Could Virtual Reality be the Next Big Tool for Retailers?
The world’s biggest businesses are using VR to enhance customer experience & increase sales
Buying a pair of black shoes sounds like a simple exercise until you end up stuck in traffic, struggle to find a parking space and get soaked by sudden torrential rail. Once you finally hurry into a shop, they seem to have everything except the shoes you want. In order to avoid this scenario, many people have turned to online shopping. But even that can be difficult, as it’s hard to know if you’re buying the right thing. That is, of course, until you can try on the shoes using a virtual avatar that looks exactly like you. You can see if the shoes suit you before buying, all without inclement weather and impatient road users. This is just one of the applications that multinational retail business Walmart sees as part of the development of the retail industry. Last month, the retail behemoth held a high profile event in Los Angeles to showcase a range of ‘v-commerce’ (virtual commerce) concepts developed at their tech incubator, Store No. 8.
Seeing retail differently
Walmart might not be the first big company to back Virtual Reality (VR), but they’re one of the biggest. Their strategy is geared towards providing a new way for consumers to experience products and consequently driving sales. Katie Finnegan, head of Store No. 8, uses camping as an example. She envisions customers placing a virtual tent in a virtual camping site to check the dimensions, and making an informed choice based on the product’s fulfilment of their needs. This ‘try before you buy’ element has not been lost on the retail world. Thomas Cook, for example, has used VR experiences to sell holidays for years, and popular fashion brand Ted Baker set up a virtual store in 2015. Despite the existence of virtual shops and services, VR is yet to make a serious impact on the retail industry. The majority of consumers still prefer to make the majority of their purchases on the high street, and ecommerce makes up less than 10 per cent of total retail revenue. This is all about to change, however, if Walmart gets its way. This summer the company challenged tech firms, venture capitalists and entrepreneurs to come up with v-commerce concepts. Out of 200 applicants, five were selected to work on their ideas for two months at Store No. 8. The tech incubator is supporting virtual applications that can be used within physical stores as well as online, delivering a hybrid that targets tech savvy buyers as well as retaining customers. “It makes sense for us to start developing the content so that at some point we meet in the middle,” says Katie Finnegan. But what disruption will virtual retail cause to the sector, and the way that commercial businesses operate within it?
The disruptive impact of v-commerce
The adoption of Virtual Reality within retail has a number of advantages for businesses. Firstly, it offers a way to reach customers who are not able to, or don’t like, visiting shops. By increasing accessibility, retailers also increase the likelihood of sales. Adding VR capabilities to product marketing could also reduce confusion about what the customer is buying. One of the setbacks of ecommerce is that customers can be dissatisfied with their order. The more information given about a product, the less likely buyers are to purchase the wrong thing. In turn, this means less returns. The retailer would also have more credence when handling complaints and demands for refunds. At the same time, businesses need to consider the impact that virtual applications will have on associated services and brands. Although Walmart sees v-commerce as working alongside brick and mortal shops, it’s likely that it will encourage online shopping. If less customers are visiting shops, then supermarket petrol stations and related services like car washes could suffer. This may also cause problems for brands that aim to attract impulse buyers, as well as the success of in-store pop up shops. Of course, physical shopping remains a leisure activity with a huge following. When people go shopping, they can see, touch and experience items in a way that a headset or desktop based application can’t deliver. Luckily, Walmart isn’t looking at the market through a rose-tinted VR headset. The company’s aim is to develop v-commerce applications alongside the established retail infrastructure to build an entirely new shopping experience.
While big retailers should be aware of the impact that v-commerce could have on existing retail business models, much of this disruption seems to be positive. Virtual Reality is a powerful marketing tool, offering new consumer experiences that are personal, immersive and entertaining. Walmart’s aim is to build a richer shopping experience, whether that be in store or online. There are certainly many considerations to be made, including the task of balancing customer retention with innovation. Walmart certainly has the means to drive v-commerce forward, but as always, the ultimate success of their virtual venture relies on convincing the consumer market.
Could Virtual Reality be the next big tool in the retail industry? Will v-commerce drive online shopping? Are the costs of developing VR applications worth the rewards? Comment below with your thoughts.