New realities in retail: How 3D and AR is transforming your favourite store
By: Kate Wilson, Dan Burgar
Tags: Startup, Technology, Retail, Augmented Reality, Shopping

By Kate Wilson and Dan Burgar

Imagine taking a walk on Saturday afternoon, four o’clock, in your downtown shopping district.

It’s quiet. The streets would usually be bustling, but now there are fewer customers carrying store-branded bags between locations. Some destinations have reopened, but many are still boarded up, slats of plywood covering storefronts from luxury outlets to sneaker shops. Each papered-up window is a reminder of the COVID-19 pandemic and its effects on the retail industry.

Across North America, shoppers are turning to online orders to buy their products. National postal services have seen a significant increase in parcel volumes; so many that the number matches those sent during the Christmas surge — minus the wrapping paper. But although the pandemic has acted as a catalyst for online shopping, it’s part of a continuing trend.

The online sector has slowly been eating up the percentage of sales from retail stores. Virtual shopping’s total share of the global market has doubled between 2015 and 2019, with the US Department of Commerce reporting that online retail sales overtook general merchandise stores in the country for the first time in February 2019. As customers have turned to their web browsers, shop vacancies are on the rise around the world, with big brands deserting even New York’s Fifth Avenue.

The high street has been forced into a period of transformation. Now, forward-thinking companies are finding ways to adapt.

Bernhard Lang / Getty Images

New realities in retail

In 2019, Charles Bergh, the CEO of Levi’s, proclaimed that stock sizes for clothes would be gone within a decade. Body scanning and made-to-order items would replace the letters and numbers found on the labels of clothes, and products would no longer be found by scrolling through images or browsing shop floors. Instead, customers would select their products — a pair of shoes, a new coffee table, a snapback hat — and customize it to their own specifications. These clothes or items would be tried on or placed within a virtual scan of their room, all without leaving the couch.

Using 3D modelling and augmented reality (AR) — a technology that places computer-generated images onto the real world — Bergh’s vision is already possible.

One of the first sectors to take advantage of the nascent technology was the furniture industry. Leading retailers like Wayfair and IKEA invested early into 3D and AR, allowing customers to physically visualize their products inside their spaces. For Shrenik Sadalgi, the Director of Research and Development at Wayfair Next — the arm of the furniture giant that uses technology to make shopping more seamless — adding the two technologies to its sales arsenal was an obvious choice for the company.

Wayfair’s customers can take advantage of two AR experiences. The first, View in Room 3D, lets users place an accurately-sized piece of furniture into their room, twist and move it in the space, and even walk around it in real time. Room Planner 3D goes further, allowing customers to visualize the piece of furniture in their home even when they’re on the go.

“We’re letting customers capture the space first,” Sadalgi says of View in Room 3D. “So you take a photo, and that photo is a very piece of rich information about your room. At a later point in time — maybe you’re on the subway, or maybe you’re at a friend’s house or whatever — you can pull up your room, and then you can add furniture as if you were there. So you don’t have to actually be in the space to plan your space.”

It’s not just homeware companies that have embraced the digital option. Augmented reality has found a natural fit in the beauty industry, and like major furniture retailers, bigger brands have been using the tech for several years. The experiences they offer continue to be refined as the technology improves. Leading players like L’Oréal, Sephora, Procter and Gamble, and more have been honing their version of the AR over time, offering customers a more interactive shopping experience.

For Lynda Pak, Senior Vice President at beauty powerhouse Estée Lauder, AR lets shoppers gain a familiarity with many of the products within its portfolio of 29 brands.

“AR is becoming a way for a consumer to be able to engage with a beauty advisor or makeup artist,” she says. “It may be tied in with, let’s say, a digital consultation. But if the consumer wants no live consultation whatsoever, she or he can just try the various shades on their own as well.

“The AR experiences that we have right now are really around virtual try-on for makeup,” she continues. “That encompasses eye, it encompasses foundation, it encompasses lip, and we also have skin diagnostic capabilities. The calibration that we’ve done is able to note if you’ve got some dry patches or red flares, or if you’re looking a little tired — it will highlight some of those skin concerns. When we go into haircare, we’re able to view the scalp and the condition of the hair close to the scalp, as well as further down to the ends. You’re able to see what you look like as a blonde, of what you may look like with an ombre. It’s a great way to get a sense of what the shade will look like.”

In both of these industries, as well as a number of others that rely on customization or fit, consumers are beginning to shop differently. Companies like Facebook have invested heavily in online transactions, encouraging more purchases in the digital realm. Instagram now boasts its Shopping and Checkout options to allow businesses to advertise and complete transactions through the app, offering an alternative to website- or brand app-based shopping platforms — all with a potential customer base of over a billion. As buyers continue to explore new ways to make their shopping decisions, brands are increasingly focusing on how they present their products digitally.

Ion Şipilov / Unsplash

Making the digital feel physical

Changes in retail have always been tied to developments in technology. The advent of the postal service inspired mail-order catalogues. Televisions created shopping channels. The internet ushered in the possibility of online shopping, and mobile phones — with their cameras — have been the launch pad for AR and 3D. Each leap creates more opportunity for shoppers to see the product how it really is — as if it was already on their body or in their homes.

In his role of Vice President of Product at 8th Wall — a company whose platform lets developers create and publish AR content to the web — Tom Emrich has seen first-hand how AR helps increase the realness of products.

“I think the near future is this spatialization of the web — the 3D-ification of the web,” he says. “2D content reaches its limit when we would benefit from being able to see all sides of a product. That’s compounded by augmented reality, and the ability to place that object into a physical space so that you could actually walk around it, maybe put it in your hand, put it on your face, put it in your room, and be able to try it on just as you would in a physical store. And even more so because within a physical store, you don’t have the luxury of being able to literally see what a couch looks like in your living room.”

Augmented reality works so well, he suggests, because sight has evolved as humans’ most important sense, and AR plays with our visual perceptions. Using a few taps or swipes, AR helps customers literally see the store inside their home — including the people who work there.

“[AR is] not just about helping you with the purchasing decision,” Emrich says, “but also to help ensure that you have satisfaction with the product, and that you’re able to understand how to either use the product or put the product together as well. So being able to use AR to provide instruction — whether that be on how to connect a router or put furniture together, or even using face filters to instruct on how to do a makeup look — that can help decrease the chances of you returning it. All of these types of ideas start to bring another physical aspect to AR, which is like bringing the salesperson and the sales support into the home.”

The visual nature of AR has translated into better sales. Across Estée Lauder’s brands, for instance, people who use its augmented reality offerings stay on the site for about twice as long — a move which has led to an uptick in completed checkouts. At Wayfair, the company has found that those who use their 3D and AR experiences are 3.4 times more likely to buy that product.

But though shareholders might rate the success of the tech based on the bottom line, a more accurate measure of its success is the amount of people using the feature, and how long they spend interacting with it. With attention becoming the currency of the future, AR and 3D visuals are slowly winning the battle. Snapchat, for instance, reported that the time spent with their AR lenses was up 25 percent since March of this year. Insight-focused firms like Deloitte, too, have evangelized about the topic, with its back-to-college survey reporting that 10% of consumers plan to use emerging technology more as part of their upcoming shopping journeys than in the past. While that may not sound like a large increase, the report notes that historically almost no one has said they planned to do so.

“The engagement is probably the number one thing that people should be thinking about right now in order to invest in this technology,” Sadalgi says. “Conversions? That stuff is kind of secondary, I would say. Because if you if you do it right, that will happen.”

“The longer you’re with that product, the higher the chances that you’re going to purchase that product,” Emrich agrees. “I believe that it actually brings the user further down the purchasing funnel. When it’s on an online page, it’s still not their product. It’s a piece of inventory on that online shop. But when you place that couch, or you put that pair of glasses on, or you put the art on your wall, there’s a small sense of ownership already. Because you’re visualizing it as part of your life. It’s making the digital feel physical.”

Jarmoluk / Pixabay

The future of brick and mortar

Despite AR’s power to capture shoppers’ imaginations and wallets, the technology’s success doesn’t spell the end of the retail store entirely. Instead, as consumers’ behaviour continues to change, shops must find new ways to adapt.

Stores have always been a place for people to gather and congregate, and despite AR’s best efforts to recreate texture and feel, it’s the only place that buyers are able to wrinkle a material or hold the weight of a lipstick case. Shops offer a no-strings approach to testing products: unlike online purchases where the onus is on consumers to send something back if they don’t like it, visiting a physical location gives the opportunity to walk out without buying anything if the product is disappointing.

But with rising commercial real estate costs and lower foot traffic, shops in 2020 are continuing to shutter across North America — a trend that has been on the rise for several years. More than 9,300 closings were announced in the US alone in 2019: a new national record.

In order to maintain their physical stores, retailers need to devise new ways to entice shoppers in.

“I think that shopping in malls is going to evolve into something else,” Sadalgi says. “You’re not going to go in and walk out and grab some things. You’re going to go there because you’re going to get an experience. And that experience is going to be tailored to you.”

“People love brands,” Emrich agree. “The brands are an expression of who they are. They collect brands, they wear brands, they buy brands, they talk about brands — it’s a way for us to be able to communicate who we are. I do feel that the store will always be something that will exist, but that store may just be about getting to know that brand; about getting to know the designer.”

Integrating 3D and AR into stores

To get around this issue, businesses aren’t just using 3D and AR for online shopping. The same technology is engaging high street shoppers in person.

Take, for example, Estée Lauder. From the get-go, the brand added its AR tech into its own shops and department stores. Providing dedicated devices and iPads for customers, walk-in shoppers can test out the company’s skin diagnostics as well as trying on different shades of makeup and hair products. When they find the one they like, they can take it immediately off the shelf, rather than waiting for a package to arrive from an online order.

“It’s really an engagement tool with our skincare specialists, makeup artists, and our haircare artists,” says Pak. “It was a way to continue to facilitate the conversation about what your own concerns were, and how we could compare that with what we were seeing with our AR capability as well. In the stores we also make sure that we have very specific makeup lighting, so that it could that be the shade is a little more accurate [using the AR tool] — and that’s really important, because when you take it home and you try it on, we want to make sure the consumers are happy.”

Credit: Estée Lauder brands

Augmented reality also offers new ways for creative engagement in physical locations. Last year, AR leader Snapchat teamed up with LEGO Wear to create a clothing store — but the shop had nothing in it. Instead, the brands swapped the traditional retail model for an AR pop-up partnership to promote LEGO Wear’s first limited-edition clothing line for adults. Shoppers scanned a Snapcode (a Snapchat-specific QR code) and found themselves in a virtual shop complete with an interactive DJ booth, LEGO bouncer, arcade machine, and LEGO’s new apparel.

“One of the things that we’ve seen with augmented reality is that you can bring a store to life using the technology,” says Emrich. “Which means that you don’t need to invest too much decor. I think Snapchat and LEGO Wear was a really good idea. That marriage between the physical and the digital bring a store to life in ways that you would never be able to do with physical merchandise and physical decoration, because the budget would be too much.

“It’s really like the Goldilocks porridge, what we’re creating,” he continues. “We’re now going to be getting the best of both worlds in our shopping experiences. We’ve talked a lot about online, but it also goes the other way — where brick and mortar will also see some benefits from AR and 3D as well.”

Limitations of AR and 3D

Like all new technologies, though, AR and 3D comes with a fresh set of challenges for the businesses looking to use them. While the images offer a way to engage customers beyond traditional shopping methods, there are constraints that are restricting the widespread rollout of the technology.

These difficulties typical stem from the images of the product, and for Sadalgi, the biggest issue is creating the uniformity of the designs. At the moment, there are no standard guidelines of how to create 3D and AR images for retail products, which makes it harder for businesses to reliably present their merchandise.

“One challenge is that [there are] a lot of platforms,” he says. “So basically, you need this kind of ubiquitous asset of sorts, where if you have a coffee table, that same coffee table shows up on all these different platforms — like Android or iOS or the web. And we want to make sure that whenever it shows up, it shows up in the exact same colour, the exact same quality.”

Another problem, Pak adds, is the way that the product images are created. Many companies designing the likenesses use techniques and technology from the gaming industry, creating AR and 3D pictures that have similar appearances. For a number of Estée Lauder’s brands, that style is not appropriate.

“It seems a little more like gamification [in terms of the style of the asset],” she says. “That may be okay, but for our brands, especially some of our luxury brands, we don’t want that feeling. That’s not on-brand for us. I think that some of the other luxury prestige beauty brands would feel the same way.”

Ultimately, though, the greatest stumbling block for the adoption of the technology across the sector is price.

“It is still extremely cost-prohibitive to make it feel so real,” Pak says. “I believe that you can make it so beautiful. However, it is not cheap. Fortunately for companies like ours, we can make those types of investments, but I think that retail as a whole — where the average retailer is not large — it’s a very expensive proposition. Until it becomes so ubiquitous, the supply is very low in terms of the individuals who can develop that content and render it in the form factor […] I have attempted multiple times to try to get the sleekest on-brand pilots out, and you know, sometimes the cost is just really prohibitive.”

Credit: M-XR

New customer choices

Despite those limitations, 3D and AR continues to creep into retail. As an increasing number of companies specialize in creating product images, the costs for stores are beginning to come down, and industry working groups such as Khronos are in the process of developing industry-standard guidelines for creating product likenesses.

Those developments are being reflected in the type of companies using the tech. As 3D and AR becomes more established, the technology is being used to sell increasingly high-value items. As well as fast fashion, mascara shades, or coffee tables, AR is becoming progressively more important for customers to view inventory in the automotive industry, where cars are purchased for tens of thousands of dollars. The technology, too, has found a niche in the art market. Leading online gallery, Saatchi Art, recently launched a web-based AR feature named View in a Room, which lets customers view over a million works of art in their home before buying.

From high street stores to bespoke galleries, the upswing in users of the technology implies that AR and 3D will become increasingly integrated into shoppers’ purchasing experiences — a reality that will be compounded by hardware that’s currently in development. Apple Glass — a pair of smart eyeglasses that projects augmented reality visuals that overlay onto the real world — is rumoured to be finalized in 2021, with technology that will bring information from your phone to your face. Offering a more natural way to view 3D renderings and images in the real world, Apple Glass will likely help propel AR purchasing after its release. Facebook, too, is racing to complete its own version of AR smartglasses that are able to integrate with its software — a move that will allow it to showcase products from its Instagram Shopping and Checkout options in augmented reality. Other businesses are throwing their support behind the technology, with Facebook partnering with Rayban to ensure a fashionable look to its glasses.

With AR beginning to rise in popularity, startups that create digital products and design interactive experiences are thriving. Companies like Shape Immersive have built whole business models on helping retail organizations integrate 3D and AR to grow sales, improve operations, and make online shopping exciting for consumers.

As physical locations move towards adapting their business, and with soon-to-be-released hardware enabling a more intuitive use of the technology, Emrich believes that AR will become ubiquitous wherever we choose to shop — whether in store or online.

“Those that already see where we are going are beginning to invest in updating their website to make 3D and augmented reality an important tool — just like they’re using photo, gifs, and video, or prioritizing having a mobile-optimized site and a regular desktop site,” Emrich says. “Within the next five years, I think we’re going to see that having AR and 3D on your dot-com and beyond will be mandatory.”

Originally published by TechCrunch, Dec 10, 2020: https://techcrunch.com/2020/12/10/despite-limitations-3d-and-ar-are-creating-new-realities-in-retail/