AR effects on consumers: Augmented retail

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  Quantumrun Foresight
• June 13, 2024

Insight summary

Augmented reality (AR) is changing how people shop by letting them see how products look in real life before buying them, enhancing the shopping experience. This technology creates a more active and personalized shopping journey, increasing purchase confidence and deepening the connection between consumers and products. As AR becomes more common, it could also lead to challenges, such as impulsive buying and a digital divide, while offering significant business opportunities and requiring new governmental regulations on privacy.

AR effects on consumers context

Augmented reality is reshaping the consumer landscape by superimposing virtual items onto the physical world, allowing buyers to preview products in their intended environment. For example, a shopper considering a new sofa can use AR to visualize its appearance in their living room, assessing size, style, and color fit within their existing decor. This leap in visualization technology not only satisfies the desire for a tactile shopping experience but also significantly reduces the uncertainty associated with online purchases. Retailers like IKEA have pioneered this approach, allowing customers to virtually place furniture in their own spaces.

The influence of AR on consumer behavior is resulting in a notable shift from passive to active shopping experiences. AR transforms the shopping process into a dynamic, personalized journey by enabling a 'try before you buy' approach in a virtual setting. This interaction increases the likelihood of purchase by giving consumers confidence in their buying decisions, as evidenced by a 94 percent conversion rate for products viewed through AR (according to research by consultancy firm Deloitte). Furthermore, the technology fosters a deeper emotional connection between the consumer and the product by considering preferences and lifestyles. 

AR applications cater to the increasing demand for convenience, personalization, and engagement, setting new customer satisfaction and interaction standards. As the technology matures and becomes more widely accessible, its role in retail is expected to expand, making it a critical tool for businesses aiming to stay at the forefront of consumer trends. Brands' adoption of AR signals a shift towards more immersive and interactive consumer experiences, encouraging innovation and creativity in product presentation and marketing, especially among younger buyers who are digital natives.

Disruptive impact

AR can significantly reduce buyer's remorse by allowing consumers to visualize products in their personal space before purchasing, leading to more satisfied decisions and reducing the hassle of returns. However, this technology may also lead to impulsive buying behaviors, as the ease of visualizing products in one's environment can make purchases feel less consequential. Furthermore, the digital divide could widen, as those without access to the latest technologies or sufficient digital literacy may find themselves at a disadvantage, unable to benefit from the enhanced shopping experiences AR provides.

From a business perspective, AR presents opportunities for brand differentiation and deeper customer engagement while posing investment and innovation challenges. Companies that integrate AR into their online platforms can offer more engaging and interactive experiences, potentially increasing customer loyalty and sales. However, the need to continuously innovate and update AR features could place a significant financial burden on smaller businesses, risking market consolidation around larger players who can afford such investments. Moreover, companies may face privacy concerns and the need for new data management strategies, as AR solutions require collecting and processing detailed user information to create personalized experiences.

For governments, the rise of AR in retail requires the development of updated regulations and policies to address privacy, data protection, and digital equity. As AR technologies collect detailed information about users' environments and interactions, governments may need to introduce stricter data privacy regulations to protect consumers from potential abuses. Additionally, integrating AR into retail highlights the importance of digital accessibility policies, ensuring that all citizens have equal opportunities to benefit from technological advancements.

Implications of AR effects on consumers

Wider implications of AR effects on consumers may include: 

• A significant shift in educational content delivery, with AR providing interactive and immersive learning experiences.
• Urban planners adopting AR for public engagement in city development projects, leading to more inclusive and informed community feedback.
• Libraries and museums leveraging AR to offer enriched, interactive exhibits, attracting a wider, more diverse audience.
• Increased demand for AR specialists in the job market, driving higher education and vocational training programs in augmented reality development.
• Healthcare providers utilizing AR for patient education and surgical planning, improving outcomes and patient understanding of procedures.
• Environmental organizations using AR to visualize climate change impacts, fostering greater public awareness and action.
• Public transportation systems incorporating AR for real-time information and navigation assistance, enhancing passenger experiences.
• Real estate agents offering virtual AR property tours, reducing the need for physical showings and accelerating the home buying process.

Questions to consider

• How could AR technology change the way you shop for everyday items?
• How might AR applications in education enhance the way you learn new skills?