VIRTUAL REALITY IN RETAIL GARY KOEPKE & ADRIAN SLOBIN
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1 VIRTUAL REALITY IN RETAIL GARY KOEPKE & ADRIAN SLOBIN
2 Virtual reality (VR) is in the midst of a rebirth. A new set of enabling technologies including faster processor speeds and higher-resolution graphics are driving a second wave of adoption and experimentation. The result will be a transformative technology that reaches far beyond gaming to reshape multiple industries, from retail to travel to hospitality. One of the most significant opportunities, we believe, is in the retail space. When Retail Meets VR We believe virtual reality is going to fundamentally transform the human experience of shopping and, in doing so, lift sales for those retailers who get ahead of the curve. Brands have an opportunity to stake out an innovation leadership position by building custom virtual reality experiences that engage customers beyond physical and digital brand experiences. We call this v-commerce. V-commerce will be the next evolution of e-commerce, as retailers and brands create fully immersive, contextual shopping experiences that go beyond the flat world of 2-D e-commerce. Along with the inherent excitement it fosters, virtual reality adds an enticing layer of information and comfort to the e-commerce experience. Consumers can be presented with a range of data regarding the products or services they are about to purchase, complemented by their ability to step into the future into their future selves with said products and services. With virtual reality removing the barrier of too little information or interaction, consumers are likely to develop a confidence in their purchases that then translates into increased comfort with (and affinity toward) the brand providing such distinct experiences. They are more likely to reach the renowned euphoric state of discovering a great buy, one that they not only wish to brag about, but will also remember and come back for. One day, we believe this kind of immersive, augmented reality will become a part of daily life for billions of people. - Mark Zuckerberg Announcing his $2B, 2014 acquisition of Oculus Rift. 1 1 Facebook. Mark Zuckerberg Post.
3 Potential applications Even though widespread mobile adoption still feels a bit distant (see Figure 1), we re already seeing opportunity areas for major brands in v-commerce. By building a customized virtual reality show world, sports apparel and equipment brands like Nike, Adidas, or New Balance have the potential to show their consumers how workout apparel moves on an athlete s body, or how a famous golfer tests out clubs. In the world of VR, consumers can immerse themselves into the story of a sports product, discover where the leather from a basketball is made, or learn how to use a specific piece of workout equipment from a top athlete. Home improvement retailers such as Home Depot or Ace Hardware can create experiences that allow consumers to try power tools, experience different lighting and landscapes, or even see how their kitchen will look after a $20,000 renovation versus a $50,000 renovation. Outdoor gear retailers such as REI, North Face, or L.L. Bean can create a show world that allows consumers to see what that new tent looks like all set up on a camping excursion. They can climb inside, manipulate the weather conditions, and test the gear with other products. FIGURE01 The future of VR adoption Within the next 12 months, VR enabled mobile devices will be announced by every major smartphone manufacturer. In 3 to 5 years, we anticipate full adoption. WE ARE HERE TODAY 1-2 YEARS OUT 3-5 YEARS OUT VR ADOPTION Sixense VR Mobile Phones Samsung Gear VR Google Cardboard Valve/HTC Vive Dev Kits Facebook/Oculus Rift Dev Kits Sony Morpheus Dev Kits Samsung Milk VR Facebook 3600 YouTube 3600 FULL MOBILE ADOPTION Sixense VR All Smartphones Samsung Gear VR Google Cardboard Oculus Crescent Bay Valve/HTC Vive Sony Morpheus Razer OSVR Samsung Milk VR Facebook 3600 YouTube 3600 IN-HOME AND MOBILE ADOPTION Sixense VR All Smartphones Samsung Gear VR Google Cardboard Oculus Crescent Bay Valve/HTC Vive Sony Morpheus Razer OSVR Microsoft Hololens Magic Leap Apple VR Samsung Milk VR Facebook 3600 YouTube 3600
4 Toy retailers such as American Girl can transport their consumers to the civil war era when their American Girl doll lived, while Disney can send consumers to the ice wonderland of the popular animated movie, Frozen. In the future of mass virtual reality adoption, mobile-heavy flash retailers like Gilt Group or Groupon can prompt users to grab their headsets and enter an immersive experience to purchase limited edition products, swipe through options, see how items fit on a mannequin, see how products complement each other, or learn details about designers. For services, consumers can step into a show world that simulates what a spa may look like before they decide to purchase the experience. The opportunities are there for anyone looking to tell their story in a more intimate and personal way. From travel to automotive, real estate to sporting events, the potential is nearly limitless. Other interesting developments There have been a number of other recent developments enabling the development of v-commerce at scale. Facebook and YouTube are now supporting 360 video Facebook and YouTube have opened their platforms to 360-degree video, and consumers now have access to affordable 360 cameras such as the Ricoh Theta and Kodak SP360. Furthermore, widespread drone usage enables soaring vistas. the next eighteen months, expect to see an explosion of 360 content of widely varying quality with creators now having a place to put it. Further investments in mixed reality platforms With the launch of Microsoft s Holo- Lens, mixed reality or augmented reality platforms are showing some signs of life, even with the shutdown of Google Glass. Creation of developer ecosystems We re already seeing signs that VR companies are investing in developer ecosystems. Oculus, among others, has a robust developer program. Look for continued investment from Samsung, Google, and Facebook into nurturing the VR developer ecosystem. Perhaps more than any other factor, the success of VR will depend on its developers and world creators. FIGURE02 Merrell ran a VR experience at the Sundance Film Festival to highlight the traction of Merrell s new Capra hiking boot. The experience took visitors to the Dolomites, a mountainous region in Italy, and allowed them to walk through the region, cross a rope bridge over a chasm, and walk along a rock wall. 2 For agencies and brands already shooting TV and digital content, it is a small step to 360 degree and then into VR. The bottom line: Over 2 Merrell. Inspiring Awesome Experiences in Park City at Sundance.
5 Actions to be taken now For retailers looking to stay ahead of the curve, there are three actions they should take soon. Start testing and playing For most retailers, the appropriate focus in VR is on testing and learning how to create great, original experiences in these new worlds. Apart from maintaining a purview over notable use cases, retailers should look toward their consumers and identify ways in which their shopping experiences could benefit from VR. The next step is finding the appropriate partners for testing those hypotheses, assessing the results, and iterating along the way. Leading retail brands should be in the test-and-learn phase now, so that when full adoption arrives in three to five years, they will already have this platform in place (for both in-store and v-commerce). A focus on mobile adoption The immediate opportunity in VR is mobile adoption, so place VR on your mobile roadmaps. Evaluate your technology integration points Just like with web and mobile, VR must integrate with your backend technology. From a technology perspective, planning for integration will be essential, so that consumers get a rich, personalized experience enabled with current inventory and pricing. If there is one thing we learned from the latest mobile disruption, it is that integration must be accounted for early in the design process. Conclusions Virtual reality is a transformational medium. It also allows for creating entirely new types of experiences and the use of our Storyscaping approach to fully immerse consumers in virtual worlds that are real to them emotionally and psychologically, the impact of which we are just starting to explore. But the mass adoption of virtual reality is coming. Within the next twelve months, VR enabled mobile devices will be announced by every major smartphone manufacturer. In twelve to twenty-four months, we will start to see more experiences built for mobile VR usage. Then in three to five years, we expect to see full adoption. Brands should start getting ready now.
6 Gary Koepke Vice President, Chief Creative Officer, SapientNitro North America Gary is an internationally acclaimed designer, creative director, and marketing executive who is bringing to life our vision of redefining storytelling for an always-on world. Adrian Slobin Managing Director and Digital Strategist, SapientNitro Minneapolis Adrian heads up SapientNitro s innovation offering, which includes a lab, an investment arm, and formal relationships with university innovation centers. Broadly speaking, he is focused on the continued evolution of both mature and emerging digital experiences. INSIGHTS WHERE TECHNOLOGY & STORY MEET The Insights publication features the marketing intelligence, trend forecasts, and innovative recommendations of boundary-breaking thought leaders. The SapientNitro Insights app brings that provocative collection now in its digital form to your on-the-go fingertips. Download the full report at sapientnitro.com/insights and, for additional interactive and related content, download the SapientNitro Insights app. SapientNitro, part of Publicis.Sapient, is a new breed of agency redefining storytelling for an always-on world. We re changing the way our clients engage today s connected consumers by uniquely creating integrated, immersive stories across brand communications, digital engagement, and omnichannel commerce. We call it our Storyscaping approach, where art and imagination meet the power and scale of systems thinking. SapientNitro s unique combination of creative, brand, and technology expertise results in one global team collaborating across disciplines, perspectives, and continents to create game-changing success for our Global 1000 clients, such as Chrysler, Citi, The Coca-Cola Company, Lufthansa, Target, and Vodafone, in thirty-one cities across The Americas, Europe, and Asia-Pacific. For more information, visit SapientNitro and Storyscaping are registered service marks of Sapient Corporation. COPYRIGHT 2015 SAPIENT CORPORATION. ALL RIGHTS RESERVED.
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