Written by: Lisanne Gauw
The technology revolution ‘virtual reality’ is more than just video games. The current rise of virtual reality (VR), after a first failed attempt in the 90’s, is impressive and promising (Van Broeck, Lou and van der Broeck, 2011). We are on the eve of a large-scale introduction of a new medium. A medium that adds to the history list of print, film, radio, television and the world wide web. Some sceptics point out that VR will be a temperate craze and doesn’t have a long term future (Smith, 2015). However, different articles state that VR will contribute to a new way of creating online marketing in retail. For example, an integration with popular social media platforms, video channels, and maybe even forms of direct messaging (Labrecque et al, 2013; Hennig-Thurau et al, 2010). Therefore, several companies are investing billions of dollars to make VR a huge success (Bradshaw, 2016).
Mobile virtual reality
According to research done by Greenlight VR (2016) a lot of people don’t know virtual reality. Gutiérrez et al (2008) describe VR as the use of a computer-generated 3D environment – called a ‘virtual environment’ (VE). Here you can navigate and interact. Navigation implies the ability to move around and explore the features of a 3D scene, for example walking through a forest. Interaction means the ability to select objects in the scene. For example, examining a flower in the forest. Therefore, VR is all about simulating reality (Gutiérrez et al., 2008).
In today’s world, one can try VR through portable glasses. For less than 100 euros, one can buy a Gear VR glasses from Samsung, which offers a convincing virtual reality experience combined with a smartphone. Millions of people own a Google cardboard glasses, cardboard or rigid plastic version, which works surprisingly well for short-term experiences in virtual reality. While many wait for the Oculus Rift or HTC Vive, the virtual reality is in the meantime being introduced massively via the smartphone (Simonite, 2015) to consumers (Ranj, 2016). Facebook, which acquired Oculus in 2014 for $2 billion, wants to connect people through the new medium of VR.
Predictions for virtual reality and retail
Burke (1997) predicted in 1997 that online shopping will displace physical retail. Nowadays, almost 20 years later, several news reports (US News, The Telegraph, CNN) write about a changing retail environment because of the digital evolution (La Monica, 2016; Soergel, 2016; Ruddick, 2015). For example, Ruddick (2015) claims high street stores must adapt or die. Therefore, this academic blog looks into the possibilities of virtual reality in the retail industry.
Reports about Oculus and Samsung argue that consumers are very fond of the experiences, rather than playing the virtual games (Williams, 2015). According to Romo, founder and CEO at California-based start-up AltspaceVR, virtual reality is still in it’s introduction phase and mostly gamers use it. However, he predicts VR will be used in many applications, business models and usage models (Williams, 2015).
“Social virtual reality is the killer app, although of course the enterprise and business-to-business side will be very important too.” - says Mitham, CEO of KZero Worldwide and co-founder of WeArVR.
Mitham, CEO of KZero Worldwide and co-founder of WeArVR, says there is still room for improvement in the technology and the awareness of VR. Therefore, he thinks the involvement of Facebook will be good for the awareness of VR. He believes that social applications will soon allow people to interact in shared online 3D spaces (Williams, 2015). Different articles predict to see more virtual experiences that ranges from fashion and virtual home viewings (Trends Magazine, 2016), to travel destinations (Guttentag, 2008) and automotive (Lawson, Salanitri & Waterfield, 2016).
One can conclude that according to Williams (2015) there is a future for virtual reality in business. Looking more into the possibilities of VR in the retail sector, this blog will answer the following questions:
- Is virtual reality interesting for the retail sector?
- Does VR already exist in the retail sector?
- Is there a future for shopping with your VR-glasses?
3 Reasons why virtual reality has more impact than traditional marketing
There is no doubt that virtual reality experiences actually add something over traditional media like the World Wide Web. Looking into several articles, these are the most important reasons why VR has a bigger impact on consumers than traditional marketing:
1. Immersive – The illusion of presence in immersive virtual reality (Hoffman et al., 2003). Users wearing a headset are completely immersed in the content, meaning fewer distractions and more attention to your message.
2. Impactful - The link between presence and emotions (Riva et al., 2007). Riva et al. (2007) confirmed the efficacy of VR as an affective medium: The interaction with “anxious” and “relaxing” virtual and virtual environments produced anxiety and relaxation. Their results suggested the importance of the sense of presence as mediating variable between the media experience and the emotions induced by it.
3. Memorable - Clear understanding of the product (Suh & Lee, 2005). Suh & Lee (2005) investigated whether VR enhances consumers learning about products. 76% of the participants remembered the products shown with VR more than the products shown with traditional media.
First experiments of virtual reality in retail
In the retail sector, researchers predict a great future for virtual reality (Burke, 1997; Gutiérrez, Vexo & Thalmann, 2008; Guttentag, 2008). The idea is, if you manage to emotionally touch the consumer, then getting them to purchase your product will be easy. This strategy has been used for centuries, however with virtual reality as a new marketing tool, this strategy can be accomplished better. There are already the first experiments with virtual reality by some well-known retailers, such as:
- Virtual reality program at Ikea (April 2016): With a VR headset you can explore there kitchens in full 3D. Here you can walk around and interact with objects, just like you are there.
- Virtual reality show at Topshop (November 2014): They gave their customers a VR experience in the world of a fashion show. Sir Philip Green, owner of Arcadia Group who own Top Shop, said: “The Topshop Unique show is going from strength to strength; not only in terms of the collection but also in how we share this with our customers at home and in our stores, giving them an up to the minute runway show experience.”
- Virtual reality campaign by Volvo (November 2014): Here you can experience a virtual reality test drive in their newest cars.
Online shopping with VR-glasses
Good initiatives, but how can we use virtual reality to consumers at home, on the couch or in a comfortable chair, allowing that the sale of physical products will actually increase? Conversion is what we want to achieve. Online shopping in virtual reality, or virtual reality shopping may achieve this goal thanks to the intense product experience that VR offers. Let’s look into the limitations and opportunities for VR in online shopping.
According to Demandware Shopping Index (2015) consumers want to shop more on their mobile phone and want to spend less time on a web shop. This is because consumers want to make a fast decision when purchasing an ‘over the counter’ -product. This contradicts the reasoning that VR is an attractive tool for online shopping. Because most of the online consumers already know exactly which product they are looking for and just want to order the best product for the best price in a fast way. The only experience they seem important is the trustworthiness of a web shop and the insurance the can give. The idea of online shopping is to have a high conversion rate. However, the idea of VR is to let somebody experience something. Combining these two can make it hard to strive for the same objective.
On the other hand, looking into the examples of Ikea, Volvo and Topshop, VR plays a big role in looking into and testing products. Therefore, VR can be an interesting tool for experiencing bigger objects and more luxury products such as kitchens, cars or fashionable clothes. People want to make a good decision when buying luxury products, so they want to compare them in every possible way there is. (Demandware Shopping Index, 2015). So if VR offers you the possibility to actually stand in a kitchen and test which colours look best for cupboards and drawers, then you get the best impression of your favourite kitchen. Or when buying a car, especially a luxury car, is a personal experience. Consumers need to see it, touch it, and feel it to truly understand. Volvo offered with VR a virtual test drive in the Volvo XC90, months before it was available for purchase.
“According to our research, consumers react very favorably to a brand after engaging with branded content in virtual reality.” – says Clifton Dawson, CEO of Greenlight VR.
Companies who are already trying strategies with VR are probably not really certain of the fact if it’s worth the investment. However, recent research done by Greenlight VR (2016) suggests that it definitely pays off in the field of brand awareness and positive impact of the profit.
Greenlight VR (2016) recently revealed the results of a survey with approximately 1300 respondents. This showed a positive view towards brands and companies that working with VR. 71% of the respondents see brands that use VR as modern and progressive. Even better news is the fact that 53% respondents argue that they would rather purchase a product from a brand/company that works with VR, in stead of a company that doesn’t use VR. Even the respondents who have never tried VR before, 91% say they have a positive feeling about VR after watching an informative video. Within the group of respondents that have never heard of VR says after the information video the following:
- 65% Intrigued
- 32% Surprised about the possibilities
- 58% Speechless
Future or reality?
Is virtual reality the future for retail, as many are promising? Or is it already reality in 2016? As we’ve seen already a lot of examples of VR in retail marketing exist. However, there is still room for improvement. One important thing to consider regarding the potential of virtual reality technology in a specific retail sector is whether that certain category is ‘luxurious’ enough for it (Demandware Shopping Index, 2015). For example, the automotive and fashion sector offer products where customers don’t buy everyday, so therefore they want to make a good decision. This also counts for the holiday and housing market.
However, according to Greenlight VR (2016) consumers react very positive about brands that make use of virtual reality. Therefore, it is recommended for companies in retail to experience with this technology. Looking into the example given before, companies can either use VR to create a virtual store, experience a specific product, or create an exciting marketing campaign.
A demand for virtual reality shopping in four specific retail industries (automotive, fashion, holiday and housing market) is found. Therefore, it is interesting to look more into each industries’ consumer preferences and virtual reality experience. The results of this research might give innovative advice about how to use virtual reality more explicitly in the four industries.
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