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Virtual reality: PR stunt or potential sales channel?

Virtual-Reality-VR-ShoppingIt’s not that long ago that the concept of ‘oh I’ll just jump online and order it’ was relatively foreign. Now, it’s easy to forget that we have access to almost every retailer via a device in our hand. As the years have gone by, the technology has improved, providing greater comfort to a growing cross-demographic audience. But think back to 10-15 years ago, that a URL and the concept of an online retail channel being a sizeable part of a retailers business, might have seemed farcical.

However, for every development in connectivity between retailer and consumer, there have been multiple questionable technologies. Virtual reality (VR) seems to find itself currently perched between storming to be the next disruptive innovation in retail, or falling by the wayside as another questionable technology that never cut through. Whichever way it swings will probably be determined over the next 24 months.

The development of VR in retail

The application of VR in retail has been relatively recent. Retailers have been using VR to create shopping experiences for customers – for example eBay and Myer partnered to develop a VR shopping app; apparel company, North Face used VR to transport customers into Yosemite National Park, and many automotive brands have been using VR to give customers a virtual test drive of cars. According to Digi-Capital CEO, Tim Merel, VR could generate annual revenues of up to $25 billion by 2021. However doubt still remains as to whether these retailers are exploring and experimenting with an actual new sales channel, or if it’s just a PR stunt to be seen as ‘innovative’.

At its core, virtual reality in the retail context, is about immersing the customer in the product. In the context of the value chain, virtual reality is focused on primarily on increasing sales conversion. However using technology to immerse the customer in the product is not new.

Customer to product connectivity

ASOSOnline fast-fashion retailer, ASOS, was one of the first to include a video of an item in the product listing. Doing so enabled the customer to see how the product moved and looked on a real person (even if it could not be them). A video may not sound fancy, however it was the first effort to allow to show customers a product in a three dimensional plane.

VR’s predecessor, Augmented Reality (AR) has then taken customer connectedness to the next level. Allowing customers to use their camera phones to create an alternative view with prices and facts about products. For example in 2013, Ikea launched an app which allows the user to view various products from Ikea but how they would look in your house.

Many suggest that the AR market will be the extent of virtual technology’s application. Main proponents of this argument suggest that the cost and social barring of the VR headset to access VR, will be the reason why AR remains the steady force in immersive marketing to consumers. While this could still hold true, one can look to fitness trackers (eg. FitBit’s) to see an alternative outcome. The fitness device is expensive and required consumers to own a new device – regardless the rise of the market has seen manufacturing costs slide and consumers seem quite comfortable adopting another device.

VR is mostly a branding exercise at the moment

Current VR applications being built have been focused on the brand. Australian creative technology agency, S1T2 has seen a dramatic increase in brands seeking their experiential marketing services, according to spokesperson, James Yong. However it’s not a typical branding exercise – brands still use these projects to connect customers to the product. For example, Dyson launched an AR project to determine toxins in a room; or there is North Face taking travel-hungry customers exactly where they might use their products in Yosemite National Park.

IKEAAlibaba’s most recent VR experience launching a virtual shopping mall for the 2016 Singles Day, allowed customers to engage with products and aisles. By doing so, Alibaba have gained incredible insight into shopping patterns and behaviors when interacting in a virtual store. They have started a data gathering process which better positions them to make an investment determination on VR. While it may be easy to dismiss VR as another public relations gimmick, it could also be the newest way to shop. Without early testing of the potential of VR and gathering more data related to VR as a sales channel, larger retailers may miss a critical opportunity.

What could the future look like?

It’s always fun to imagine the what the future could be like with VR. While those skeptical of VR might highlight the social barrier of the headset, it is also very possible that one day you catch yourself saying “oh I’ll just pop on my headset and buy that from the virtual store”. It’s possible that we have virtual versions of ‘Chapel Street’ or ‘Westfields’, in which many retailers will be able to access a dream of owning an actual store – sure it may be virtual, but it will just be yet another way to connect their products with customers.

Arani Satgunaseelan is a principal consultant at ADP & Co, a management consultancy specialising in strategy and analytics for the retail sector. Arani can be contacted at

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