One type of technology that had been gaining increasing importance in the retail setting even before the pandemic, is augmented reality (AR). According to an International Data Corporation (IDC) study, AR is anticipated to see compound annual growth rates of up to 135 per cent in retail market spend through to 2023. Retailers such as Ikea, The Iconic, and Amazon are among the many companies that have already implemented AR features.
It’s clear why these technologies are gaining interest from both consumers and retailers. The opportunity for shoppers to virtually trial products is an intriguing prospect, particularly in our current environment where some are still avoiding stores. People have experienced this need recently during lockdown, where they relied on technologies such as AR to engage with and choose products. Imagine trying to buy new glasses without wearing them first, and you see the potential for AR to benefit the consumer experience.
However, as AR continues to gain widespread use, and given the significant investment involved, it’s important to consider the real impact of these technologies. There is a certain ‘wow’ factor for consumers when new technologies are introduced, but the challenge is determining whether there are real long-term benefits. Even more importantly, our research on the impact of AR on customer experience suggests that while AR can help the customer experience, it can also hinder it if retailers are not careful.
Customer experience with AR
With our colleague Sean Sands, associate professor of marketing at the Swinburne University of Technology, we recently published the results of a study* on the impact AR has on customer experience at different stages of the customer journey. We aimed to explore how customers experience AR, and how it impacts their shopping behaviour before, during, and after making a purchase.
We conducted a series of interviews with consumers of different ages and technology experience levels. We gave these participants an AR tool to use, observed how they used it, and then conducted in-depth qualitative interviews to unpack their attitudes, perceptions, and overall experiences.
Through this analysis, we found a lot of the potential upsides to AR that have been widely discussed. For instance, it can help consumers experience a wider variety of options and therefore be more experimental with different styles than they might in a physical store. This is especially likely to happen when using AR from home, as consumers feel less societal pressure to conform, and it is easy to view multiple alternatives quickly. We also found an element of fun, with many consumers simply enjoying the experience of ‘playing’ with an AR tool or app.
However, some of the most intriguing findings were in the ways that AR could hinder the consumer experience. We will elaborate on these in more depth:
AR can amplify cognitive dissonance
One of the positives of AR is that it can increase a consumer’s purchasing confidence by removing some of the risks of online purchases, such as not being able to try something on before buying it.
However, there is a potential downside to this. When an item does not meet the consumer’s expectations after they have used AR, it may amplify the customers’ cognitive dissonance. In other words, consumers can build up their expectations and then feel even worse if the purchase doesn’t live up to what they hoped, or how it looked in the AR environment. By raising consumer’s hopes about how well a product will fit or look, this also sets a higher bar that the final product needs to meet.
Technology is a turn-off for some consumers
Not all consumers find AR technology useful. For some, it is due to a lack of experience and understanding of how AR works. Some of these people may overcome these barriers with education and experience, while others are deeply reluctant to engage with technology. For the latter group, it is essential to offer alternatives that don’t rely on technology. Interestingly, we also found some participants who thought the available technology was not realistic enough and wanted to see more advanced features. So it is important to acknowledge there is no one-size-fits-all strategy for any technology or experience, including AR.
AR’s benefits may be short-lived
As we mentioned, new technologies come with an initial ‘wow’ factor and sense of novelty. However, some of the consumers we interviewed said their enjoyment of AR might be short-lived. Beyond the initial fun of experimenting, some consumers felt that there might not be long-term benefits from AR technology, at least not as it is currently constructed. Retailers, therefore, run a risk of investing in a technology that consumers may outgrow quickly, so it’s crucial they make sure it supports a real need long-term.
AR has the potential to mitigate the value of brand
It is also worth mentioning a potential downside for large brands. We observed that when using an AR tool, consumers pay more attention to the style of the product than the brand name. This happens because, when done well, the technology enables consumers to enter a “flow state”, in which they get lost in the experience. Large brands that compete on brand recognition lose their advantage when consumers ignore focus only on style. However, this creates an opportunity for smaller brands to cut through with innovative and appealing product designs.
Leveraging AR for retail
AR is a powerful tool for customer experience. Done well, it can provide benefits to both consumers and retailers. However, retailers need to be cautious when deciding whether, and how, to implement it as part of the customer journey. It is important to acknowledge that not all consumers enjoy the experience of using technology like AR, and there can be unexpected outcomes even for those who do. One of the most notable is that using AR can mitigate the role your brand plays in the decision process. If this is good, then leverage it to your advantage. If not, think about how to leverage the benefits of AR while reducing this risk.
This doesn’t mean you should ignore AR and its potential. What it does mean is that it is always important to remember that any technology should be only one piece of a compelling customer experience. Leveraging the benefits of AR requires a solid foundational base of a good offer and services like flexible returns. Otherwise, you might just be at best offering a novelty that is short lived, and at worst actually hindering your customer experience.
*The paper is titled “Augmented reality and the customer journey: An exploratory study” and appears in the Australasian Marketing Journal.