Analyzing How Augmented Reality Will Occupy the Market Amidst COVID-19

Augmented reality is a form of technology that superimposes virtual objects and information in real-time on actual-world scenes. AR makes a new simulated environment by adding information using the existing environment. Myron W. Krueger was the first person to introduce AR in 1974.

CC BY 2.5, Link (Myron Krueger (left) and Dan Sandin, at Ars Electronica ’99).

It was later developed by other people through different inventive applications. The application of AR in different industries has intensified in the last ten years, where different companies such as Coca Cola and Disney have used it in their operations.

In the current period where the entire globe has been hit hard by the COVID-19 pandemic, businesses have been affected negatively because of different forms of restrictions that have reduced the number of customers visiting their stores. The current pandemic has affected the retail sector heavily, and according to different sources, its intense effect could be compared to the one experienced during the Great Recession In the US, retail sales are projected to reduce by 10%, while e-commerce is projected to increase by about 18% (Emarketer.com, 2020).

This predicts that many customers will shift to online shopping, which means that AR applications in the retail sector will intensify. In this case, AR has distinct features that make online shopping interesting, convenient, and safe because it makes product navigation easier with minimum efforts at the comfort of customers’ homes.

According to Parekh (2020), AR has a huge impact on the way businesses compete with each other in the current competitive environment controlled by technological advancements. For the last ten years, AR has become more acceptable, and it has been applied intensely by corporations in creating brand expansion and awareness. However, the fact remains that the application of AR in retail is a new concept, and it has been used only by large corporations such as McDonald’s, Coca-Cola, and General Electric (Parekh, 2020). According to those companies that have integrated this concept into their business operations, it is clear that it has made the retail experience better, and it has given them an effective way of marketing their core products innovatively. One way of creating loyal customers is by maximizing their interaction with a company’s products because it ensures that customers build strong relations with the company hence creating a competitive advantage. AR has been cited as one of the best platforms that businesses can use to enhance customer engagement because it ensures that customers interact with the products they want to buy virtually in the most immersive way possible. B2B customers have benefited immensely from the use of AR because they have a wide range of product choices.

Parekh (2020) explains that there are three types of customer engagement that are enabled by AR applications. The first type is user-brand engagement, which entails the engagement that occurs between the consumer and the product. Within this model, a customer can customize and manipulate the interaction as much as possible using the technology. The other type is user-user engagement that entails the interaction of customers based on the AR content. This engagement is critical because it not only ensures the strengthening of the bond between the customers and the company but also their relations with the respective companies. The third type is user-bystander engagement, which is based on customers creating artifacts based on their experience with AR, which they share on different social media platforms leading to the marketing of the product, which has immense benefits to the company (Parekh, 2020). The development of AR has been characterized by the development of several devices and platforms such as mobile applications, HMDs, and contact lenses. A good example of such devices is the Memory Mirror, this device allows customers to view different products from different angles enabling the customers to interact with products, such as outfits, effectively.

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According to Baytar (2020), AR has a huge impact on customer relations because it promotes sales since it eliminates different forms of risk experienced by customers while buying products. AR has been characterized by improved customer insights, which not only reduces perceived risks but also makes the shopping experience enjoyable. Online shopping is associated with different types of risks. For example, there is the perceived risk where customers face uncertainty related to negative results after shopping online. In this case, AR reduces this type of risk because customers can evaluate different aspects of a product, and they can make informed decisions. Retailers who use physical stores to sell their products are facing a loss of sales to virtual stores because online shopping is has become the new normal, especially during the COVID-19 pandemic. According to different sources, the introduction of AR has changed this incidence because it has enabled retailers to reinvent their level of customer experience, ensuring that it becomes better and more interesting. AR application in retail is projected to intensify in the future because it has numerous benefits to retailers since it promotes price optimization.

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According to Pantona (2017), there are multiple ways that AR can be applied by retailers to manipulate consumer behavior in a way that benefits them. Loyalty programs are a strategy that have been used by retailers as a way of keeping track of customers. They provide incentives to customers, such as discounts, which allows them to access consumer data. The integration of AR with data derived from the loyalty program is a critical platform that benefits retailers because they can optimize their prices according to different customers. AR has enabled retailers to have personalized shopping experiences that improve their customers’ experiences. The rate at which AR applications related to online shopping are being developed explains that the use of AR in retail is gaining momentum and when other platforms are experiencing decreasing numbers due to the pandemic, AR is continuing to make a positive impact (Pantano, 2017). The digital experience created by AR has a positive effect associated with customers’ decision to purchase because it enables customers to try products before buying them, which makes the experience fun and helpful. It is projected that when the use of AR intensifies in the near future, a significant number of customers AR-related technologies when making a purchase (Pantano, 2017).

Baytar (2020) details that online shoppers have a tendency to return specific products, such as outfits, because of distinct issues, such as the wrong color or choice. The application of AR has reduced such cases because it enables customers to have test drives before they purchase products, which gives them interactive visual cues and enriched information related to the products. Baytar has stated that the application of AR in online stores is an area that has a lot of potential because customers will experience a lot of support when shopping online. During the COVID-19 pandemic, different companies will benefit while others might lose depending on their industries. Halan (2020) indicates that retailers can make positive progress if they use AR in their businesses because it will ensure that they stand out from their rivals and increase their sales. Brick and mortar stores have a high chance of competing with online stores during this pandemic by using AR technologies. The main advantage that online stores have over brick and mortar stores is that they offer a variety of discounts due to low costs associated with their operations. Halan states that AR technologies have the potential of enhancing customer satisfaction and improving customer base. However, the fact remains that AR technologies can be applied by online and brick and mortar retailers. During this pandemic, AR technologies have a high chance of being used by retailers to increase sales and strengthen the interaction with customers.

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The COVID-19 pandemic has influenced consumer behavior in different ways that have seen more consumers adopting e-shopping. The concept of AR fits in the COVID-19 business environment because it promotes e-commerce and presents an opportunity for consumers to engage with products without being in actual stores. In the current pandemic, online shopping has become essential due to various forms of restrictions that have been put in place to prevent the spread of the virus. In this case, the application of AR has become a positive aspect of online shopping because it gives a better and advanced online shopping experience suitable in the present period characterized by minimal interactions. According to Hashem (2020), COVID-19 has changed consumer behavior whereby there are fewer random expenses and spending and other consumption habits have also changed due to efforts put towards financial planning in uncertain times.

Papagiannis 2020 has stated that the current pandemic has accelerated the growth of e-shopping by around five years and the application of AR has experienced a positive boost that and it is projected to intensify even in the post-Covid period. Retailers have made a sudden shift to apply AR technology to reimagine the e-shopping experience and accommodate consumer needs in the current period. Therefore, AR has contributed to the increase in values of e-commerce because it has encouraged minimal spending in physical stores, promoting e-shopping on different platforms. The current period has encouraged digital shopping and AR technologies have become essential and it is projected that their application in the future will intensify where more consumers will shift to e-shopping

Research Question

How will augmented reality occupy the market amidst COVID-19?

Theoretical Framework

Consumer behavior is influenced by different factors that affect the behavioral intentions of customers concerning retail shopping. The S-O-P model (stimulus-organism-response) depicts that different environmental stimuli are linked with behavioral responses, which influence the way organisms to avoid or approach behaviors (Baytar, 2020). This model is used to explain how consumers are influenced by new technologies related to retail when they are shopping online. In this case, AR has been cited for causing rich sensory influence and experiences related to mental imagery, which leads to positive behavioral and emotional responses. AR technology makes online shoppers feel locally present, and it increases the level of customer engagement, enabling them to try the products before they buy them. Ecommerce is becoming the new normal, and the integration of AR technologies in online shopping by retailers will bring better financial performance to the retail sector. The perceived tactile sensations and interactivity of AR are great since they enable customers to experience the expected performance of products that fit the actual performance of the products (Baytar, 2020). AR has solved the challenges related to online shopping because it provides customers with physical try-on that they would usually get in store. They can evaluate the performance of a product and find the right size as well as evaluate the fit of the product .

AR can provide accurate sensory information related to real-world experiences in a virtual environment in a way that customers could navigate in a physical retail store. AR has proved effective in normal settings, and in the current period characterized by the COVID-19 pandemic, it will continue to occupy the market intensively because more customers will shop online. AR technologies will be more useful during this period because customers will want an advanced online shopping experience where they will interact more with the products before deciding to purchase. This projects that more retailers will integrate AR into their businesses to ensure that they increase their sales volumes during these challenging times . Therefore, based on this information, the application of AR technologies could increase amidst COVID-19.

Hypothesis

AR  technologies will continue to occupy the online market amidst COVID-19 since more shoppers are using e-commerce platforms to purchase products. Due to different forms of restrictions related to COVID-19, such as preventive measures, retailers have created a better consumer experience. Now, consumers have an intensified engagement with products before deciding to purchase.

References

Baytar, F., Chung, T., & Shin, E. (2020). Evaluating garments in augmented reality when shopping online. Journal of Fashion Marketing and Management: An International Journal. Retrieved October 27, 2020, from

https://www.emerald.com/insight/content/doi/10.1108/JFMM-05-2018-0077/full/html

eMarketer Editors. (2020). US Retail sales to drop more than 10% in 2020. Insider Intelligence. Retrieved October 27, 2020, from https://www.emarketer.com/content/us-retail-sales-drop-more-than-10-2020?ecid=nl1014

Halan, D. (2020). How AR and VR can be applied to marketing. Retrieved 17 October 2020, from https://www.electronicsforu.com/technology-trends/must- read/ar-vr-applied-marketing

Hashem, T. (2020). Examining the influence of COVID 19 Pandemic in changing customers’ orientation towards e-shopping. Retrieved November 12, 2020, from http://www.ccsenet.org/journal/index.php/mas/article/view/0/43229

Pantano, E., Rese, A., & Baier, D. (2017). Enhancing the online decision-making process by using augmented reality: A two-country comparison of youth markets. Retrieved November 16, 2020, from https://www.sciencedirect.com/science/article/abs/pii/S096969891730098X

Papagiannis, H. (2020). How AR is redefining retail in the Pandemic. Retrieved 11 November 2020, from https://hbr.org/2020/10/how-ar-is-redefining-retail-in-the-pandemic Parekh, P., Patel, S., Patel, N. et al. (2020). Systematic review and meta-analysis of augmented reality in medicine, retail, and games. Vis. Comput. Ind. Biomed. Art 3(21). Retrieved 11 November 2020, from https://doi.org/10.1186/s42492-020-00057-7