Death of the high street? What role will AR play in the future of commerce?

With Australian states in and out of COVID-induced lockdowns, one of the most disrupted industries the past 18 months has been retail, which has continued to suffer off the back of already challenging market conditions and increased e-commerce competition.

A new report, based on global research by shopping behaviour agency, Foresight Factory, and Snap (owner of social media platform Snapchat) has revealed consumer expectations on the future of retail.

The global report found that of the 1,500 Australians polled, 75% currently shop in-store at least weekly, with the social aspect in-store shopping brings being the main drawing point. A further one in three Gen Z consumers choose to shop in-store because it’s a chance to socialise with friends and family.

There is a conundrum posed by the gap in virtual retail options to support the 57% of Australians that would like to see increased COVID-19 safety measures imposed in stores, which highlights the importance of providing technological retails solutions, that can support virtual product personalisation and testing at the point-of-sale.

While most Australians still plan to do the majority of their shopping in-store in the coming year, sectors like fashion remain at risk, with 55% of 20-24s, and 43% of millennials likely to do the majority of their clothes shopping online.

However the research conducted has shown that in the absence of physical shopping, more is now being demanded of retailers, in order to emulate the in-store experience virtually.

In the past year, Australian shoppers spent $99.5 million on clothing purchases online that had to be returned because they didn’t fit. The report states that at least 31% of these purchases could have been avoided with the use of augmented reality (AR) technology.

While e-commerce has seen a major uptick since the start of the pandemic, 45% of Australian shoppers said that not being able to see, touch and try out products are detractors in shopping online, yet 44% who have used AR when shopping claim that it encouraged them to make a purchase.

With mobile now being the preferred retail channel for one in four Australians, AR will have a major role to play in the future of retail. The report states that by 2025, three in ten Gen Z consumers will be using AR. 57% of Gen Z consumers have also indicated interest in using AR to shop by 2025.

The barrier currently is the lack of investment from retailers in AR. As it stands, increased AR use could be seen as a detractor from traditional footfall, however the uptake would be seen as a more complimentary function of retail, to provide for those not as willing to shop in-store.

Retailers not planning on proactively and effectively engaging with AR could run the risk of not keeping up with consumer needs and expectations,  according to the report, missing out a the opportunity to push online sales over the line with enhanced virtual shopping experiences.

Meabh Quoirin, cofounder and CEO of Foresight Factory, said: “Consumers are demonstrating a clear desire for the human interaction that comes with in-person shopping, alongside the convenience and engagement of online shopping. ‘Connected shopping’ should be at the heart of brands’ strategies to drive shoppers back into their stores, as our study shows that when brands embrace technologies both in-store and online they could further strengthen and deepen their connections with consumers.”

Among Gen Z in Australia, more than a quarter said they would prefer to try out furniture, clothes, beauty and luxury products with AR rather than going to the store.

Kathryn Carter, general manager, ANZ, SEA & HK at Snap Inc. said: “There’s no doubt it’s been a tumultuous year for Australian retail. As we look to the future, consumers are demanding a mixed retail experience with all the benefits of online and in-store shopping. Retailers who meet consumer demands and offer convenience, social interaction, product proximity and personalised shopping experiences, will continue to see growth, especially with young shoppers.”

While uptake in AR has been slow, there are increasing examples of its use in Australian retail in the past year.

Last month, Big W partnered with Verizon Media’s RYOT Studio to create a new way for Australian’s to shop its annual toy sale, Toy Mania using AR. This was a first for Big W, partnering with RYOT Studio, allowing consumers to virtually interact with the products from their own homes via mobile devices.

Google Australia worked with Emotive to deliver a new feature starring a series of Australian animals via augmented reality in November last year.  The launch film was shot entirely on mobile phones and allowed Aussies to get up close with a koala, kangaroo, quokka, wombat, platypus, emu, kookaburra or echidna.

In the same month, Australian-based activewear clothing label P.E Nation created a custom-built AR) changing room ahead of the launch of its latest collection.

A report from Nasdaq last week predicted that 95% of purchases will be made online by 2040, yet 71% of consumers say that purchasing in store is still their preference. A follow-up report by
TBWA\Worldwide’s cultural intelligence unit, Backslash looked at why eradicating in-store shopping may not be the answer, and how the relationship with the in-store experience is changing.


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