Immersive Retail
Retail | Immersive Technology | Research
This project documents my Master’s Thesis, with research based on diverse demographics in India and Germany.
The objective of this thesis is to analyse the impact of Augmented Reality on consumer behaviour and retail outcomes, examining psychological factors, experience design, and strategies for enhancing engagement, satisfaction, and revenue while ensuring data privacy and sustainability.
My Approach
01.
Secondary research
Industry Overview
Academic journals
Online databases
Case studies
Statistics and other data
02.
Research plan
Setting an objective
Analysing secondary sources
Planning primary research activities
03.
Primary research
Online Survey (96 participants)
Observation study (2 participants)
Interviews (1 participant)
04.
Data Synthesis and insights
Data clustering
Identifying trends and insights
Strategic recommendations
Proposing consumer journey
Industry Overview
I conducted comprehensive desk research on the Indian and German markets. The aim was to gain insights into the latest innovations and trends in social media, product and technology advancements, market demographics, emerging consumer profiles, and strategies employed by international brands in the Indian and German market.
In 2023, online retail sales of clothing in Germany amounted to
€14.6 billion
Source: Statista
In 2023, the revenue generated by the e-commerce market in India amounted to about
€47 billion
Source: Statista
In-store vs. Online Shopping
In-store Shopping
Customers being able to touch, feel, and try on products
Store atmosphere: environment, lighting, music
Assistance from store staff
Shopping with friends or family, receiving instant feedback and gratification
Store displays, events, sales, etc.
Online Shopping
Convenience and flexibility of shopping from anywhere
Access to customer reviews and ratings
Avoiding crowds and saving time
More variety and better prices
Easier return/exchange process
Privacy while shopping
Existing AR and VR integrated shopping experiences
Real-world examples of integration of immersive technologies in the retail environment highlight the diverse ways that these innovations have transformed the buying experience and resulted in a shift in people’s buying habits. These innovations are providing practical solutions and filling the gap between online and in-store shopping experiences. Customer engagement and brand visibility through social media have opened new avenues for marketing and sales initiatives.
The integration of immersive technologies, such as augmented reality (AR), has significantly transformed the traditional retail experience. Retail giants like Amazon and IKEA use AR to help users visualize products in their homes. Beauty brands like L’Oréal and Sephora offer virtual try-on features, and sportswear brands Nike and Adidas enable users to virtually try on sneakers. Luxury brands are also adopting these technologies, with Tiffany & Co., Chanel, and Burberry enhancing customer experiences through AR. Car manufacturers like Hyundai and Audi use AR and VR to provide virtual car tours and customizations. Social media platforms like Instagram play a crucial role in this transformation, with popular AR filters used by brands such as Disney, Gucci, and Nike to engage customers and increase brand visibility.
Understanding Users
Generational Differences
25%
Gen Z (14 - 27 years old)
31%
Gen Y (28 - 42 years old)
26%
Gen X (43 - 57 years old)
These numbers represent German consumers who shopped online several times a month in 2023
Gen Z consumers are reshaping the retail landscape with their preference for authenticity, individuality, and technology-driven shopping experiences.
Millennials are focused on convenience, personalization, value, and sustainability in their purchases.
Both generations are resonating with brands that prioritize emotional connection, quality storytelling, and sustainability, paving the way for a new era in retail.
Geographical Differences
Large novel marketplace for brands and retailers
Rise in disposable income leading to more quick-commerce brands
Most number of digital payments worldwide
Clothing and footwear are most ordered items online
India
Mature marketplace that values locally sourced and sustainable products
Consumers value quality and durability
Consumers prefer to buy unique high-quality goods at lower prices from second-hand or thrift stores
Rapid shift towards online shopping post the pandemic
Germany
Source: Statista
Understanding Technology
Advantages & limitations of AR and VR
“Trying on a new spectacles frame or a dress on such a platform always comes with a risk of revealing important information or even your identity to the platform which could also be misused. This fear is backed by the recent trends where fake videos and images can be created very easily using AI tools.”
— Apoorva, India
“
“Wrong dimensions many times. Also the lighting of the 3d model is poor and the product looks unattractive.”
— Gerry, Germany
“
“AR definitely helps to take an informed decision when you visualise certain product on yourself or in your space providing clarity, just like in a physical store! It also helps to take a screenshot or snap and share with my family before purchasing anything!”
— Puja, India
“
“Slow experience while using AR on older devices/bad internet connection (especially Instagram filters).”
— Avani, Germany
“
Understanding Impact
Research Insights
Consumers' preferences for AR experiences vary based on factors such as age, location, personal choices, trends, and technological proficiency. Therefore, retailers need to tailor AR experiences to diverse demographics to ensure inclusivity and accessibility.
The study found that AR applications significantly enhance the shopping experience by offering features such as virtual try-ons, real-time customization, and immersive storytelling. These features lead to a more personalized and engaging shopping experience, which can positively influence purchasing decisions.
Successful implementation of AR strategies can help retailers stay ahead of competitors, drive revenue growth, improve operational efficiency, and promote continuous innovation. By providing seamless and memorable shopping experiences, retailers can enhance customer engagement and loyalty.
Strategic Recommendations
-
Applying experience economy framework
Gamification in shopping
-
Personalised shopping
Inclusive design implementation
Address generational demands
Local and cultural considerations
-
Making shopping a social activity online
Leveraging social media
Encouraging autonomy among consumers
-
Incorporate AR experiences in stores
Educate customers
Enhance accuracy
Make AR interface more intuitive
-
Actively listen to customer feedback
Design customer journeys based on sector
Diversify market offerings
Continuous innovation is key
Sustainability and social responsibility are non-negotiable
Proposed Touchpoints for AR-Integrated Customer Journeys
1. Pre-Purchase Stage
AR Marketing Campaigns
Virtual Window Displays
Influencer Partnerships
2. Online Shopping
Product Visualization
Personalized AR Recommendations
Hidden AR Offers
Omnichannel Experience
3. In-Store Shopping
AR Navigation
Virtual Mirrors
Hidden AR Offers
AR Scavenger Hunts
4. Post-Purchase Stage
AR User Manuals
AR Product Images
Feedback on AR Experience
Conclusion
Augmented Reality is set to bridge the gap between the physical and digital realm. Through interactivity and gamification, AR has made online shopping a joyful experience similar to the traditional in-store experience. Despite the learning curve, many consumers are excited by the introduction of this technology and hungry for more advancements. This document was intended to highlight and recommend some strategies for retailers and designers to adopt while designing personalised and inclusive AR-integrated shopping experiences.
My Learnings
This thesis project has been a fulfilling journey, allowing me to apply everything I learned during my one-year Master’s program at the University of Europe for Applied Sciences.
For this project, I used a mixed methodology approach, combining quantitative and qualitative methods to provide a comprehensive view of AR's impact on shopping behavior.
Throughout the project and the Master’s program, I gained valuable insights from the perspectives of my classmates, survey respondents, and interview participants.
One of my most significant learnings was the meticulous organization of the project and research planning, which enabled me to successfully complete and defend my thesis.
Additionally, I learned the importance of prioritizing tasks due to the time constraints of this thesis, enhancing my time management skills.