Augmented Reality Finally Becoming Reality?


Though it has been under development since the 1950’s, Augmented Reality (AR) is only now becoming practically applicable (PwC, 2016). In the last decade, AR has been in the centre of attention among academics, resulting in numerous studies analysing the (dis)advantages derived from the many possible AR applications. AR offers an enhanced perception to help people to experience the environment in new and enriched ways that will benefit in the fields such as education, health, design, and retail (van Krevelen et al., 2007).

While different definitions of AR still exist, it’s objective is clear; enhancing the user’s perception of and interaction with the real world. The business opportunities of this novel technology seem promising, as people can look at operations from a combined view of digital and physical operations while externalizing the burden of the task (PwC, 2016). Since AR is one of the novel technologies that could support new business activities and generate new business opportunities, it is of great value to investigate AR’s business potential. AR is a technology that could revolutionize the way companies do business and consumers buy products (Azuma, 1997). Specifically, AR has the potential to reshape the world of retail with its’ influence on the shopping experience of consumers. Major benefits of AR in the retail industry are that users can virtually visualize the products they would like to purchase, explore virtual showrooms, and create a more appealing shopping experience (Guven et al., 2009). But how exactly does AR affect the retail user experience? Will it eventually result in higher user satisfaction or will the limitations of the technology outweigh the opportunities?

According to Poushneh et al. (2017), AR-enriched applications empower users to better perform their tasks and appreciate the functionality of the product more. This is because AR-enriched applications are more entertaining and it enables consumers to have endless interaction with virtual information (Poushneh et al., 2017). Not only does AR produce higher user satisfaction, but also higher user willingness to pay (Poushneh et al., 2017). However, these benefits of AR will only become available when the technology application is practical, easy to use, easy to learn, organized, symmetric, attractive, and pleasant, in order for it to provide relevant information to the users (Poushneh et al., 2017). If companies fail to do this, it could actually negatively affect the user experience after all.  Therefore, developing such applications is not feasible for every company. As can be seen from the figure below, only 3 percent of the retailers has already implemented a well-working AR application (Business Insider, 2019). Companies that have already implemented such applications in their business model are therefore considers the first movers, of which IKEA is one.

(Business Insider, 2019)

Business model

IKEA is a Swedish multinational group that designs and sells (ready-to-assemble) furniture kitchen appliances, and other useful home accessories. Launched in 2017, the IKEA Place app helps customers to visualize how over 2.000 furniture items would look like in their homes (IKEA, 2019).

(IKEA, 2019)

Currently available on the app are large furniture such as sofas, armchairs and storage units (IKEA, 2019). Other products are still in development to become available in the app. The main objective for IKEA according to Michael Valdsgaard, leader of digital transformation at IKEA, is to allow shoppers to make more reliable buying decisions. According to Michael, most people postpone a purchase because they are not entirely sure that the colour is going to match or fit the room (IKEA, 2019). With this app, he hopes that this insecurity to purchase gets replaced with entertainment and security. It saves the customer a lot of time and consideration before placing a purchase. Furthermore, IKEA (2019) automatically scales products based on a room’s dimensions and claims that is able to do so with up to 98 percent accuracy (IKEA, 2019). Even allowing customers to see the texture of a fabric and the interplay of lift and shadows on a specific location.

Efficiency & Limitations

As mentioned before, AR-applications must be practical, easy to use, easy to learn, organized, symmetric, attractive, and pleasant, in order for it to provide relevant information to the users (Poushneh et al., 2017). Looking at the IKEA Place app, it seems to fulfil all these criteria. With easy to follow guidelines that help people to use the app while offering 98 percent accuracy, the app is able to provide additional value to the shopping experience of the users.

From a joint profitability perspective, the IKEA Place app offers both additional value to IKEA as well as to its customers. IKEA is able to help the customer in their shopping journey in order to make it more enjoyable. Furthermore, it also helps the customer to make more correct purchasing decisions and thereby reducing the number of products being returned, lowering costs, and increasing customer satisfaction. With IKEA’s large customer base, the company is able to grab a large share of the online home furnishings market, boosting its sales and giving an advantage over its competition (Business Insider, 2019). On the other hand, app users are able to enjoy a 3D-visualization of potential furniture, reducing uncertainty and the time needed to make a purchase decision, since there is less hesitation regarding the colour, size, fabric, and overall fit.

From a feasibility point of view, the company is not facing any legal or political issues. Rather, IKEA’s biggest challenge would be the social aspect. While IKEA claims to offer 98 percent accuracy to the app users, there is a chance that the app might not visualize a piece of furniture correctly to the user. For example, when the user tries out a sofa in his/her living room and the app shows that the product should fit, however, once it arrives it results to be too big. The customer has then wasted time, money and effort while relying on the advice given from the company. In such a case, will the customer bear the costs or will IKEA be held responsible?

(IKEA, 2019)

Another drawback of the IKEA Place app could be linked to consumers’ cognitive limitations discussed during session two (Tsekouras, 2019). When customers are offered many options, they find it difficult to search through all of them. There is a fear of regretting the ‘wrong choice’. This could also be the case with IKEA, since the app allows the customers to compare thousands of products and have them visualize it in their room, making it hard t consider all relevant attributes when choosing between alternatives.

References

Azuma, R. T. (1997). A survey of augmented reality. Presence: Teleoperators & Virtual Environments6(4), 355-385.

Guven, S., Oda, O., Podlaseck, M., Stavropoulos, H., Kolluri, S., & Pingali, G. (2009, March). Social mobile augmented reality for retail. In 2009 IEEE International Conference on Pervasive Computing and Communications (pp. 1-3). IEEE.

IKEA (2019). A better Reality. Retrieved from Https://highlights.ikea.com/2017/ikea-place/.

Poushneh, A., & Vasquez-Parraga, A. Z. (2017). Discernible impact of augmented reality on retail customer’s experience, satisfaction and willingness to buy. Journal of Retailing and Consumer Services34, 229-234.

PwC. (2016). Augmented reality: the road ahead for augmented reality. Retrieved from

Tsekouras, D. (2019). Session 2: Consumers’ Cognitive Limitations. Erasmus University.

Van Krevelen, D., & Poelman, R. (2007). Augmented reality: Technologies, applications, and limitations. Vrije Univ. Amsterdam, Dep. Comput. Sci.

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