Virtual Reality a Third Dimension between the Physical and the Online
As we inch towards the year 2019, we realize that while everything else – including product prices and the number of players in the market – is seeing an upward trajectory of growth, the retail shop floors are facing a massive space crunch.
The high-end luxury brands are the most hard-pressed in this regard to navigate the intricacies of finding a place, which is free of the Sunday market clutter and yet is approachable enough to appeal to the right customers.
With the increasing purchase power and understanding of quality and style being evinced by the Indian market, how can the international brands capture the interest of their customers without compromising on their margins? Well, the answer is virtual reality, a free-floating third-dimension between the overly cluttered physical and online retail spaces.
About a year ago, Rebecca Minkoff collaborated with eBay and Magento to create a digitally connected store, which used “connected glass shopping walls” and digital fitting rooms to guide shoppers through the experience, while collecting data about customer preferences and trends. Within six months of implementation, sales of ready-to-wear increased exponentially, which is attributed to enhanced in-store experiences.
With a customer-centric approach to scaling businesses that are not just transactional, but aim at creating customer lifetime value, brands are increasingly re-vamping the retail ecosystem by introducing digital technologies in it. VR/AR market alone is expected to grow at a compound annual rate of 76 percent over the next five years, according to a report by Growth Enabler.
As each year gives way to the next, more and more retail brands across product categories have begun using digital disrupters such as big data analytics and artificial intelligence to segment and personalise the experience of their customers. For instance, one of the retail majors deployed a model analysing the shopping pattern of customers and predicted their chances of Parents-to-be in recent future. The retailer then was able to send promotional offers related to baby products according to the pregnancy scores.
Apart from analytics, even augmented reality has great potential for the online retail platforms as the technology helps increase store visitors, reduces the cost of operations and product return rate along with breaking language barriers.
Even though the adoption of AR/VR technologies is at a nascent stage in India as compared to markets like the USA, UK and China, the outlook is very promising for our market, especially for the manufacturing and healthcare sector, apart from consumer retail, where precision is key.
Outlook for 2019:
- Business Model: Digital, especially social and mobile commerce would enable retailers to explore new business models to stay relevant
- Operating Formats: Omni-channel strategies would continue to expand along with other retail formats such as subscription, flash sale etc.
- Positioning: Digitally enabled store experiences would help retailers differentiate and provide better experiences.
- Segmentation: Data insights allow companies to bundle and monetize services in addition to products.