Editor’s Note: This post was originally published in Forbes. It is republished here, with permission.
Whether you agree with the idea that there is a “retail apocalypse” or not, retail is certainly experiencing a very high degree of change and disruption. It’s been going on for years, and will likely continue for years as well, as consumer technology continues its rapid evolution, and retailers find themselves forced to keep up.
The difference between an apocalypse promoter and an apocalypse denier comes down to whether you’re an optimist or a pessimist. There are a lot of retail stores closing, and still more retailers who are declaring bankruptcy or outright closing their doors for good. Pessimists look at these trends and say the retail store is dying. “Apocalypse!”
Optimists look at the same trends and say that retail is definitely changing, and the 20th century store is certainly a relic of the past. However, some retailers are adapting, even as digital upstarts figure out the 21st century model and start opening stores – stores which don’t look a lot like the stores that are closing. Retailers who don’t have the financial cushion that can support change file for bankruptcy, and even the retailers who have that cushion face a rocky road ahead, as they struggle to adapt a large base of stores.
The Problem With Stores
Why is this all about the store? Digital channels have not just offered a new way for consumers to shop. They have also altered the general pattern of the shopping journey. Yes, there are some journeys that happen only in stores. And there are some that happen only online. But there are many, many more journeys that begin online and end in the store, or begin online, move to the store, and then move back online.
Twentieth century stores were built on the assumption that the store is the one and only way for consumers to shop. If you think about a shopper journey, you can break it down lots of ways, but the most common typically include some kind of need awareness, evaluation of options, selection, purchase, and purchase enablement. Sometimes companies throw in things like post-sale service, or advocacy as well.
But just take these five steps (awareness, evaluation, selection, purchase, enablement). Stores were designed to serve at least 4 of those steps in their entirely. Need awareness might happen outside the store, but evaluation, selection, and purchase had to happen in the store because outside of catalog sales, that was the only place those activities could happen. Enablement often wouldn’t be that big of a deal, because products weren’t very complex. You might need a delivery and install for an appliance, but you don’t exactly need “enablement” of a box of cereal.
With the rise of digital, the store suffers greatly in comparison, especially when it comes to need awareness, evaluation, and selection. All of those activities have shifted to online researching before a consumer ever sets foot in a store. Also, “selection” is actually a big, complicated step, because you can select the product, and you can select where to buy it too. And there is probably a “confirmation” sub-step in there for high consideration items, where a consumer wants to talk to some kind of expert, just to make sure they’re making the right choice. That expert could be someone in a store, or it could be friends or family.
Retail stores have fallen into a vicious cycle, where retailers, seeing falling traffic and consumers shunning inadequate sales help, have cut training, cut staffing, and effectively ceded the first half of the shopping process to online. At the same time, there are more and more products that are complicated and require more of an enablement step – anything “smart” in the home certainly qualifies, and wearable technology will start to come on strong here too – and stores are just as ill-prepared to embrace an enablement role.
Part of the reason why retailers resist investing to help stores step up their role in other parts of the shopping process is because they tend to define success in stores only in terms of sales – the purchase part of the process. A lot of the activities that have shifted online may lead to sales, but it’s not a direct path, nor is it an easy path to follow.
Putting Digital Into Stores
Digital offers some promise to help stores overcome their challenges, and thus you hear a lot of retailers talk about a strategy of “bringing more digital into stores”. The industry has seen many iterations of this, from kiosks (aka “websites on a stick”), to employees with iPads, to electronic shelf labels and mobile apps with “in-store mode”.
It’s a worthy goal – stores definitely compare unfavorably when it comes to accessing rich product information as part of a shopping process. There is so much information available online, and pretty much one little paper sign and whatever the manufacturer decided to put on the box when it comes to the store shelf. And oftentimes, retailers overlook category-level information about products in the store – what’s important to making a product selection, rather than just “which product is best”. Best for whom? And for what use or purpose?
Online does an excellent job of exploring category-level information, and it’s not surprising that sometimes retailers have not been the ones leading the charge for providing this level of information, given the struggles they have in providing these basics in stores. But they’re learning. Lifestyle information, tips and tricks, category guides, how-to guides – not to mention ratings and reviews – are all finding homes online, but rarely make it into stores.
So when retailers talk about wanting to bring more digital into stores, they often are talking about trying to do more to bring this kind of content into stores, rather than, say, more online “buy” buttons.
The AR Opportunity
This is where augmented reality has the opportunity to shine in retail. If consumers can be primed to use their phones to seek a digital overlay on products, retailers can start leveraging their digital content to better support the first half of the customer shopping journey in stores.
There are a lot of big “ifs” there. Consumers have to be persuaded to use their phones in an AR context – that’s a whole topic on its own. And retailers have to package lifestyle and non-product content in a way that makes it easy to use it as part of the journey in stores. If all you have is products and shelves, though, and no way to easily support anything other than selection and purchase in stores, then there’s no natural place for consumers to tap into all of that content.
In other words, if all you have is products in stores, then the only content that is likely to be leveraged is product content. If you have a lot of lifestyle content, you need to have lifestyle places in your store where it’s natural to bring in and explore that content. Most retailers are not keen to take product out of stores when store sales are already flat and traffic is falling – that seems like the exact opposite thing to what you should do, especially if the way you’re defining success is only in terms of purchases made in the store.
But that is exactly what digital upstarts are doing in the stores that they’re opening. Less merchandise – sometimes not even any merchandise to buy at all – and lots of space for events, classes, education, and entertainment. They’re currently investing in store associates who are trained and educated to help savvy digital consumers, but it’s not that much of a stretch to see where consumer-directed experiences that leverage AR could come into play.
AR’s Digital Pitfall: Promotions
If you look at retailers’ adoption of other digital customer experiences, one potential pitfall for AR becomes clear: killing it with promotions.
Brand awareness doesn’t pay the bills – sales do. And so, as nearly every new digital touchpoint has become popular with consumers, one of the first things retailers try to do is use it to offer promotions – basically, to get consumers to use it to buy. Facebook had its Facebook store moment, followed by races to get the most Likes, and therefore maximum opportunities to offer promotions and discounts.
Twitter, Pinterest, Instagram have all had retailers try to use them to offer promotions, mostly with limited success. Instagram has only now offered a way to buy directly through the app, ironically long after brands figured out how to use it to build a following through lifestyle content which has often been powerful enough to disrupt long-established brands. But retailers measure success in terms of sales, and so they almost have to go through a period of spasming through a bunch of promotions before being able to settle in to use social channels for their intended purpose – to be social.
AR will face the same temptation. However, it will be complicated by the fact that consumers are not already naturally using AR (vs. naturally flocking to social media). If retailers succumb to the temptation to use AR as a promotion-delivery mechanism, they risk alienating consumers away from what really should be considered an “experience” channel. Stores are deficient in the education, events, and entertainment parts of the customer journey. Making consumers download and use an AR app just to get a discount fulfills none of these needs. And yet, if history is any indicator, we’ll have to go through the AR discount phase before we can get to what it is best intended for – experiences.
The Bottom Line
While AR has the opportunity to solve a pressing need for retailers – how to bring digital into stores – retailers have to resist the temptation to use it as a vehicle for delivering promotions. AR isn’t like other digital touchpoints. Outside of Snapchat filters, AR is not inherently social, and so consumers are not flocking to it as part of their digital experiences. That means retailers have to be extra-careful in how they use it.
If retailers can overcome the promotions pitfall, and focus on using AR to bring experiences to life in stores that stores don’t serve well today, then AR could very well be the injection of new life that 20th century stores need in order to make it into this century, and beyond.