Virtual Reality, Augmented Reality and Gamification in Retail

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Virtual and augmented reality statistics and forecast

In the past weeks, in our retail technology article series that includes display technologies and gadgets, apps and technologies that improve customer experience and mobile apps designed to create better in-store customer engagement, we discussed a bit about augmented reality.

We thought it was necessary to expand on this idea and to also discuss about virtual reality, since it's the most anticipated of all technologies and about the concept of gamification applied to retail.

Gamification

What is gamification?

According to Badgeville's Wiki page, Gamification is a rather old concept (term coined in 2003 by Nick Pelling) that means applying game design techniques and mechanics in order to engage and motivate people to achieve certain goals. Putting it into simpler terms, it means turning something into a game in order to motivate people to finish a task.

The oldest gamification example are airline Frequent Flyer programs. Only in 2010-2011 did the idea gain popularity and started being used by companies around the world.

How is it useful to retail?

But before that let's have a look at the psychology at play here. People love playing games and they also love winning at them. Games tap into our needs for social interaction and for competition. Goals, levels, achievements and leaderboards help fulfill these needs.

Jane McGonigal discussed about who plays video games and how much time they spend doing so in a TED Talk back in 2011, and the numbers are staggering. "Currently there are more than half a billion people worldwide playing computer and video games at least an hour a day -- and 183 million in the U.S. alone... The average young person racks up 10,000 hours of gaming by the age of 21... 5 million gamers in the U.S., in fact, are spending more than 40 hours a week playing games -- the equivalent of a full time job!"

So just imagine tapping into that, offering your customers a fun experience that turns out to be a win win situation.

Alicia Fiorletta from Retail TouchPoints has identified the 6 most important elements that make games so attractive: desire, incentive, challenge, achievement/reward, feedback and mastery. In the same article on retailers who use gamification she states that "by rewarding users with points and badges in return for frequent visits and purchases, the applications arm retailers with the resources to increase in-store foot traffic, as well as purchase rates."

Check out this survey report from Boston Retail Partners on the future plans of North American retailers to include gamification into their business. It is estimated that nearly 90% of them will include gamification in their customer's experience over the next 5 years.

Customers want to feel as if they are in control and as they become more and more sophisticated, knowing how much their contribution matters to retailers, they want something in return. That is to have an engaging, personalized and entertaining experience with your brand, going as far as to create an emotional connection with it.

In this Mashable article you can find gamification examples from retailers such as Bonobos, Home Shopping Network, Nike, Aldo, Best Buy and more.

These are the main benefits that gamification offers to retailers, employees & customers:

  • Increase employee productivity (read Karl Swensen's article on how games can help retailers step up service)
  • Customer loyalty - through points, awards, badges that can be translated into discounts, access to exclusive products, free shipping and so on, offered for frequent purchases, social shares and commenting, store visit milestones, reviews, watching product videos, etc.
  • Drive higher engagement: customers spend more time in the app, on the website or in the store
  • Acquiring new customers and reaching out towards possible customers - brand lovers become multipliers by spreading the word and generating buzz about the idea/app/winning possibilities
  • Gathering valuable data on users(including customer behavior) in real time
  • Increase sales - according to a survey from the Salesforce Blog on Gamification and Sales from 2013, from the 100 companies who participated, 71% said that they have seen anywhere from 11% to 50% increases in measured sales performance. 

With the help of Augmented Reality, you can create scavenger hunts for your customers for example. Rewarding them for their dedication and hard work of searching for various AR elements in your store or throughout the town.

Augmented Reality

What's the deal with Augmented Reality?

Augmented reality or AR for short, is a technology that allows digital integration of information on live video. It's basically a blend between the real world and the digital world through the lens of a camera. The concept isn't new, but as with gamification it caught on slower. It is not to be confused with Virtual Reality, we will discuss a few differences later on.

Some of it's first and most popular applications include the maps for TV weather forecasts and the information display on fighter jets' windshield, the same technology that is now being applied to cars.

For mobile, augmented reality requires an app and GPS and a mark or target to be scanned that reveals the hidden information.

For PC's, a browser with a special plug in and a webcam along with the trigger mark, is all that is needed to enjoy this experience.

This video explains more on the subject and how it is applicable to most industries.

But talking about retail...

Since this technology has been around for quite some time now, it is clear that AR has the possibility to serve as an incorporated advertising or marketing strategy, to engage and enchant customers. There are already many examples of it being used by retailers to make their customer's experience extraordinary.

You can find 10 of these examples in this article from Creative Guerrilla Marketing. Through these success stories you can find out how Shiseido uses an AR make-up mirror, IKEA's amazing AR catalogue that allowed shoppers to see how some furniture items looked in their homes, Converse's instant shoe app and more.

See here the video for IKEA:

Other successful examples include the one from LEGO, discussed in the video above, and called "the nag factor", because customers (mostly children) would nag their parents for a set, after seeing the virtual models.

Also at the beginning of the year, the famous song finding app, Shazam announced that they will introduce "visual Shazam", a feature used as a means to connect the app with reality and create a unique retail experience. "Shazaming" magazine ads, TV ads or other channels will allow retailers to connect with customers more effectively. More on this subject in this The Next Web interview with ShazamCEO, Rich Riley.

So what are the ways through which AR can assist retailers exactly? According to an article from Augmented Pixels there are 10 uses for it:

  • Improves conversion rates and reduces returns for clothing stores
  • Optimizes warehouse space
  • Combines traditional retail experience and e-commerce
  • Enhances brand recognition
  • Empowers advertising campaigns
  • Lets customers “try” before they buy with a 3D product preview
  • Displays additional information about products shown, enriches shopping experience
  • Searches for deals around
  • Visualizes product catalogs
  • Brings customers inside a store
  • Virtual Reality

    Virtual Reality? Tell me more...

    To provide a comprehensive definition, we turn to the Virtual Reality Site. "Virtual reality is the term used to describe a three-dimensional, computer generated environmentwhich can be explored and interacted with by a person. That person becomes part of this virtual world or is immersed within this environment and whilst there, is able to manipulate objects or perform a series of actions."

    Now, as promised, we are going to let you know what exactly are the differences between Augmented Reality and Virtual Reality. First of all, the technology used ( Google Glass vs. Oculus Rift as an example) followed by the time it takes to create the environment (much more time for VR to make everything just right). The most distinguishable thing, though, is that AR keeps the user in the real world, letting him or her only interact with the virtual objects while VR isolates the user from the real world, immersing him or her fully in the experience.

    So what about the retail Reality?

    A word is already buzzing around for VR, namely v-commerce (Virtual commerce, vCom, vCommerce), the term describes a type of application, service, or product feature that helps enterprises implement strategies and design websites for e-commerce.

    CCS Insight projected this summer that AR and VR devices will become a $4 billion business in only three years. Since it will have such an impact on the world in the following years, VR should already be discussed as an integrated strategy in their CRM(Client Relationship Management), at the tables of retailers everywhere.

    Virtual and augmented reality statistics and forecast

    There are already some examples available to form an idea of VR applicability, although it can have so many uses in so many areas. We will only discuss Virtual Reality as used by retailers and one of the first successful examples is that of The North Face, in March 2015.

    Their idea was to immerse the couch potatoes and others who don't explore nature all that often into the beautiful lands of Yosemite National Park and of the Moab desert in Utah. Once transported to these virtual realms they could trek and rock climb, along with well known athletes, all from the comfort of the company's brick and mortar stores.

    According to an article from Digiday about The North Face's accomplishment, it seems that they collaborated with the VR company Jaunt. The footage was realized with the aid of their 360 degree, stereoscopic 3D cameras and advanced 3D sound-field microphones and with the aid of Camp4 Collective's athletes and filmmakers. The VR headset chosen by the company, so the customers could enjoy the experience, was Google Cardboard, the most inexpensive and easiest to make one on the market at this hour.

    As mentioned in the same article, Oculus Rift, owned by Facebook, was the first on the market, followed by Google Cardboard, Samsung Gear VR, and soon enough by Sony PlayStation VR, previously known as Project Morpheus(no exact release date) and HTC Vive(2016). Microsoft plans to launch a competitor for Google Cardboard called the VR Kit, but their most anticipated piece of technology is the HoloLens for Augmented Reality. So the tech is out there in all shapes and for all budgets.

    Car manufacturers such as Lexus(Oculus) and Volvo(Google Cardboard) offer virtual drive tests of their cars, also, Volvo and Microsoft also teamed up to create a virtual car showroom with no cars in it, but this was done in terms of augmented reality. Jaguar also created something similar, but it is more of a cross breed, users didn't need headsets, because of 3 walls with projected video and because the system used, recognized their gestures and reacted to them.

    Topshop also created a 360 VR catwalk show experience with Oculus Rift to engage with customers, in 2014. The users were seated in the front row of the show and could navigate through various rooms by moving their heads up, down or sideways. For more information on the project check out the video below.

    Tommy Hilfiger with Samsung Gear VR did the same with their autumn fashion show 2015, creating a 360 video of the catwalk were viewers were sitting in the first row.

    This is only the beginning but Virtual Reality is definitely going to become a booming industry and as earlier mentioned it has so many benefits it can bring to many areas such as medicine, architecture, travel, entertainment and of course marketing. It will help put more emphasis on the experience of the shoppers and on personalizing offers for them, thus helping create a strong bond that will be fruitful for both ends.

    To Conclude...

    This technology is amazing and we have all the reasons to be excited for its implementation in all fields, our perspectives will be changed and our notion of reality altered. Engagement and experience will be the focus of everything that is retail and it is bound to leave everyone feeling happy at the end of the day.

    The technology and knowledge are at our fingertips and they can help us create amazing things for people to enjoy.

    We invite you to check out our articles on the mobile apps designed for retail, on the latest technologies created to improve customer experience and advanced display technologies retailers can use.

    We are super excited for the upcoming technologies and we know you are too!

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    • George Blitzer
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