The Augmented Reality and the Artificial Intelligence will change our shopping experience

The Augmented Reality and the Artificial Intelligence are experiencing boom in the retail marketing. It seems that the importance of the Artificial Intelligence (AI) as well as the Augmented Reality (AR) will increase during the next 12 months. Last summer, the application PokemonGo was accepted on the mass scale and this year, AR applications are entering the market already with the specific use in retail. And the Artificial Intelligence is starting tobe used to improve communication and assistance services.

In addition, customers themselves believe that retailers should invest into the AR and the AI, especially to be able to offer more personalized and more intense shopping experience. According to the report “Retail Future” of the company Apadmi, more than a quarter (26 %) of consumers would like retailer to implement AI tools into shopping applications; and almost a third (29 %) of consumers believe that retailers should invest more into augmented and virtual reality platforms. A quarter of them believe that these technologies will allow them to view customization of products, as for example different colours, sizes and patterns. Retailers would in turn help to create stronger brand relationships with customers who would know what they could expect from products, which would then be reflected in sales and profits.

First try then buy

In 2015, the company Statista evaluated the market of the augmented reality to 2.35 billion USD and we can expect its increase up to 117.4 billion USD by the year 2022. Its potential lies in a number of opportunities for a revolution in a shopping experience, primarily by allowing people to “try products before buying them” in the comfort of their homes. It can be used to place a picture of furniture in the form of a real view of the room, or to try clothes virtually without the necessity to go to a fitting room.
Thus furniture retailers, home appliances retailers or hobby markets can work with the Augmented Reality. Through their applications, customers could place a selected furniture or refrigerator directly into the picture of their flat, examine it from all sides and consider if it fits or if a different colour would be better (Jesenský, 2017a). Such application is being used already by, for example, Home Depot (D´Innocenzio, 2017) or Ikea presenting up to 2,000 pieces fitting to living rooms (Semerádová, 2017). The FaceCake shopping platform in co-operation with the company Nars Cosmetics allows their customers to test their products from make-up to handbags using its application (Sotille & Kent, 2017).
The Augmented Reality can also be integrated into shelves where, after picking up products, additional information, colour samples and discussion forum comments appear (Jesenský, 2017a). It can be placed also to a shop-window, as for example Hugo Boss brand showed in London. The brand placed a screen into their shop-window at Sloane Square, which was playing a private fashion show after scanning “an invitation card”. And in the end, it invited them to the store, where customers could play black-jack for discount vouchers (Hugo Boss Augmented Reality Promo, 2016).

Source: oocl.it, available at: http://www.oocl.it/nonconventionaladvertising/en/2010/01/11/nuove-vetrine-aumentate-firmate-hugo-boss/

Increasing sales goals

The Artificial Intelligence goes one step further with its revolutionary nature. According to the IBM survey, 91 % of retailers have the power to disrupt the groovy functioning of the retail. Up to 83 % of them think that it will play a crucial role in their future business. Their opinion also confirmed the estimation of the company Research & Market saying that the market with the Artificial Intelligence should reach the value of 23.4 billion USD by the year 2025. It will enable retailers to automate the consumer tracking, deeper understanding of the customer path and better customization of their offer.

On the Czech market, for example, Česká pojišťovna uses the Artificial Intelligence analysing phone calls recorded on the Customer Services line using the EMMA tool. This helps them to identify weaknesses and improve the Customer Services (MSM, 2017/3). Within the on-line Customer Services, the Artificial Intelligence is present through Chatbots responding to queries 24 hours a day.

With the help of the Artificial Intelligence, retailers can also offer so called personal assistants who can recognize the customer´s interests, preferences and shopping habits. The outdoor clothing brand North Face recommends appropriate products to their customers in conjunction with the Watson cognitive system developed by IBM. And the application Digital Tire Journey by the shopping centre Sears helps with selection of tires (Forbes, 2017). Macy´s with Watson and a localization software can guide shoppers towards demanded brand; and the e-shop with gifts and flowers 1-800-Flowers.com brings its customers to a perfect gift with a virtual advisor GWYN.

Together with the Artificial Intelligence, there comes also more advanced predictive analysis that can, for example, predict what a customer will order based on his previous buying behavior and adapt supplies and dynamic pricing to it. In practice, an application of the Artificial Intelligence may be following: a customer forgets to take his mobile phone charger to his business trip and so he orders a new one at the airport with a required delivery to his hotel room on the eve of his business meeting. However, Amazon can predict that the customer might want also headphones for his flight based on the analysis of his previous behavior, thus offering a cost-sensitive customer a competitive discount price (Sharma, 2016).
The AI finds its sphere of action also within the visual search, in which it searches similar products after uploading a picture and provides personalized recommendations.

Last but not least, the Artificial Intelligence can contribute to security in stores. In video systems, it can detect thefts and also analyze visitor according to the demographic indicators. The so called smart camera is offered by, for example, the company Axis Communications, whose technology, in addition to monitoring behavior of visitors, can also count visitors, create heat maps, monitor queues by cash desks and identify sold out products (Brands & Stories, 3/2016). The advanced behavior evaluation using the Artificial Intelligence is only a presage to more advanced analysis and preparation of personalized, real-time communication that will soon become the matter of course (Jesenský, 2017a).

Especially for the retail sector, the AR and the AI are likely to have very strong benefits and might change the way of shopping in the near future. As technology is evolving and customer expectations are shifting, retailers should start investing more in developing their services also with their help.

Daniel Jesenský, DAGO, s.r.o.