WE/AR Blog The Ultimate Guide to Augmented Reality (AR) in Retail
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The Ultimate Guide to Augmented Reality (AR) in Retail

By Veronika Petrenko
19 min read
Last updated on 21.02.2022 at 18:46
AR in retail

Today augmented reality in retail represents both innovation and challenge that’s changing the online shopping experience. State-of-the-art trends present themselves every second, creating new opportunities and learning experiences for retail industry specialists. 

Thanks to AR in retail new experiences like the try-before-you-buy are made possible. Consumers can experience a product or service and see how it can offer a solution or solve a problem before actually paying for it. They’re even able to customize a product to receive something that has been created explicitly for them. 

But how exactly is augmented reality used in the retail business? What future opportunities should we expect to see as a result of this ever-evolving technology?

If you’re asking yourself these questions, you’ve come to the right place because, at WE/AR, we have a team of specialists who are ready to answer you. So keep on reading to learn more about AR applications in retail and how it changes the retail shopping experience for manufacturers, sellers, and consumers. 

What is Augmented Reality?

Before we dive into details, it’s important to understand what augmented reality is. Augmented reality refers to an immersive and interactive experience that incorporates real-life objects with computer-generated items. 

In the retail business, it refers to the manipulation of products that don’t actually exist at the time of using the technology but can be placed and altered in real-time. 

It is a combination of real and computer-generated objects in a single interactive experience. Real-time updates and alterations are possible thanks to this technology which allows users to adjust and use something that they don’t actually own or hold. 

Using overlaid sensory information, the user can add something to their existing environment or mask something that they already have. For example, in the retail business, a potential buyer will see how a clothing item fits before actually buying it. Using the same technology, they can also change the existing color and apply a different one. The list of its applications is endless.

Augmented Reality Retail
Image from shutterstock.com

How is Augmented Reality Different From Virtual Reality?

Both augmented and virtual reality technologies offer several benefits like providing better communication, creating an immersive experience, and offering more engagement. But these two technologies work differently and offer companies a different kind of competitive advantage. 

In short, augmented reality adds something to your current reality, while virtual reality replaces it. Augmented reality in the retail business allows users to utilize virtual products and concepts in a real environment and manipulate them to offer different benefits. On the other hand, virtual reality immerses users in an alternate reality that doesn’t even exist. They get disconnected from the real world and experience a new one using the products or services they’re going to buy. 

Both technologies positively impact the retail shopping experience because they change the way e-commerce functions. Users are no longer being surprised by a product that doesn’t look like they’ve expected or doesn’t live up to its potential. But there are several differences that set these two technologies apart and affect their applications in real life. 

Types of AR Applications

Before integrating AR applications into your business ecosystem, it is crucial to get to know the differences between various types of AR technology. They include:

Marker-Based AR

Marker-based AR is also known as image recognition or recognition-based AR. It relies on the straightforward identification of markers to create augmented reality. Markers are patterns that a smartphone camera or any other camera can recognize, and the captured images are then processed to be visually independent of the surrounding environment. 

The images captured can be paper-based or images of real objects that are later manipulated in a created reality. The markers are scanned by a device to create a new reality that features a created object, video, animation, or text. Marker-based AR is made possible using apps that allow users to scan those markers using the cameras they already have on their devices. 

A good example of this augmented reality retail application is used in restaurants. For example, interactive menus that show how a dish would look and allow users to examine various ingredients use marker-based augmented reality in their personalized AR stores. 

Boston Pizza made use of this technology by introducing an augmented reality interactive menu that a customer can easily view using their smartphones. No other devices are needed to show the menu item, which can make this technology more accessible. 

Markerless AR

Markerless AR is a different application of augmented reality because it grants users more control, allowing them to see 3D products and manipulate them easily in their reality. This kind of AR is used when the retailer doesn’t have information about the user’s physical space or actual reality. 

The technology combines software, video graphics, and audio with the different input data from the smartphone or headset the user is using, and the sensors will transform 2D images into interactive 3D graphics. It relies on simultaneous localization and mapping technology to improve the accuracy of the rendered results, even if the objects aren’t within the user’s field of vision. 

Markerless AR Retail
Image from content26.com

Compared to marker-based augmented reality, markerless AR applications offer several advantages. The user can start the AR application wherever they are using a handheld device if a headset isn’t accessible. The technology offers a wider field of view, and the content can be shared with others. 

Macy’s added AR API to their native iOS app to allow its customers view their furniture in 3D. Customers can simply tap the ‘View in My Room’ button while using an app and visualize how the product would look in the context of their homes.

Location-Based AR

Location-based augmented reality relies on smartphones and other devices that provide location detection. 

Using this AR application, the user’s surroundings come alive with overlaid computer-generated content that transforms the space. The newly created reality changes based on where the user looks. 

IKEA Place remains to be one of the most successful applications of this technology in the retail industry. Users can view different pieces of furniture and transform their current space by adding these different pieces. Customers can also choose different colors and layouts to pick the best setup that works for them. 

Projection-Based AR

Spatial AR or projection-based augmented reality delivers computer-generated digital data within a stationary context instead of a handheld device or headset. Because no devices are needed, the projection-based reality is probably one of the simplest augmented reality applications. Both users and the created objects can move within a specified space, where the generated data creates the needed illusion. 

In the retail business, projection-based AR can be used to demonstrate the features of a new product in product launch events or to showcase the differences between two products. 

Nike has created a projection AR experience at their London studio. It allowed customers to design their own model of Nike sneakers in 3D.

Superimposition-Based AR 

Superimposition-based augmented reality doesn’t create a new digital object but instead offers a new and alternate view to an existing one. The augmented view explores a new side of a real product that already exists. 

In the retail business, several companies have used this technology to market their products. Kylie Cosmetics introduced a special Instagram filter that would allow users to take pictures using the company’s products. 

MAC is another cosmetics production company that offers this technology on the company’s website, as users are able to try on different products to see how they look. The company also offers its AR mirrors in its brick-and-mortar stores to help users try new products in a practical and sanitary way. 

How Retail Businesses Are Using Augmented Reality

There are numerous ways augmented reality can be used to improve and alter the retail business – from engaging live events and gamification to AR manuals, takeaway content and product packages. Here, you can find the most common examples.

AR Creates Interactive Live Events and Product Launches

Augmented reality in retail market is the number-one tool that a brand can use to create buzz about a new product. Instead of being passive viewers, customers can be active participants who actually get to try the products, although in a virtual setting. This technology is also scalable and enables the company to carry out different events at various locations without worrying about the physical boundaries or setup. 

During the times of the ranging pandemic, OnePlus launched their OnePlus Nord smartphone by creating an AR event that users could access from the comfort of their homes.  

Personalized and Customized Product Visualization Using AR

In the retail business, augmented reality creates an excellent opportunity for personalizing a product by adding or removing features to make it more suitable for the buyer. This personalized experience improves the shopping experience and helps buyers make better and faster purchase decisions. At the same time, users can visualize how a particular product will look in their space. 

L’Oréal offers its customers a new augmented reality experience that allows them to try on their newest products in a fun and safe setting, using nothing but their smartphones. Users are able to download an app and test the shades of different products before actually buying them. 

Dulux Paint is another brand that uses augmented reality to help customers visualize their walls using the company’s different types and shades of paint in a highly prized augmented reality shopping experience.

AR Tells A Product Story

The importance of storytelling marketing is the reason behind using augmented reality to enhance the performance of a retail business. Augmented reality can tell an interactive and compelling story that explains the history of the brand or the development of the product. This story will make the customer more connected to the product and the brand as a whole. 

Jack Daniel’s takes buyers on a journey to explore the story of the brand and its products, creating an opportunity to make users more engaged and loyal to the company and its creations. 

Francesco Rinaldi® has been in the market for decades, and this sauce-making company introduced a new augmented reality app to retain its customers by offering a mixture of tradition and new technology. Once users download the AR app, they can point it to the well-known face of Mrs. Rinaldi, where she shares more information about this particular sauce and the whole brand. Moreover, there’s a chance to discover recipes using this particular sauce and learn more about the company’s other products. 

Showing Operation Instructions Using AR

In order to streamline the user’s experience, augmented reality in retail industry applications can be used to provide various instructions that involve putting together and using a particular product. TechSee’s Virtual Technician is an example of an augmented reality application that uses artificial intelligence to help consumers put any product together, no matter how complicated it looks. 

Hyundai also took its users’ manuals to a whole new level by introducing the augmented reality interactive version of their traditional manual. 

Bring Customers Back with AR Takeaway Content

To ensure that customers will get back to the physical store, those who haven’t made a purchase decision are sent home with an augmented reality application access. This will allow customers to explore the full potential of a product or service that they’re still hesitant about to help them make a purchase decision. 

In situations where the seller can’t showcase the product in question to an interested customer, showing an augmented reality replica becomes the next best thing. Pipelife Latvia manufactures and sells plastic piping systems to leading contractors in the drainage, urban water circulation, and gas industries. Using AR services, the company can show the potential of its products to contractors and other interested parties. 

Interactive AR Packaging

Smart AR packaging is accessible using customers’ smartphones. All they have to do is to point the phone’s camera to a QR code to experience an augmented reality immersive experience that offers discount codes, introduces new models or flavors of a product, or tells the story of the business. 

Lucozade Energy has launched an augmented reality campaign to promote its energy drinks. When a user points their smartphone towards a bottle of the company’s products, they can watch a documentary about their favorite musician. 

Lacta, the chocolate maker, uses its interactive packaging to build on its legacy. Instead of writing love notes on the wrappers, customers can use the AR app to write interactive messages that they can send to another user who will read the message when they point their phone to a wrapper. 

AR Gamification to Increase Customers’ Loyalty

The AR experience takes consumers beyond the purchase decision, offering a gamified experience that would make them feel more connected to the brand and its products and services. 

Herbal Essences offers augmented reality content that encourages people to dispose of their plastic bottles responsibly. This also draws customers’ attention to the brand’s message and mission. 

Kellogg’s offered consumers in the Middle East another unique experience by offering a code that kids can scan to engage in an augmented reality game where they learn about the company and take part in various educational games. 

For the fun element, Lego launched an augmented reality app that offers a game-hunting experience with virtual objects hidden in the company’s actual products

Benefits of AR for Retail Stores

Augmented reality applications greatly impact online and offline sales as they offer customers a new experience in the retail business. By introducing products and services differently, offering more information about different models, and showing the potential of each new item, customers are more able to make better purchase choices because they know they’re buying something that actually works for them. 

Augmented reality applications have a positive impact on the customers’ experience. They also leverage the sales team’s efforts by creating an immersive and interactive reality, where users can see, visualize, and touch a product without actually buying it. Here are some of the benefits of using AR in retail. 

AR is a Useful Brand Awareness Tool

In a highly competitive industry, AR can be the best tool to make your brand stand out. When the customers feel that they’re seeing something unique that they haven’t seen before, they’re more likely to engage with the brand because they know it’s offering something special. 

Beck’s Beer created a special AR experience that users can enjoy in a unique art gallery that has been set up in various locations across the US, UK, and Europe. The exhibitions showed the collective work of several artists using an AR application that users can view on their smartphones. The digital content was also available if customers visited the company’s Facebook page. 

AR provides brand awareness also when the brand is shown with others in third-party retail stores. For example, Philips used this technology to make its products stand out in third-party stores, where there’s a lot of competition from similar brands. 

AR Reduces Returns

9% of products bought from brick-and-mortar stores are returned compared to more than 20% of products bought online. There are many reasons why people feel unsatisfied about a product after buying it in an online transaction.

The number one reason is that the product might not be the right fit or might not look as described. Some users feel that the product didn’t actually help solve the problem that they bought it for, and some feel that it didn’t provide enough value.

Using AR retail applications, companies can help decrease return rates by offering a chance for users to visualize a product and possibly use it before actually paying for it. Several retailers in the apparel business are currently using this technology. 

By offering a virtual fitting room, a brand like Lily was able to provide users with a unique experience by showing them how their clothes will actually look on them without heading to an actual store. 


GAP collects the customer’s data to create an avatar using their exact measurements. Using this avatar, a customer can try on different outfits, seeing how they’ll actually fit before making an online purchase. 

AR Increases Retail Conversions

AR campaigns in the advertising business have proven extremely successful, as people are more likely to buy a product that they’ve visualized and virtually tried. As a result, more brands are utilizing this technology to show the potential of new products. According to Shopify, brands that use augmented reality have experienced about a 200% increase in retail conversion rates. 

The technology works in various ways to impact conversions. The first factor is related to the novelty of AR, which attracts customers to try something that they haven’t tried before. It also makes the brand more appealing to younger customers who are more comfortable using augmented reality. Foot Locker has used this technology to emphasize its presence in a world where online shopping has become highly competitive. 

Augmented reality also increases dwell time in physical stores, which is the time buyers are likely to spend in a store. Augmented reality mirrors at Sephora have proven extremely helpful at persuading customers to buy something that they haven’t actually thought about buying in the first place. 

AR allows users to try products before buying them and offers more information than regular advertising and display methods can’t offer. It also increases rates of conversion by helping shop assistants introduce the different uses and aspects of a product. 

AR for Interactive Upselling 

Augmented reality can actually create a need to purchase a product that the customer didn’t really think of before. For example, a customer might be shopping for sports equipment and then get introduced to another product like footwear or sunglasses to go with their outfit. 

Using AR retail applications, brands can engage in upselling and cross-selling from sister brands or the company’s other products. Customers using the IKEA app can consider other products from the catalog to create a replica of the suggested setup. Bombay Sapphire is using this application to sell more of the company’s products by showing interactive digital content. 

AR for Effective Visual Merchandising

Augmented reality in retail stores is an effective tool to make merchandising more efficient by showing the features of a product and explaining what it can do in a visual context. AR allows customers to visualize the product even if it’s not in stock in the store and make up their minds about buying. It also lets the merchandisers display only the most popular products, allowing customers to view the rest virtually using AR.

Timberland used this technology in its augmented reality campaign to help customers visualize the company’s apparel. This works not only when the company is introducing new products, but also when it’s promoting older collections. 

Retailers can use AR to find the best way to arrange products based on which items grab customers’ attention first. They can also use this technology to offer lucrative packages that prompt buyers to buy more products. 

AR for Data Analytics

Using the data provided by multiple AR platforms and applications, retailers are more capable of analyzing buyers’ behaviors and the factors that affect their purchase decisions. Moreover, they’re able to experiment with several AR applications to offer the best experience a customer can expect to promote future products and services. 

The retail industry generates a large amount of data by its nature, and AR creates more tangible data for decision-makers. For example, the Try-before-you-buy concept that various retail brands currently implement can show exactly which trends are gaining popularity and which ones need to be discarded or reconsidered. 


Augmented reality has become a critical tool and key component in the recipe to success in the retail business. AR applications can be implemented in various stages of sales transactions, offering the customer a unique shopping experience. At the same time, these applications provide retailers with the chance to improve their market share and brand image. 

At WE/AR, our experts will assess your company’s situation and suggest the best AR solution to leverage your business efforts. Then, we’ll explore all the options to customize a 100% effective solution that will bring your retail business under the spotlight. 

We’re only one click away, and a team of capable experts is waiting to help you. Contact us today at hello@wear-studio.com and get a free consultation.