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How Augmented Reality is changing the face of luxury retail

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How Augmented Reality is changing the face of luxury retail

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Snap’s global head of luxury, Geoffrey Perez, explains how brands such as Dior, Gucci and Piaget are changing the face of luxury retail using Augmented Reality.

In December 2021, Bain & Company published a forecast stating that online will become the single biggest sales channel for personal luxury goods in the coming years. The luxury space is expected to make up to 30 percent of the global market in 2025. The same forecast predicted monobrand physical retail stores would account for only 28 percent over the same time. 

Many within the luxury space are embracing digitalisation. However, there are questions as to how the instore luxury shopping experience can be replicated online. How can we replicate the same personalised and elevated in-store experience with the convenience of digital media? 

Many are turning to Augmented Reality (AR) to answer this call.  

Apps like Snapchat have been leading the adoption of AR globally, and the same technology is now being applied to luxury retail. 

AR’s ability to let customers see, interact with, and try-on products in a lifelike setting unlocks unprecedented opportunities for high-end retailers. Gucci, Prada, Piaget and Louis Vuitton have already jumped on board.

Working with global brands, here are three examples of how AR is changing the luxury retail game:

AR for a personalised try-on experience 

One of the biggest challenges with online shopping is not being able to physically try-on a personal item before purchase. But AR is allowing users to do this using the power of their smartphone. Brands like Dior, Gucci and Piaget are leading the way. 

Dior recently launched its new B27 sneaker range in Augmented Reality. It allowed Snapchatters the opportunity to try-on the sneakers in AR at home. The users could then move through to purchase. Dior successfully drove sales on its website, and the AR Lens generated a return on investment of 6.2X. In addition to promotion via paid advertising, Dior generated over 2.3 million views of the AR try-on experience via a Business Profile

AR has the ability to replicate the in-store try-on experience through the power of the camera. It’s reinventing the opportunity for brands to engage with consumers online. 

AR to assess fit and reduce returns 

When working with luxury brands, Snapchat’s AR is more than just about how the garment or accessory looks on a consumer. It’s also used to assess fit and limit return issues with online purchases. 

There are many barriers when it comes to shopping for high-end items online. One is the fear of returning a high-value item if it doesn’t fit. It was revealed by Foresight Factory that Australian shoppers returned $99.5 million worth of clothes. This is all in one year due to purchase not fitting or not being suitable. 

The global report found that Augmented Reality “try on” technology could reduce annual online returns by 31 percent. 

 

This also represents an opportunity for luxury brands to reach more regional and remote shoppers. Almost half (46 percent) of rural Australian shoppers find the difficulty of returning products a key deterrent for online shopping. This could be addressed via AR try-on. 

AR to increase engagement

Snap’s internal data shows Australian Gen Z and Millennials are invested in luxury fashion. Sixty percent of the community stated they buy luxury fashion items online. But before purchase, brands are looking to engage with young digital natives in an environment they’re most comfortable.

AR delivers twice the level of visual attention compared to non-AR equivalents. This leads to improved memories, enhanced experiences, and a more powerful response from consumers when looking and purchasing a brand. Further, when people interact with products that have an AR experience, their conversion rate is 94 percent higher, indicating a deeper individual connection with the brand. 

This is illustrated by Robert Triefus, EVP of brand & consumer engagement, Gucci who said, “The conversion rates that we’ve seen have surprised us. As a result we’re doubling-down on AR experiences to drive eCommerce.” 

Any luxury brand without an AR strategy in 2022 should reconsider its approach. A utility when shopping, AR allows users to get a 360 degree view of a product. It allows users to see what the product looks like, as well as providing a more engaging shopping experience. 

Final thoughts 

The luxury industry can no longer ignore the influence of millennials and Gen Z customers. AR speaks to a new generation of digital-native shoppers. Those who are used to buying online and whose first experience with a luxury brand is most likely via its website or social media. Millennials will make up 50 percent of luxury sales by 2025. This is already accounting for 20 percent, Gen Z shoppers are set to account for 40 percent of the market by 2035. In addition, Millennial buying power is increasing year over year. Now is the time for luxury brands to not only reimagine retail, but to catapult immersive shopping experiences into the future. It’s an exciting time, and one where the face of retail is changing thanks to the power of Augmented Reality.

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