How are immersive technologies being used in retailing Augmented and Virtual Reality in Retailing February 2017
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1 How are immersive technologies being used in retailing Augmented and Virtual Reality in Retailing February 2017 Edgar, Dunn & Company, 2017 Version 1.0
2 Introduction to immersive technologies Immersive technologies refer to all forms of perceptual and interactive technologies that blur the line between the physical world and the digital world, creating a sense of immersion for the user We have multiple methods of sensing our environment: sight (visual), hearing (audio), touch (tactile),taste (gustatory), and smell (olfaction). Recently, retailers are piloting visual immersive solutions (i.e. virtual reality and augmented reality) Retailers have embraced visual immersive solutions (i.e. virtual reality and augmented reality) for sales, marketing and product development; leading to enhance customer experience and increase brand awareness Augmented reality (AR) is the blending of virtual reality and real life in real time. With AR, users can see and interact with virtual objects in the real world, being able to distinguish between the two Virtual Reality (VR) is the creation of a digital world where the user is fully immersed in from a visual perspective. In other words, VR is able to transpose its users to another place Both technologies have the ability to alter our perception of the world but they differ in how we perceive our presence. VR creates a totally artificial environment (it moves our presence to elsewhere), while AR uses the existing environment (it does not move us elsewhere) and overlays new information on top of it New technologies to achieve different senses are expected in the future Confidential 2
3 Leading retailers around the world are piloting AR & VR Confidential 3 This is not an exhaustive list of retailers around the world using immersive technologies
4 Examples of what s happening in North America Retailer Retail Segment AR or VR Integrated Payment Apparel VR Not yet Apparel AR Yes Apparel AR & VR Yes for AR only Eyewear AR Not yet Apparel AR Not yet Furniture AR Yes Confidential 4
5 Tommy Hilfiger introduced a virtual reality shopping experience at selected stores to watch Fall 2015 Hilfiger Collection runway show Tommy Hilfiger introduced in 2015 a 360 degree VR shopping experience at select stores around the world to watch its fall 2015 catwalk show held at New York s Park Avenue Armory To capture the all-around image, Hilfiger worked with WeMakeVR, a start-up based in Amsterdam, which used a special 3-D camera to capture an image with no blind spots Shoppers used, as we can see in the image on the left, a Samsung GearVR headset that let them feel as if they were sat on the front row of the runway Confidential 5
6 Converse allows its customers to try shoes on using their sampler iphone app that uses AR Converse Sampler iphone app uses Augmented Reality technology Customer can select any shoe from the Converse catalogue and simply point the phone towards his/her foot to see how the (virtual) shoe will look wearing it The app allows its users to save the image on their phone and share it on social networks The sampler app also supports purchases, so the customer can have the full retail experience of shopping, trying on shoes and making a purchase, all through the power of AR Confidential 6
7 Rebecca Minkoff leveraged virtual and augmented reality technologies during its Fashion Week event in September 2016 Rebecca Minkoff leveraged virtual and augmented reality technologies during its Fashion Week event in September 2016 This way, thanks to VR, consumers could feel as if they were right there, sat on the front row of the catwalk and additionally, thanks to AR shoppers were able to see how Minkoff s newest line looked on their own body The AR experience was provided through Zeekit app, which allows its users to upload a picture of themselves within the app and then pick out clothing items from the show. These items are overlaid by the app on customers body, allowing them to see how these clothing items would look. Zeekit app supports in-app payments The VR experience was provided via headsets. Rebecca Minkoff, as we can see on the below images, is selling its own headset REBECCA MINKOFF VR HEADSET Confidential 7
8 Moosejaw has created a product catalogue app using AR to visualise what the catalogue models are wearing underneath The Moosejaw X-Ray App is an augmented reality experience designed to work with the Moosejaw Winter Catalog (print and digital versions) The app allows its users to see what the catalogue s models are wearing underneath The use is very friendly; the X-RAY scanner is activated by aiming the device s camera at pages in the catalogue Confidential 8
9 FramesDirect.com allow its customers to try on a pair of glasses through an AR tool installed on its website FramesDirect.com has incorporated an AR tool on its website that allows customers to try on as many pair of glasses as they would like Customers can upload their own photo to the website and see how they will look wearing different pair of glasses This AR tool helps FramesDirect.com to complement its only sales channel: the WEB, as it contributes to eliminate the customers indecision pain point Confidential 9
10 View my room, an AR feature incorporated by Houzz into its mobile app View my room is a new AR feature incorporated by Houzz into its Houzz mobile app, which can be downloaded from Google Play and App Store View my room allows its users to virtually place products from Houzz Shop in their home, so customers can get an idea of how these products would look The app also enables to take a picture of the product in their room to create a sketch, which is saved to an ideabook and can be shared on social networks Additionally, it supports in-app payments and is compatible with Apple Pay Confidential 10
11 Examples of what s happening in Europe Retailer Retail Segment AR or VR Integrated Payment Furniture AR Not yet Apparel AR Yes Confidential 11
12 Ikea has created a product Catalogue App using AR to visualise furniture in the customers home Ikea catalogue app incorporates AR and is available on mobile devices (i.e. mobile phones and tablets) running ios or Android The app using AR allows customers to see how Ikea s furniture would look like in their own home It is possible by scanning the physical catalogue with the smartphone; Ideally, customers should place the catalogue in the room they want to decorate, as it helps to set the scale Once customers have scanned the catalogue, then select the items that they want to virtually add to the room and they appear at the correct size, enabling customers to get an idea of how they would look Confidential 12
13 Visa in partnership with Blippar has introduced an AR payment app in collaboration with House of Holland Visa in partnership with Blippar has introduced an AR payment app in collaboration with House of Holland The app was introduced in June 2016 at London Fashion week The app allows customers to take a picture of a shirt, which is identified by the technology. Then, customers can select their size and number of items desired The app also allows to complete the transaction with a pre-registered payment card. The order is delivered next day to customer s home Confidential 13
14 Examples of what s happening in Asia Retailer Retail Segment AR or VR Integrated Payment Beauty AR Not yet Mass Merchandise VR Yes Confidential 14
15 Shiseido is using a AR to create a Cosmetic mirror, an in-store tool that allows its user to try on make-up and a AR Telebeauty app Augmented Reality Cosmetic Mirror Augmented Reality Telebeauty app The Cosmetic Mirror is an AR tool used in-store by Shiseido to engage their customers Telebeuty is an AR app developed by Microsoft Japan, Skype for Business and Shiseido The AR cosmetic mirror scans the user s face. The digital make-up is applied instantly; customers can try on as many products as they like The app is targeted at women who telecommunicate from home and its aim is to reduce the pain point of their appearance in teleconferences It also allows to take pictures and compare them Women use the app by selecting one of four palettes: natural, trend, cool, or pretty, before entering the teleconference call Finally, the customer can print out product recommendations for purchase The app then scans the user s face and adjusts her skin tone, superimposing a kind of digital beauty balm that blurs pores, dark spots, and pimples Confidential 15
16 Alibaba allows its users to enjoy a full VR shopping experience with Buy+ The Chinese e-commerce giant, Alibaba, offers a full VR shopping experience with Buy+ Buy+ is set to offer customers a 360- degree panoramic view of products during the online shopping process in a customised in-store environment Buy+ requires a VR headset or a cardboard VR headset and smartphone combo Buy+ is integrated with Alipay (the most successful digital wallet in China), allowing users to make a payment without the need to remove the headset to check-out Confidential 16
17 The use of VR and AR by retailers is transforming how people shop The use of VR and AR by retailers is starting to transform how people shop. One customer might try on shoes without having to go to the store (see Converse as an example). Another might order furniture in the store and being sure about the furniture s size and colour and matching it with their home (see Ikea as an example) The main use of AR by retailers is to facilitate the online shopping experience by offering a better service and eliminating customer s pain points, such as time contraction or indecision, and providing an enhanced pre-purchase experience of the product Within the online shopping experience, there is a focus on the fashion segment and the furniture/home segment, although other companies from other industries, such as Alibaba (mass merchandise), GAME (gaming) or Shiseido (beauty) are also using AR AR elevates customer service and creates a differentiated and personalized customer experience, which will subsequently lead to customer satisfaction and customer retention These technologies are more likely to be embraced by millennials and younger generations due to the fact that they are tech-savvy, while older generations could be more reticent to adopt them Confidential 17
18 Lowe s has developed Holoroom using VR to allow its customers to see a virtual recreation of their remodelled kitchen or bathroom Lowe s Holoroom is a mobile virtual reality design and visualization tool that let customers experience a virtual re-creation of their remodelled kitchen or bathroom to see what the finished project would look like and to select from myriad alternatives they might not have been aware of, widening selection and eliminating guesswork It combines YouTube s 360-degree video capabilities with Google Cardboard so customers can take their virtual kitchen or bathroom designs home to share them online or make further revisions to the design Confidential 18
19 Edgar, Dunn & Company is a strategy consulting firm with a global experience of and expertise in payments International experience of and expertise in payments since 1978 with projects in more than 30 countries every year Independent consulting firm working for all the payments industry and the whole value chain: merchants, issuing and acquiring banks, payment networks, vendors, regulators, etc. International consultancy focused on payments Full range of strategy consulting services (corporate strategy, marketing, product, distribution), M&A support, RFI / RFP, benchmark, product development, etc. A multi-industry approach : B2B, travel, e- commerce, retail, mobile payments, issuing, acquiring, etc. We deliver actionable strategies, measurable results and a unique blend of global perspective and local market knowledge for clients in over 30 countries Office locations Shaded blue countries represent markets where EDC conducted client engagements Confidential 19
20 Contact the Head of Retailer Payments Practice for more information Mark Beresford Director Edgar, Dunn & Company Candlewick House 120 Cannon Street London EC4N 6AS Mobile: Tel Fax Confidential 20
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