New con­sumer ex­pe­ri­ences merge re­al­i­ties

China Daily European Weekly - - COMMENT - Barry He The au­thor is a Lon­don-based colum­nist. Con­tact the writer at edi­tor @mail.chi­nadai­

Tech­nol­ogy and proven busi­ness mod­els are be­ing com­bined to en­sure con­ve­nient and mean­ing­ful re­tail shop­ping

Shopa­holics around the world in the past few years have en­joyed in­creas­ingly con­ve­nient lives. As com­pe­ti­tion be­comes fiercer for an ever di­ver­si­fy­ing range of prod­ucts, re­tail­ers are look­ing for more cre­ative, quicker ways to en­gage with their cus­tomers.

The bat­tle that phys­i­cal re­tail­ers are fight­ing against on­line gi­ants is in­creas­ingly daunt­ing, and so­cial me­dia mar­ket­ing and digital brand­ing have played a large part in keep­ing the fight for brick and mor­tar alive up till now.

How­ever, there are new pow­ers at play. China has been the world leader in ex­per­i­ment­ing with emerg­ing tech­nolo­gies, such as aug­mented re­al­ity and vir­tual re­al­ity, as the lat­est ar­tillery pieces in this mas­sive eco­nomic game of thrones, which was worth $25 bil­lion on Sin­gles Day last year.

So what is the dif­fer­ence be­tween AR and VR, and why do they have the power to po­ten­tially tip the bal­ance back in fa­vor of shop­ping cen­ters and high-street re­tail­ers?

Vir­tual re­al­ity in­volves a com­puter-gen­er­ated en­vi­ron­ment ac­cessed through a head­set, by which the cus­tomer is fully im­mersed in a new world — for ex­am­ple at an ex­cit­ing mu­sic con­cert or a re­lax­ing hol­i­day on the beach. Aug­mented re­al­ity, how­ever, does not ob­struct or re­place the view or ex­ist­ing sur­round­ings of the con­sumer, but in­stead merges the view of the real world with com­puter-gen­er­ated graph­i­cal con­tent, for ex­am­ple show­ing what an item of cloth­ing would look like on you with­out hav­ing to ac­tu­ally wear it be­fore pur­chas­ing. Poke­mon Go ma­nia in 2016 and the ac­cep­tance of AR with in­dis­crim­i­nate open arms showed re­tail­ers around the world the power that such tech­nol­ogy could have on the way we shop.

While a few com­pa­nies in the United States have been slowly ex­per­i­ment­ing with in­te­grat­ing AR and VR into the shop­ping ex­pe­ri­ence, China has been blaz­ing full steam ahead. At the end of last year, a sur­vey by World­pay in­di­cated that 95 per­cent of Chi­nese re­spon­dents had had ex­pe­ri­ence with us­ing VR or AR in the pre­vi­ous few months. A fur­ther 84 per­cent agreed that the tech­nol­ogy was im­por­tant to shap­ing the fu­ture of shop­ping. Chi­nese mil­len­ni­als are rapidly grow­ing com­fort­able with new tech­nolo­gies and are will­ing to ex­per­i­ment with it in their re­tail ex­pe­ri­ences.

One such shop that Chi­nese mil­len­ni­als are flock­ing to is To bol­ster off­line brick and mor­tar sales, AR tech­nol­ogy has been rolled out this year in a bid to in­te­grate on­line and off­line shop­ping ex­pe­ri­ences for main­stream technophiles. Sev­eral AR-pow­ered prod­ucts have been used, con­sist­ing of a va­ri­ety of makeup and dress­ing mir­rors as well smart glasses. The abil­ity of cus­tomers to rapidly de­cide whether the prod­uct is right is vi­tal to stay ahead in the fast­mov­ing world of high-street fash­ion.

For ex­am­ple, the 3D vir­tual fit­ting room gives shop­pers the abil­ity to try on clothes through a cus­tom­ized avatar match­ing their hair, face and body di­men­sions. These store fea­tures will quickly al­low users to en­gage in mul­ti­ple in­ter­ac­tive ex­pe­ri­ences, by which they will then be able to find the right prod­ucts on­line. It may seem coun­ter­in­tu­itive to walk to the store only to then pur­chase the prod­uct on­line, but con­sumer an­a­lyt­ics in­di­cate that the ex­pe­ri­ence of phys­i­cal shop­ping is enough to en­tice buy­ers if the ex­pe­ri­ence re­mains cre­ative and en­gag­ing.

China’s mixed re­al­ity is fast spread­ing across the re­tail uni­verse. This is in part thanks to the sup­port of the gov­ern­ment in its 13th Five-Year Plan (2016-20) for the econ­omy, which has in­vested in re­search and devel­op­ment in the area. Na­tional com­pe­ti­tions and con­fer­ences for AR and VR are fre­quent, and these en­joy a re­lent­less stream of sub­si­dies and in­cen­tive pro­grams to en­sure that the tech­nol­ogy takes off. JD’s use of AR tech­nol­ogy in­creased the con­ver­sion rate of pur­chases to 9.6 per­cent ear­lier this year, be­fore steady­ing to a main­tain­able 7.5 per­cent.

Keen to avoid the 2016 boom and bust of VR tech­nol­ogy in the West, these ven­tures are com­bined with proven busi­ness mod­els to en­sure that the VR and AR groove runs deep into the fab­ric of the re­tail ex­pe­ri­ence of to­mor­row.

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