Augmented Reality (AR) market size is expected to reach USD 97.76 billion by 2028, exhibiting an excellent compound annual growth rate (CAGR) of 48.6 per cent during the forecast period. AR is beginning to appear in many fields including healthcare and entertainment, but where it may be the most impactful is the retail industry. Leveraging this technology, shopping experiences will likely change completely, so, what can we expect from adoption of AR in the retail business?

Gartner estimated that over 100 million consumers used AR to shop in 2020, showing the clear appetite to further digitise our everyday lives. Now, major movements in AR hardware should accelerate the use of AR, especially as earlier this summer Google said it is now joining Meta, Apple and Microsoft in rolling out AR glasses targeted at consumers and business users. While this isn’t Google’s first foray into AR —the company unsuccessfully launched Google Glasses about a decade ago — the huge amounts of investment into this space promise the time for AR is now.

If I am reading the signs correctly, we are on the cusp of seeing an onslaught of AR enabled devices, including more fashionable headsets and eyewear, that will make the technology much more approachable for the everyday consumer. These will truly augment our physical world and change the way we shop for good.

The beauty of AR is that it integrates digital information, in real-time, with a user’s environment. Users experience a real-world environment with generated perceptual information laid on top of it. For example, if you are in a grocery store, and you’re not sure where an item is, your AR glasses could provide directions to that item, or even the most efficient route to pick up all the groceries on your list.

There are also opportunities that can go much further, such as when you catch a glance at somebody’s coat walking down the street and the online listing for that coat pops up with directions to where you can then buy that item near you. Or, if you only like shopping for ethical brands in a store, AR could be used to scan the ESG rating of an item on the shelf, telling you the materials were sourced. The options for how AR can be used in commerce are limitless.

But how can retailers capitalise on AR technology?

To take advantage of AR, retailers and brands need to ensure their commerce systems are API-enabled in order to consume the data and functionality these devices offer. As AR becomes more popular, it is also important that businesses have the capabilities to quickly prototype and test new AR experiences to make sure these are what their customers are looking for. This is likely to be a challenge for many retailers who may need to look to third-party agencies to step in.

Another challenge that is likely to arise is the gatekeeping of AR platforms by the technology industry behemoths. Knowing that AR is likely to be the next big thing in retail, these companies are already working to build their own platforms and could be seeking to control the development of AR experiences through app store-like functionalities. These options might seem attractive for brands to sign on to be a part of but could be very limiting in the long run.

Whether dominated by a few major players or not, the need for competitive differentiation in how retailers and brands build customer experiences for existing channels, and for new ones, like AR, is an impetus for who will be successful in the next generation of retail, and who will fall short. Those who have embraced composable commerce technologies and their adherence to API-first architectures will have the advantage here. Composable commerce technology enables a retailer to work with AR functionality selecting the necessary software components á la carte, exactly as they are needed. The headless principles mean the whole stack of commerce functionalities, like catalogue, ordering, or payment can interface with whatever “head,” such as the Google or Apple AR device, is chosen by the consumer.

At the heart of it all, today’s increasingly mobile-first consumers are well versed and experienced in online shopping. It is only a matter of time before AR becomes the new standard in retail. My advice? Start your own AR journey now, and work quickly, so you are not left out of the game.”


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