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Augmented reality in retail transforms customer experiences

Retailers like Hershey's are experimenting with augmented reality to take the customers' experience beyond a smartphone screen and drop it into their living rooms.

It's like a scene from Star Trek: you're on the holodeck, but instead of embarking on an adventure in space, you're choosing a candy bar -- and you're in your living room. This is the augmented and virtual reality world that foods giant The Hershey Company and 24-hour online delivery service goPuff have prototyped and hope to bring to consumers in the future.

Virtual reality (VR) and augmented reality in retail are nothing new; stores like Ikea allow shoppers to customize rooms online to view how the furniture would look in their homes. Meanwhile, both Apple and Google have released augmented reality (AR) technology, ARKit and ARCore, respectively, to enable developers to create AR experiences. Goldman Sachs estimates the augmented reality/virtual reality market for retail will hit $1.6 billion by 2025, likely bringing a holodeck-like experience to consumers' homes.

This is the new normal, according to Brian Kavanagh, senior director of retail innovation at The Hershey Company. The old retail model, in which shoppers enter a store or place an order online, is giving way to a new immersive shopping model that requires brands to provide experiences, as well as products. Must-do errands are being replaced with automation, and retailers need to provide places where consumers want to go to explore, interact and shop, he said.

"That's not limited to brick-and-mortar anymore," Kavanagh said. "Technology has given consumers the power to shop how they want, when they want and where they want. Retailers and brands alike must consider this 360-degree approach to reaching the consumer."

The Hershey Company and goPuff demoed how augmented reality in retail, along with gamification, could work during the South by Southwest (SXSW) festival in Austin, Texas, earlier this year. Starting in a dorm room or living room, visitors were transported to different worlds based on product categories: ice cream, snacks called munchies and beverages. For example, the ice cream world consisted of mounds of ice cream, and consumers could play a game to catch ice cream scoops in cones.

"VR is just one of many technologies that have the potential to disrupt the retail environment," Kavanagh said. VR and AR help brands remove physical limitations from the shopping experience and create an entirely new experience -- an experience with no rules, he added.

"Everyone in retail and consumer products is trying to get closer to the customer," said Daniel Folkman, vice president of business development at goPuff. "In today's environment, consumers are used to getting what they want, when they want and how they want, so what can you do to bring the store or shopping experience closer to the consumer?"

VR is a chance to provide a unique, enjoyable experience to customers, as there are no online shopping experiences that consumers are beholden to, he added.

GoPuff has been working with large consumer packaged goods companies, including Hershey's, to build on this momentum.

"People seemed to like the idea of shopping in a virtual world ... and experience products they grew up loving and consuming in a different way," Folkman said.

Hershey's has been focused on helping consumers find the products they want in the channels they want, and it has been experimenting with technology that can help its category, partners and customers.

"Our brands have a strong emotional connection with people, and the snacking category lends itself to more experiential shopping," Kavanagh said.

The SXSW demo users responded positively and, for many of them, it was their first experience with augmented reality in retail.

"We heard repeatedly that they forgot they were actually shopping," Kavanagh said.

While there are no definite plans for Hershey's to introduce this goPuff retail experience on a larger scale, it is still a possibility, according to Kavanagh.

"We feel that the barriers to VR are increasingly coming down, and the adoption curve is following similar paths of disruptive technology [like] PCs and mobile phones," he said.

As consumers, particularly younger consumers, continue to demand more interesting shopping experiences, and as VR and AR technologies continue to mature and become more accessible, it may be possible to one day shop like a passenger on the Starship Enterprise.

Augmented reality in retail takes the customer experience beyond a computer or smartphone screen and drops it into the living room. And, based on early feedback, this may be the preferred way to order candy bars in the future.

This was last published in July 2018

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