Rising prices, slowing growth, and fresh challenges from online outlets have together worsened a decades-long decline in physical retail. After a reprieve last year, we are seeing a renewed wave of woe in 2023 as big retailers across the globe close locations or cut staff to curtail costs.
In the United States, retailers have so far this year announced plans to shutter 884 stores, led by struggling homewares vendor Bed, Bath & Beyond. In Canada, Nordstrom announced in early March it would close all its Canadian stores and cut 2,500 workers. In the UK, meanwhile, retailers have cut nearly 15,000 staff since January.
Forecasts for shopping malls are equally worrying, with some industry watchers predicting there may be as few as 150 U.S. malls in ten years’ time, down from a 1980s peak of 2,500.
So are the days of brick-and-mortar shopping numbered? Not so fast.
The good news is that more than half (54%) of U.S. consumers still say they prefer to shop in person, according to a May 2022 survey by customer engagement platform Emarsys.
But even those who do prefer browsing physical shelves to digital ones are demanding more. According to a PWC survey of 9,180 consumers across 25 countries released last month, those who plan to spend more time in physical stores indicated they expected retailers to up their technology game and offer a more convergent experience.
Those shoppers who do most of their buying online often cite convenience as the main appeal. Dig deeper and you learn there are three e-commerce tools that boost this sense of convenience: Discoverability, Search, and Personalization.
The good news? Augmented Reality (AR) promises to revolutionize in-person shopping by bringing those advantages to stores and malls everywhere – without sacrificing the face-to-face interactions and entertainment that make in-person shopping so satisfying for so many of us.
Let’s look at each of these in turn, along with how AR can take them from the digital sphere into physical stores.
1. More Dopamine, Less Frustration
First, let’s take discoverability.
Simply put, discoverability is a measure of how easily a prospective customer can find the product they need. Not only does this minimize frustration, or friction in industry parlance, but finding items they want can actually boost shoppers’ dopamine levels: all of which increases the chances they’ll complete a purchase and makes them more likely to pay a return visit.
Wise retailers are well aware of the adage “eye level is buy level.” In other words, shoppers are more likely to notice a product positioned at their eye line, rather than at what is called “stretch level” (180 centimeters and above) or “stoop level” (below 90 centimeters). Unfortunately, stores only have so many shelves, so there is a limit to how many items can gain such prominence.
In digital space, there are no such limits. Drawing upon browsing information and past shopping data, e-commerce sites can surface just the right products at the right time. They can also suggest supplementary purchases, for instance offering light bulbs to a shopper who has just popped a sharp new lamp into a virtual shopping cart.
With AR, physical retailers can draw on customer data to highlight product suggestions in real-time, at the moment of purchase intent. And if a product is out of stock, they can propose alternatives or, if time permits, help customers make an order and organize in-store pickup.
2. Easier Navigation = More Time to Buy
One of the big advantages e-commerce outlets have over physical stores is search. We’ve all wasted time riding from floor to floor on department store escalators, guided by directories that list only broad product categories. Great exercise for the legs, but maddening when we have limited time to shop.
Some stores – think Ikea with its one-way system – compensate for poor discoverability by lengthening shoppers’ journeys. But when customers can’t find what they need, forcing them to stick around can go from frustrating to infuriating, and may actually push them online.
In our store of the future, groundbreaking spatial computing and positioning technology will make AR navigation a breeze.
Need saffron for your risotto? AR will map out the shortest route to the spice aisle. Seeking inspiration for the perfect housewarming gift? Throw some keywords into your phone and the store’s AR will suggest items it knows are in stock, then guide you to their precise location.
3. The Power of Personalization
Today’s consumers are looking for a shopping experience tailored specifically to them. This doesn’t just mean unsolicited offers, which, if mishandled, can actually feel intrusive and off-putting.
A targeted survey by McKinsey that followed a small group of individuals over a two-week period found that some kinds of personalization appeal more than others – targeted recommendations for products customers browsed for but didn’t end up buying, for instance.
While e-commerce platforms can draw on shopper data to point to the products they are most likely to buy, limited staffing means that only small, high-end boutiques can offer the same level of intense personal attention. In larger stores, every consumer sees the same offers regardless of intentions, demographic details, or buying history.
All that will change with AR. Tomorrow’s stores will be equipped with the same tools as the best e-commerce sites, making it possible for them to offer every one of their customers a unique and supportive shopping experience customized to their preferences and interests.
Need to find a store in the mall that sells the shoes you need for this Saturday’s special occasion? Or perhaps you want to pinpoint the gluten-free or keto-friendly items on a crowded shelf? The store’s AR will provide personalized guidance, connecting you directly to what you want and need.
In all these ways and more, the supermarkets, department stores, and shopping malls that await us in an AR-enriched future will make shopping expeditions more immersive and rewarding – and far less stressful. Confident they will easily find what they need when they need it, consumers will again be free to rediscover the very real joys a visit to the mall once offered.
And with AR powering a convergent commerce ecosystem – one that marries the pleasures of physical shopping with the conveniences of digital – retailers will have the tools they need to halt the exodus.
Neil Redding is Head of Product at Auki Labs.