Augmented Reality Drives Bottom-Line Results for Retailers
By Gwenever Pacifico / November 19, 20203 min read
Imagine a future where you can try on clothes without even touching them. A tomorrow where you won’t need to buy three different sizes online to figure out the perfect fit, only to return two of the sizes. That tomorrow is already here.
Augmented reality (AR) is revolutionizing how we shop for clothes. According to a 2019 NPR/Marist Poll, 84% of online shoppers have purchased clothes or shoes from a digital retailer. With hundreds of big-box retail stores having closed their doors for good, the fallout has opened the door wider for shoppers to spend money online.
It’s no wonder that emerging technologies, like AR, are finding a stronger niche in consumers looking for at-home retail therapy. This rising trend will transform the customer journey and decrease return rates, which has been a constant pain point for retailers.
The Right Fit: Expectation vs. Reality
We’ve all been there: those pants that looked great on the model chopped us in half in real life. Online shopping is a tug of war between expectation and reality. It can be fraught with uncertainty as we purchase clothes based on how we project ourselves onto a 2D image. But with AR, online shoppers can see whether those trendy harem pants or neon orange socks are bad ideas before buying them.
Augmented reality apps on phones and tablets allow users to scan a 3D image of their body and face, or take videos and photos of themselves to upload onto a retailer’s website. By capturing image data of a customer’s measurements, AR apps can reproduce an accurate silhouette of the user, making it easy to virtually try on clothes and find the perfect fit.
And it’s not just for clothing. Online jewelry retailer Kollectin’s app provides an augmented reality feature that lets customers try on jewelry through their device.
Need a pair of glasses but can’t make it out to a shop? Eyeglass maker Warby Parker’s AR app lets you try on frames before making a purchase. The glasses are rendered on a person’s face in live 3D, so potential customers can turn their heads to see how the glasses look from various angles.
Seeing how products fit go all the way down to your feet. Luxury brand Gucci’s Ace sneakers collection uses an augmented reality app that lets users see how shoes look on their feet just by pointing the phone’s camera down. The app tracks movements so customers can walk around to get a sense of style, just like what shoppers commonly do in brick-and-mortar stores.
In 2019, 100 million people used augmented reality technology to try on clothes and accessories while shopping for new outfits. According to market research firm IDC, the retail sector is expected to spend $1.5 billion dollars on AR/VR technology in 2020.
The Expensive Costs of Free Returns
One of the biggest financial downsides of e-commerce is returns. It’s a burden to the consumer, retailer and environment.
According to a Cornell University research team, online shoppers tend to practice “bracket shopping,” which is ordering multiple sizes and colors of an item with the intent of sending back the ones that don’t fit correctly or aren’t the right color. Fatma Baytar, Assistant Professor in the Department of Fiber Science and Apparel Design at Cornell, says that “bracket purchases increase shelving and shipping costs.” She’s hoping that AR tech, with its ability to help online shoppers accurately and confidently confirm size and fit, will be able to reduce these costs.
VNTANA, a 3D design company, found that AR decreases returns from online shopping purchases by 40%. And when online shoppers return 70% of the clothing they order, a 40% drop is significant. This would drastically help online clothing retailers like Revolve, which made $400 million dollars in net sales in 2017, but incurred $385 million in cost for returns.
A 2019 Consumer Report by customer experience platform Narvar shows that 48% of U.S. consumers bracket their online purchases, with Gen Z shoppers incurring the most costs at 71% and Baby Boomers the least at 36%. With numbers like that, bracket shopping is hurting retailers.
The environment is also taking a hit. Trucks delivering items to your house only to pick them up at a later date increases the amount of greenhouse gases emitted into the atmosphere with each trip. In 2016, for the first time since 1979, transportation overtook power plants as the number one producer of carbon dioxide emissions.
According to Sharon Cullinane, a Professor of Industrial and Financial Management and Logistics at the University of Gothenburg in Sweden, “the returned goods make journeys of thousands of miles” with most returned items not directly going back to a local store, but being shipped for processing in another country where labor is cheaper. Or worse, to a landfill.
With 3.5 billion products being returned each year in America, 5 billion pounds of those returned items end up in landfills. This waste pumps 15 million metric tons of carbon dioxide into the atmosphere.
A decrease in bracketing through AR fitting would not only save retailers money on return shipping, but lessen the negative impact on the environment.
In 2019, the London College of Fashion livestreamed its Womenswear Show in augmented reality. Broadcasting to each remote viewer’s smartphone made it seem as though the models were walking in the viewer’s own living room. With this technology, celebrity brand ambassadors can promote new clothing lines by appearing right next to a potential customer’s couch.
The fashion show is part of a growing trend: fashion advertisers are embracing AR to reach their audience with next-gen tech.
E-commerce fashion retailer Asos has been using an AR system to promote new products since last year. The “See My Fit” tool digitally fits models with new clothes, providing multiple images of garments digitally mapped onto the model with different sizes, cuts and fits to ensure product presentation is as realistic as possible.
Shopify found that when potential customers view products in AR, conversion rates increase by up to 250%. Global fashion brand Rebecca Minkoff reports that visitors on its site who interacted with a 3D model of an item were 44% more likely to add that item to their cart and 27% more likely to actually place an order.
Nike took AR advertising to the sky to promote its Air Max 2090 sneakers. As part of its mobile campaign, Nike urged customers to point their phones up to find an augmented reality cloud in the shape of the Air Max sneaker to unlock exclusive content. Luiza Baffa, Strategy and Business Innovation Director at digital agency AKQA, talks about the AR cloud advertisement:
For times like this, people are eager for something different. But most of the brands remain doing the same advertisement formula and delivering content in the same way as always. So we understood that we should surprise the consumer. How can we deliver content in a way that also responded to people's expectation on innovation and newness? And that was how the idea came. The interaction changes the way of how people connect and relate themselves with the content.
This wasn’t Nike’s only play in the AR advertising game. During the 2019 Christmas season, the sportswear giant ran its AR Gifting campaign where consumers could use their phones to shoot hoops in Nike’s Augmented Reality Basketball Game to unlock prizes, boosting NikePlus Membership and brand experience.
As AR technology evolves and gives consumers increasingly accurate renderings of digital objects in physical spaces, the greater benefit AR marketing can provide to brands. From clothing and accessories to fashion models and footwear, augmented reality has the potential to transform the shopping experience. AR can help retailers better connect to their customers and empower shoppers to make more informed and accurate purchase decisions.