Last month at CES, among other honors bestowed on innovations was a “smart mirror”, one of the many immersive technologies revolutionizing the retail industry. These technologies are blending virtual reality, augmented reality, artificial intelligence and other digital neurometric integrations, and there are signs of rapid adoption across all categories, especially in the highly competitive world of luxury retail.
There are many examples of immersive tech manifesting itself in pilots and installations in brick-and-mortar as well as online retail channels, as brands and retailers strive to increase sales and drive brand loyalty. These technologies don’t necessarily come cheap though. It is important therefore to examine these through a behavioral framework and consider the pitfalls brands should watch out for when considering their own immersive investments.
Despite the costs, there is a clear reason for brands and retailers to invest in immersive engagements. In increasingly competitive retail environments, it is imperative that brands deliver memorable experiences for customers – ultimately going beyond customer satisfaction, to influence shopper behavior that results in sustainable customer loyalty and drives brand growth. Behavioral Sciences tells us ensuring there is a ‘peak’ emotional moment in every experience as well as a memorable end can be very effective in achieving this goal.
Take for instance LVMH Guerlain’s Mindscent - a new experience created to help clients find their ‘perfect scent’. Boutique visitors are invited to put on a neuronal headset, then asked to blind test different fragrances along with a few questions. The sensors in the headset can detect and analyze the customer’s emotional reactions to ultimately recommend a personalized ‘perfect match’ perfume. Launched last October at the brand’s flagship store in Paris, the results were so promising that there is a worldwide roll out planned for 2020.
Swarovski’s Crystal Studio uses multiple immersive tech elements to reinvent the store concept entirely. Digital touchpoints allow consumers to interact with the products, create their own looks, experience “virtual try on” and get inspiration or connect with other shoppers via social media. The company’s CEO, Robert Buchbauer, has described the initiative as an attempt to give consumers “…a glimpse into our sparkling world in store. We wanted to break the traditional distance between staff and consumers, facilitating an interactive and continuous dialogue between them.”
The immersive tech in virtual “smart mirrors” also helps address frustration that fashion shoppers encounter waiting for the fitting room. By superimposing outfits on shoppers’ images in the glass, and even enabling the augmented image to be shared with friends on social media, shoppers consider and buy, without ever actually trying the apparel. Retailers like Zara and Saks Fifth Avenue are piloting installations that can also suggest other items that consumers might like to consider and add to their purchases.
And these are not gimmicky fads: according to a recent industry study from Market Insight Reports, the global smart mirror market is predicted to grow at a CAGR of 10%-15% by 2023, anticipated to reach $1.2bn by 2022, from an estimated value of $386.8m in 2015.
Other applications of immersive technology are transforming online shopping as well. Leading furniture retailers like IKEA, to upscale boutiques like Magnolia Market, offer the ability to see how a product looks in your own room; eyeglass manufacturer Warby Parker enables a virtual “try on” of their frame designs through their website; and a Lacoste app allows users to try on shoes virtually through clever use of AR.
These examples have a common objective – to elevate the consumer experience, beyond satisfaction to a state of happiness. Depending on how technologies are deployed, immersive retail can not only streamline the shopper journey to alleviate pain points but can also ideally enable memorable peak moments that drive engagement with your brand.
There are however, three main cautionary watch outs brands and retailers must consider when introducing new tech services if they want to achieve this goal.
First, the technology must work properly, and ethically. This is table stakes. While it may seem obvious, a memorable experience can turn negative rather quickly if apps don’t download, AI serves up illogical recommendations, or interactive displays in store simply malfunction. And the complex rules of privacy need to be factored in, particularly where personal data is being captured, stored and referenced later, either by the consumer or the brand.
Second, the human factor needs to be central to the design of the experience so that it gets adopted by consumers. The technology will only be valuable if it gets noticed, it is easily understood how to use, and it adds value to the experience rather than only novelty. Habits have a strong influence on how we shop, and consumers will embrace the technology or service only if it makes the shopping experience easier, and the resulting experience must delight them as well. If that formula works, these immersive experiences will be what consumers expect and rely on.
The final challenge for the application of immersive technologies in retail, which can be very expensive, is measuring the ROI of these increasingly sophisticated experiences.
Today’s most commonly deployed loyalty measurement systems have limited value in calculating ROI for the new “Immersive Retail”. They focus on customer satisfaction alone and prescribe corrective action first and foremost, instead of measuring and calculating the effect of the emotional triggers. As a result, they struggle to capture the added value of the investment in these technologies and tools, or control the risks associated, in the increasingly important metric of emotion.
Ultimately the industry needs new measurement systems that are behavioral, observational and contextual, in order to identify ways that new technologies contribute to emotional peaks in retail. Beyond simple satisfaction, we must move towards a holistic measurement system that places greater attention on the human behavior behind shopper choice, which in turn will allow brands to develop immersive experiences that put the consumer at the center, make peak and end emotional moments a KPI, and directly impact the bottom line.
Lauren Davitt recently joined PRS IN VIVO, a global shopper and product experience consultancy, as Vice President of the Luxury practice in the US.
At PRS IN VIVO, particularly in our Luxury practice, we help brands to understand the ROI of these new tools by making the measurement tools more human, through the integration of behavioral and happiness sciences.
She can be contacted at Lauren.Davitt@prs-invivo.com