My first, large chain store experience in retail was as a blue light special girl for K-mart. For the uninitiated, this meant dragging around a cabinet on wheels about the size of a bathroom vanity.Inside was a car battery, wired to a light at the top of a pole that stuck out through the middle of the cabinet. The light at the top was a flashing blue light, kind of like the old magnet police lights from old movies and TV shows. When I showed up for work, I was given a list and times to run “specials” – blue light specials – in the store. So at the appointed time, I would get on the PA system and announce that there was a blue light special in a specific department, and then I would go to that department with my blue light, and I would use a price sticker gun to manually reprice items that people wanted to buy.
The people who got items repriced would take them to the bank of registers in the front, and the clerk would enter the temporary promotional price, and the customer would walk out happy.
I remember this, and share this, because this was the cutting edge of technology in your average retail chain store in 1988. And I remember the year clearly because it was the year that “Your Simi Valley K-mart!” converted from all manual pricing to… barcodes. Yes, barcodes. The thing that was first used to scan Wrigley gum in 1974.
The first Sunday (day of the new week’s sales) that my K-mart cut over to barcodes, the price file didn’t load. I didn’t run any blue light specials that day, because I spent the whole day first frantically answering price check calls at the registers until we all realized what had happened, and then frantically manually pricing everything with that week’s deals so that we could get cashiers running faster.
It’s hard to believe that only seven years later, Amazon started selling books online.
This was the pace of technology change in retail prior to the internet age. This is the very core of retail’s challenge in navigating the disruptions of the last 20 years. Retailers think it’s totally okay to wait 14 years to embrace a new technology, even when it demonstrably improves operations. Case in point, there are retailers today who are frantically trying to stave off the day their support for Microsoft Windows 7 ends. Microsoft ended mainstream support in 2015, and are finally cutting everyone off (unless you want to pay exorbitant support costs) in 2020. There are even retailers who are trying to save their Windows XP installs.
So it’s with a great sense of irony to find that while retailers may be trying to control – and milk for all its worth and then some – the technology they use to run their operations, it has been consumers who have been driving and defining the technology that retailers use for engagement. And not only have there been more and more touchpoints, but the pace of change has not slowed. If anything, it has only increased.
When it comes to customer engagement, retailers, whether they like it or not, are on the bleeding edge front line. If consumers want to shop and pay on Instagram, retailers better figure it out. If they want to use Facetime or group chats to co-shop with distant friends, retailers need to be there.
The challenge for retailers, who operate thin-margin businesses and don’t have a lot of extra cash available to experiment, is trying to decide when is the right time to “get in” on a new technology. That challenge is no different, when it comes to Augmented Reality. Retailers aren’t thrilled to have to deal with yet another touchpoint for customer engagement. But their ability to avoid it – if consumers adopt – is pretty much zero.
What Consumers Want
If consumers drive engagement technology adoption, then what does their adoption say about how fast AR should come to the retail industry? The numbers are a bit sobering.
While at least 87% of US consumer households have mobile phones today, only about one-third report having used augmented reality (which is most easily delivered via a mobile app). Given the hype over mobile AR games like Pokémon Go, and the number of Snapchat filter selfies there are floating around on the internet, this number seemed low. But when you look at adoption, it supports the one-third number. About one-third of US consumers seem to have downloaded Pokémon Go (whether they are still active users is another matter). And about 30% of US adults (over the age of 18) are Snapchat users.
That may not seem compelling on the surface, but these users are highly attractive to retailers. Of the US consumers who reported trying AR, 41% had income over $75,000 per year, and 81% were 44 or younger.
On the virtual reality side, only 11% of US consumers report owning a VR headset, a surprisingly low number after two holiday seasons in a row that were considered fairly successful for VR, between Playstation, Oculus, Samsung and HTC.
With these rates of adoption, companies that are investing in mixed reality (AR or VR, or XR to mean potentially both) are setting expectations low. Microsoft talks about consumer market penetration of AR in terms of years, and is partly why the company has chosen to prioritize enterprise applications first.
When They Want It
With low penetration rates of both VR (which requires equipment that can get expensive fast) and AR (which is still low even though 87% of households have mobile phones, which means AR apps are just a download away), it seems that consumers aren’t in any great hurry to experience mixed reality in any setting, let alone specifically in retail.
However, the adoption lag hides a level of enthusiasm that retailers should pay attention to. Of the one-third of US consumers who reported using AR, 73% said they were satisfied (or very satisfied) with their experience. AR has the advantage over VR in that it does not have high odds of inducing the “hurl factor” (some people are sensitive to the eye-ear imbalance that occurs when VR replaces visual reality with something that doesn’t match what a person’s inner ear is telling them, with messy results), so the satisfaction levels with AR promise to overall be higher than with VR anyway.
Where retailers should really start to pay attention is when it comes specifically to shopping. Only 10% of consumers say they have used AR or VR while shopping. But another 45% say they would like to try it. And in the same survey, 30% of consumers said they would never go to another clothing store again if AR would allow them to buy the right size clothing with confidence. Those are numbers that promise that, with the right use-cases, consumers could start demanding AR experiences from retailers at a very fast pace, to the point where not having an AR experience becomes a disadvantage.
What Gets In The Way
There are a lot of reasons why consumers are not adopting XR at a faster pace than they are today. For VR, it’s still a novelty, and while you can get VR on the cheap, for the real, immersive experience, that is a big budget investment. The market is still highly fragmented and with lots of walled gardens. Going with one brand of VR means not having access to content from another brand that you might like.
With AR, the content is similarly walled off – every AR experience requires a new app, which must be downloaded and logged into and maintained and remembered. And knowing when AR is available is still a big guessing game.
For both AR and VR, the issue here is about friction – what it takes to get up and running reliably, and how easy it is to continue to use it. If there is a lot of friction, as there is right now, then it’s easier for consumers to not use it, than it is for them to embrace it.
Then there is the problem of ergonomics. If you’re worried that you’ll look silly bumbling around in a VR set, you’re probably worried that you’ll look almost as silly waving your phone around to try to get AR content up and running – if it’s even there to see in the first place. That’s one angle to the ergonomics, that it’s painfully obvious when you’re trying to use it, and there are more people not using it than are using it, so people trying to use it will stand out. Some people like to stand out in a crowd, but many don’t. That will inhibit use as well.
And then there are the plain ergonomics involved in successful use. I was testing out a few AR apps on my phone while sitting on my coach. The use cases were designed assuming the user would be sitting at a table. Trying to get the right angles to use the apps against the backdrop of my sofa arm rest meant holding some uncomfortable poses for arms and neck. I’ve tried multiple VR rigs, and some I have never managed to get to sit comfortably. It’s not a fun experience.
And if you believe that there is a convergence coming with AR and VR – one set of eyewear, with the only difference between AR and VR being the amount of “reality” you let through, there is this reality: 75% of the US population requires corrective lenses of some kind. Right now, VR rigs tend to take the ski-goggle approach – make them big and wide and add lots of padding around the edges, and the VR mask won’t crush your glasses against your face too badly. But it still makes for a less-than-appealing experience. For something of a Google Glass form factor, prescription lenses are going to have to be part of the equation, and let’s not forget bifocals at some point. These issues don’t seem to be much addressed in the discussion of how XR gets adopted.
What Retailers Think
There don’t seem to be a lot of studies diving into retailers’ planned or current adoption of AR or VR in their consumer experiences. In one study, 70% of retailers said they expect to see widespread adoption of AR across their company in the next 3 years, but that study was not focused on consumer experiences, and some retailers have jumped on the bandwagon of using XR for training purposes.
One analyst firm forecasts that by 2022, over 120,000 stores will be using AR smart glasses – this is globally, with the usage split evenly across Europe, North America, and Asia. In the same study (by ABI Research), the firm estimates that 3% of eCommerce revenue will be generated because of AR experiences, or $122 billion in revenue worldwide. It’s not clear exactly how this revenue will be generated – because of direct purchases through the channel, or through influencing sales that are generated in other channels.
The Bottom Line
Right now, the use cases for AR and VR that are focused on customer experiences tend to be very specialized – seeing if the couch will really fit in your house, or what the paint color might really look like on your walls, or what a redesigned kitchen might look like to walk through. Makeup and fashion are getting on board as well, with virtual try-on of makeup looks and colors, and 3D visualizations of clothing to get a better assessment of fit. Some of these work better than others – clothing fit is still a bit hit or miss. What retailers need to figure out is if XR will only ever be limited to these specific use cases, or if its utility can be expanded out beyond these. Buying with confidence is an important value that XR can bring to the shopping experience, but it’s probably not the only one.
In the meantime, until consumer adoption at home reaches a tipping point of some kind – and who knows, the long-awaited Harry Potter AR game may be that tipping point – retailers are going to have to find ways to experiment and stay on the learning curve. If XR is anything like any other technology experience that consumers have adopted over the last 20 years, when it hits, it will hit fast.
This article first appeared in www.forbes.com
Guest Author: Nikki Baird, I focus on the digital consumer’s impact on retail. I am the vice president of Retail Innovation at Aptos, a retail enterprise solution provider. I am charged with accelerating retailers’ ability to innovate. I have been a top global retail industry influencer for several years, with a background in retail and technology. I regularly draw on my experience as a retailer (store operations and supply chain), an ITer (point of sale and back office), a consultant (IT strategy), and a software marketer (for two different retail solutions). I’m not afraid to use my own digital-native children as guinea pigs in this wild world of digital, social, and retail – and happy to share what I learn.