There is a lot of discussion about how AI (artificial intelligence) is impacting supply chains and with good reason. So for this column, I thought I would focus specifically on the retail sector, and take a deeper dive into how emerging technologies like AR (augmented reality) and VR (virtual reality) are playing a key role at both frontend and backend processes.
A recent report by ABI Research “Augmented Reality in Retail” forecasts that by 2020, 3% of ecommerce revenue will be generated as a direct result of AR experiences. Simply stated, 3% of ecommerce revenue equals about $122 billion in revenue worldwide. Now let’s be clear here, we are talking about a relatively small percentage, but still a lot of revenue in general.
What’s more, ABI points out that while AR will be in demand in the retail segment, adoption may not follow the predictable path. For instance, the report predicts that AR will struggle to take root among customers in the brick-and-mortar environment, but will be lapped up by the retail workforce and online shoppers.
AR adoption among the retail workforce is partially due to the availability and adoption of smart glasses, which can help retail employees in both the front and back of the house.
ABI’s report suggests more than 120,000 stores globally will be using AR smart glasses by 2022.
- For retail employees working in a warehouse, for example, AR can aid in operational efficiencies.
- For retail employees working in the storefront, AR can help them deliver a superb customer experience.
And for online shoppers, the idea is that augmented reality can allow people to virtually interact with products that they can’t physically interact with prior to purchasing them.
Simply, ABI Research is telling us that AR will be adopted where it will provide the most value.
So, if AR isn’t adding much to customers’ experiences inside brick-and-mortar stores, then this use case probably won’t end up driving the bulk of AR adoption in retail.
However, if these other use cases prove to be as valuable as they seem to be, then you better believe AR will explode in this sector in the next several years.
No business is going to want their back-of-the-house employees operating without AR if there are applications that can help them, say, find items more quickly and easily.
Likewise, no business is going to want their customers to miss out on an improved customer experience thanks to an AR application.
Here are a couple of real-world examples of how the IoT (Internet of Things) is impacting the retail sector.
Walmart is leading the way in leveraging virtual reality technology to train its employees.
Last year, Walmart began its VR journey by bringing the technology to its Walmart training academies across the U.S.
And now, the company is taking its VR initiative further by providing Oculus VR headsets to all of its U.S. Stores. Walmart is saying the headsets make learning “experiential,” and when associates go through a module using the headset, their test scores improve by 10-15%.
Beginning this month, the retail giant is launching its VR training by sending four headsets to every Walmart supercenter and two to every neighborhood market and discount store.
That will put more than 17,000 Oculus Go headsets in the hands of Walmart associates by the end of the year. In terms of software, they’re using modules from Strivr, which features realistic, repeatable, and scalable training content. VR gives Walmart the chance to create scenarios that would be impossible to present associates with without the technology.
It extends their training abilities immeasurably. This just might become the norm for retail. Walmart is leading the way, and other major retailers won’t be far behind.
But now let’s look at how the IoT is being used in frontend operations by another retail trend setter: ZARA. ZARA’s Stratford flagship store in London has reopened, and it’s really impressive.
One of the keys to success in retail going forward is finding ways to integrate the in-store and online shopping experiences. ZARA has done it with this store concept.
The store features four distinct sections—there’s women’s, men’s, kid’s, and a fourth area dedicated to the purchase and collection of online orders. This fourth section offers two automated online order collection points that are serviced by a concealed area capable of handling 2,400 orders simultaneously.
The automated system’s optical barcode reader scans QR codes customers receive when they place online orders, and then a robotic arm collects and organizes packages and delivers them to customers within seconds.
In addition to the automated order collection points, the store offers RFID (radio frequency identification)-equipped interactive mirrors that can detect the garment a customer is holding and help her see what a complete outfit will look like in the mirror.
Employees also have iPads that can accept mobile payments, and there is self-checkout area that automatically identifies garments being purchased. Customers just have to review and approve, then pay.
ZARA has found a way to integrate the physical and virtual shopping experiences, and this is just the beginning. The retailer is using technology to transform the customer experience.
In the future, it seems to me the race for technologies like AR and VR and beyond are only going to make it easier for retailers to go above and beyond to give customers what they want. And if they don’t consumers are only going to shop with the brands that make the experience fun, easy, and even a bit awesome.
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