How to Survive the Retailpocalypse With Immersive Technology - OneBonsai - Blog

How to Survive the Retailpocalypse With Immersive Technology

Brick-and-mortar retailers have been struggling for a few years now. Earlier this year, the Motley Fool composed a list with fifteen retailers that are closing stores in 2019. We’re talking big names: Sears Holdings, the parent of Sears and Kmart, filed for bankruptcy; Gap is closing hundreds of stores in the US, including its flagship store in New York; Ascena Retail Group, the parent of brands such as Ann Taylor, Lane Bryant, and Justice is closing stores too.

That’s not even taking into account the big retailers that have gone bankrupt in 2017 and 2018: Toys “R” Us, Maplin, Radioshack, H.H.Gregg, etc… The list goes on. So many retailers seem to struggle in today’s environment that analysts have labeled the last few years as the retail apocalypse, or, somewhat clumsier, the retailpocalypse.


Victims of the retail apocalypse from January 2015 to March 2018 (from CB Insights)
Victims of the retail apocalypse from January 2015 to March 2018 (from CB Insights)

Here are some of the main reasons why retailers have been struggling: firstly, real estate has become significantly more expensive and rent for shops has gone up. Secondly, the astronomic rise of e-commerce has lowered in-store sales. Thirdly, competition of giant companies such as Amazon and Walmart has only increased. And fourthly, consumers, and in particular millennials, now prefer to spend money on experiences over material goods.

As such, for brick-and-mortar retailers, costs have gone up and revenue has gone down. Those with tight operating margins can no longer pay back their debts and need to file for bankruptcy. Those who have survived the retail apocalypse up to this point now have to face up to their inevitable new reality: none of the above-mentioned trends will go away. This is the future now. How can you turn it to your advantage?

The answer lies in the age-old adage: innovate or die.

The Case for Immersive Technology

Immersive technology, by which I mean, of course, Virtual Reality and Augmented Reality, addresses two of the four retailpocalypse reasons mentioned above: it helps to merge the digital with the analog; e-commerce with brick-and-mortar, and it allows retailers to move the focus from purchasing goods to experiencing a brand.

Forward-thinking companies have already started incorporating VR and AR into their marketing strategy, and, although VR and AR allow for many different, creative use cases, most VR/AR retailer apps seem to focus on one of the three following use cases:

To Encourage Exploration

Now that much of shopping has moved online, consumers need new reasons to go to stores. After all, why should anyone spend more time buying a product in a store when they could probably either buy the same product cheaper online or at least be able to compare it with alternatives?

Immersive technology, and in particular AR, can entice consumers to visit shops. For example, in the summer of 2018, in order to promote the movie Jurassic World: Fallen Kingdom, game developer Ludia published Jurassic World Alive, an AR mobile game that overlaid dinosaurs onto people’s surroundings.


Where you could find dinosaurs in your nearby surroundings
Where you could find dinosaurs in your nearby surroundings

Ludia had partnered with Walmart to promote the game. If gamers visited a Walmart store, used the app and posted a dinosaur pic on social media, they would unlock in-game content. This encouraged people to visit Walmart.

Adidas did something similar in November 2018. During the ComplexCon conference in Long Beach, California, attendees could use AR functionality integrated into the ComplexCon app to look for and buy limited-edition Adidas sneakers that were scattered around the conference. This way, attendees were incentivized to explore the conference, while Adidas had a novel and fun way to sell more sneakers.


Seems like the project was a success
Seems like the project was a success

To Improve the Shopping Experience

This is by far the most mature application of AR in retail: the digital overlay of products either in a different environment or on the consumers themselves. One of the best-known examples is IKEA Place, the AR app that allows you to scan your home environment, select furniture, and place it in your living room to see whether it would fit and whether it looks nice. Amazon and Target have similar AR apps.

Interestingly, while most companies use AR to improve the shopping experience, Macy’s has experimented with VR to do so. Shoppers at Macy’s can use VR headsets to design a living space with furniture and move around virtually in the space to see if they like it.


Walking around in the room you designed yourself
Walking around in the room you designed yourself

This has now been rolled out in over 90 stores. When they ran the pilot, they found out that “VR-influenced furniture sales have increased by more than 60% versus non-VR furniture sales,” while also leading to a lower than 2% merchandise return rate.

To Create Brand Experiences

While the previous two use cases mostly lean on AR, this use case works best in VR. With VR, companies now have the opportunity to create immersive, captivating experiences that emotionally bind consumers to their brand.

One such example is what the British fashion retailer Topshop did. They had installed an inflatable in its flagship store in London. Visitors could put on an Oculus headset and go on a dazzling water slide through central London.

Another example, again in London, is One Aldwych Hotel, which had partnered up with Dalmore Whisky to create a VR experience where people could order a whisky cocktail and be taken to the Scottish highlands where the whisky was made.


A cocktail with a twist
A cocktail with a twist

In Conclusion

Brick-and-mortar retailers are struggling because of irreversible trends. They have little choice: they can either innovate or die. Luckily, immersive technology in the form of AR and VR provides the opportunity for retailers to be more creative with their marketing, their branding, and the shopping experience.

More specifically, retailers can use VR and AR to encourage people to come to their stores and explore them, to improve upon the shopping experience by showing shoppers how products can fit into their lives, and by creating brand experiences that thrill, excite, and inspire shoppers.

OneBonsai provides VR solutions. From corporate training in different industries to tailor-made virtual reality projects. If you are a business and would like to understand how we can help you implement virtual reality in your company, please feel free to contact us here.