The future of AR in Chinese Luxury Retail

Perhaps the most significant specific trend within the new customer-centric universe is the pervasiveness of mobile as the leading technology in the movement toward omnichannel marketing. While consumers are now interacting with brands through a variety of different media including email, social media, PCs, tablets, smartphones and the store, mobile has taken the lead as the dominant channel for retailers based on its convenience and consistent presence with the consumer. These trends are only expected to continue as the market moves toward the next evolution of customer-centric technology and all it has to offer.

When e-commerce and later social media took off, first adopters took large advantages and managed to eat bigger shares of the market. Chinese design agencies, especially those who established themselves as market leaders, are scared to be left out and surpassed by newcomers who better understand new technologies. This is why Augmented Reality (AR) and Virtual Reality (VR) technologies are so fascinating in the eyes of these CEOs. It led some companies to blindly pump cash into R&D programs that most of the times don’t really know where they are trying to get.

Yihaodian: AR and guerrilla marketing in China

Yihaodian, one of China’s leading e-commerce websites, has teamed up with Ogilvy & Mather Advertising/Shanghai — this time taking the battle for China’s grocery shoppers ‘offline.’  In a guerilla stunt, Yihaodian has just launched 1,000 stores overnight through an app. These stores are located at some of China’s most iconic landmark locations as well as directly in front of Yihaodian’s offline competitor brick & mortar supermarket stores. The interesting twist is that these Yihaodian stores are not real brick & mortar stores. They are virtual 3D stores where consumers can only see, visit and shop in them by using the Yihaodian Virtual Store App while being physically at one of the 1,000 locations. Each of the stores is packed with promotional discount coupons and high-value, free gift vouchers that are just waiting to be claimed by shoppers. The word was spread socially on Weibo (the Chinese version of Twitter) during the launch of the promotional video to garner national attention.

The most important keyword is ‘immediacy’

Exhibition designers can not avoid confronting with this technology, because, especially in China, customers aged below 40 are avid consumers of a wide range of new media on smartphones and tablets. Must be kept in mind that in these media, massive consumption of informations happens in seconds and this made all of us a bit lazy. People don’t want to spend more than a couple of seconds to understand what an exhibit is telling them. Augmented Reality perfectly fit this pool of people behaviors because it can take digital marketing strategies to a more sensory, immediate level – perfect for dynamic new generations. But don’t expect anybody to spend energy to download an app in order to ‘enjoy’ your multimedia content. Most people won’t go further than scanning a QRcode.

Stability VS Innovation, how AR and luxury brands can go together

Luxury brands and shopping malls are very conservative customers, yet they crave for innovations that can impress their customers. Marketing campaign cost a lot, and this is particularly true in Eastern Asia, where the high population density in urban areas has pushed property costs to heights that would embarrass every European real estate. Floor space is expensive for all parties, this is why off-line campaigns last for a few week at the most. Nothing can go wrong or the investment is gone. Augmented Reality technologies have already become part of the marketing tools also for luxury brands. I think design agencies in integrating these technologies should face a choice between two paths: work on site specific ‘art-installations’ or implement existing AR tools. Any way in between means you are walking into shifting sands. I’ll try to explain why.

To figure out how these technologies can fit into the advertising industry for luxury brands, I think we should think first of what the word ’luxury’ really mean. It recalls two words: ‘craftsmanship’ and ‘exclusivity’. A lot of AR applications can help to achieve both definitions. Craftsmanship means customization, luxury products try to be tailored specifically for the customer. Augmented Reality can be used in products display to tailor the user experience to the customer’s needs. This intrinsically gives a sense of exclusivity.

On the other side once the novelty of this technology is gone, it won’t give customers the ‘wow-effect’ anymore. Marketers should think carefully before adopting these technologies to display luxury products: luxury products must to be perceived as relatively stable or at least slower-paced goods. Marketing campaigns purely based on AR can be rapidly start to be perceived as old-fashioned and cheap, so the downside of this can be extremely dangerous for the image a luxury brand because it totally nullify the exclusivity feature of the brand.

The route to sustained success

The route to sustained success is applications that offer genuine utility and enhance the customer journey, choosing between two path: the adoption of a custom-made interactive ‘art’ installation, or the implementation of already tested and commercialized AR products. In the first case AR is the main subject, and we are pushing the technology outside of its boundaries to give the visitors a surprising custom made experience. In the second one, we are using an already commercialized tech product to provide a real service to the visitor that simply betters his/her experience, so that AR is just a tool. AR has already happened, and habits are changing faster than consumer products do.

For cash rich, time poor consumers AR offers the opportunity to try on luxury items – be they watches, jewellery or clothes – wherever and whenever they like without the need to worry about retail locations or opening hours. As such, AR could increase desire, facilitate choice and prompt a retail visit to make a purchase. But the assumption that moving consumers along a purchase funnel that ends in a retail store is all that AR can achieve is likely to be a mistaken one.  AR may be able to enhance the online experience to such a degree that it prompts an online purchase.

As luxury consumers become more familiar with AR, it’s ability to excite and generate word of mouth will fade. Its future lies in offering genuine utility – to educate, to allow exploration, to offer choice and to facilitate purchase.  As long as AR can successfully move along this path, then its future as an integral part of the luxury retail experience looks assured.

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