Augmented reality in retail and its impact on sales

• Main Authors: TAN, Yong Chin, CHANDUKALA, Sandeep R., REDDY, Srinivas K.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: augmented reality; online retail; mobile app; virtual product experience; product uncertainty; Marketing; Sales and Merchandising; Technology and Innovation
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/6696; https://ink.library.smu.edu.sg/context/lkcsb_research/article/7695/viewcontent/AR_Retails_Sales_2021_av.pdf
• Institution: Singapore Management University

The rise of Augmented Reality (AR) technology presents marketers with promising opportunities to engage customers and transform their brand experience. While firms are keen to invest in AR, research documenting its tangible impact in real-world contexts is sparse. In this article, the authors outline four broad uses of the technology in retail settings. Next, they focus specifically on the use of AR to facilitate product evaluation prior to purchase, and empirically investigate its impact on sales in online retail. Using data obtained from an international cosmetics retailer, they find that AR usage on the retailer’s mobile app is associated with higher sales for brands that are less popular, products with narrower appeal, and products that are more expensive. In addition, the effect of AR is stronger for customers who are new to the online channel or product category, suggesting that the sales increase is coming from online channel adoption and category expansion. These findings provide converging evidence that AR is most effective when product-related uncertainty is high, demonstrating the technology’s potential to increase sales by reducing uncertainty and instilling purchase confidence. To encourage more impactful research in this area, the authors conclude with a research agenda for AR in marketing.