Retailers Push Investments In Augmented Reality, Even As Consumer Interest Dips

retailarimgWhile consumer interest in augmented reality (AR) has risen and fallen like a tide, retailers and tech vendors see it as more than just a passing fad.

Hybris Labs, the retail tech R&D division of SAP, began working on AR products in 2013 after Google Glass debuted, said Hybris Labs team lead Christian Neeb. “There was a high degree of interest at first, but even when that went away we saw retail applications for AR,” he said.

The mainstream popularity of AR is a bad barometer for retail use cases because the technology fits best as an operational brick-and-mortar tool, said Neeb.

People aren’t shopping while wearing Google Glass – and don’t expect critical mass there anytime soon. Nor are they downloading AR apps and using their phone’s camera to view supermarket aisles overlaid with augmented info.

It’s most useful, said Neeb, as a way for retailers to source real-time info on the customer (like past order history, upselling opportunities and known interests) or to offer discounts on ad hoc product bundles – a common ecommerce cart tactic which is difficult to apply in a physical store.

The biggest challenge is making data from AR applications available in real time and across online and offline properties. “Retailers right now are doing a lot to structure their data so it can be made available to services and applications,” said Don White, CEO of the customer engagement tech vendor Satisfi, who expects within a year more retailers to unveil in-store, API-based capabilities that can enable AR.

One example of the “store as API integration” approach is a joint product from Satisfi, Macy’s and IBM Watson that let’s shoppers pull up the Macy’s app or mobile site to get advice on where certain products are in a store and what’s in stock.

Most retailers aren’t equipped to apply the kind of AR Satisfi, IBM and Macy’s are working on because it takes a huge tech and operations investment. Location trackers can use beacon pings or mobile ad serving to decide whether someone is in the vicinity, but actually being able to visualize the aisle or individual product a person is looking at and map his or her route through the store during a shopping session is a big step up from there.

“Even knowing where you are in the store or what you checked out is really important to retailers whether or not there was a sale,” said White.

Consider how much Amazon makes every year based on its ability to pitch brands on a person that “picked this item up and checked it out” in a virtual setting (hello, retargeting). In-store AR tech that maps shoppers’ locations and interests can generate similarly valuable data, even if the in-store sales lift is insignificant.

Foursquare sees AR location mapping as an entry to retail marketing budgets – hence the company’s vocal support for “Pokémon Go” to potentially popularize an AR layout as a dashboard.

“Ninety percent of the economy still happens in a physical store,” said Foursquare President Steven Rosenblatt. And for those brick-and-mortar businesses in particular, “there’s a lack of trust in the bidstream when it comes to attribution.”

Real-time customer mapping over a retail floorplan is “the holy grail,” said Beck Besecker, co-founder and CEO of the AR development firm Marxent.

For the moment, Besecker said AR strategy mostly revolves around incremental sales conversions. Like one deal to install AR kiosks in Lego stores so buyers can see and engage with the toy sets they’re considering is a good example of a way AR can tick up sales in a store where many people browse but don’t buy, he said.

But project-oriented AR case studies in test locations are low-hanging fruit. The real prize, according to Besecker, is figuring out how retailers can squeeze value out of their real-world footprint as people simultaneously migrate online and to urban cores with new work/play/eat/shop/live environments.

The United States has a retail infrastructure built for a more rural and suburban America, “and to anchor stores AR is really the high-volume data management solution that’s going to keep people interested” in offline shopping, said Besecker.

It’s second nature for a premium hotel to continuously collect data and optimize the experience for every guest who walks through the door, said Rosenblatt.

“Retailers aren’t set up to do that or sophisticated enough yet to personalize toward every consumer,” he said. But when that does happen, it’s going to look like AR.

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