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Extended Reality: the next phase of immersive retail?

illustration of two people using virtual reality headwear and handheld remotes

We’ve heard all about augmented reality and virtual reality, but it’s not that often that we hear them discussed in the broader umbrella of Extended Reality (XR). But as brands begin to integrate digital tools into the shopping experience in more and more ways, it’s long overdue that we take a deep dive into this area.

According to Zenith, 72% of adults see AR as ‘fun and engaging’, while global spending is set to grow over 30% each year until 2023. 

But to understand where XR is going, we need to know where it’s already been – and why the time for gimmicky, surface-level XR activations has long passed.

A brief history of XR

The ‘ahead of its time’ phase

When adopting any new technology, brands want to be ahead of the curve – but not so far ahead that consumers are scratching their heads and asking ‘why?’

Google Glass promised consumers a new way of experiencing life through wearable AR tech when it was unveiled with much fanfare in 2013. Slick promotional videos showed people going about their everyday life seamlessly sending messages, checking the weather, and surfing the web via their Google Glasses. 

But in reality, the prototype was clunky at best. The high price tag appealed to tech obsessives, rather than the mainstream consumers it was marketed to. Concerns over privacy and ethics also led many businesses to ban the glasses from their premises entirely. 

In the end, Google pulled the plug on Google Glass – just two years after they launched. 

But there was another reason for the failure of Google Glass; despite being a ground-breaking application of AR technology, the product didn’t boast any unique capabilities that a regular smartphone couldn’t accomplish. 

It illuminates the major teething issues experienced at just about every new technological frontier. Despite the hype, the glasses didn’t address any actual pain points, which left consumers unsure what their purpose was.

For XR, the consequences of this failure were profound. As one of the first mainstream extended reality offerings, its inability to effectively showcase VR and AR fed into the technology being poorly understood by marketers and brands alike. 

The gimmick phase

As XR became more accessible, this set the stage for a period of use that we like to call the ‘gimmick’ phase – when the technology is heralded as the ‘next big thing’ – but not being used in a way that’s actually useful to consumers. 

This meant a plethora of businesses jumping on the XR bandwagon from a brand-centric, rather than customer-centric standpoint. It was the birth of short-lived AR and VR filters designed to engage and entertain – especially as retailers tried to leverage the immense popularity of AR games like Pokemon Go. 

Turner Sports’ Instagram basketball game to celebrate March Madness gave college basketball fans a new way to engage with their favorite sport. Likewise, Pepsi’s #summergram campaign was designed to ‘enhance summer’ with hundreds of fun AR filters to liven up people’s Instagram Stories. 

These initiatives were undoubtedly fun and creative applications of XR. But in so desperately trying to force their way around consumer’s digital campfires, it highlights the lack of authenticity behind these efforts. 

Thomas Husson, VP and principal analyst of marketing and strategy at Forrester, said it best when speaking to Mobile Marketer:

“Marketers have fed into this underwhelming array of use cases by using AR for shallow, entertainment-based promotions and not truly connecting the online and offline world to help meet a consumer need or lower decision stress.”

So, while a fun filter or two is a cool novelty, it ultimately does very little to add lasting value to consumers’ interactions with a brand. An XR social campaign can easily attract millions of impressions – but there’s little evidence to prove it provides ongoing benefits once it wraps up.

Today: The CX refinement phase

This brings us to where XR is today. In the past couple of years, we’ve seen a steady stream of immersive retail experiences using XR to facilitate more seamless and accessible shopping journeys for their customers.

Warby Parker presented something of a watershed moment when it launched its virtual ‘try on’ app in 2019. They were among the first consumer brands to pioneer XR technology not to entertain, but as a value-added part of the shopping experience. It enabled customers to confidently make purchases online without needing to venture into a store first – and in doing so, making the often-fraught process of getting new glasses infinitely easier.

It’s a prime example of how XR can give brands a major point of difference when used in ways that address common areas of friction for consumers. And with the COVID-19 pandemic, these pain points have become plentiful.

In 2021, American Eagle will be debuting the AE x Snapchat AR Jeans Guide as part of its Jeans are Forever campaign, tackling one of the most difficult garments to fit and size effectively. The tool will allow customers to use 3-D lenses to ‘fit’ jeans and explore features, as well as in-app styling advice and purchasing.

With physical retail off-limits for huge stretches of 2020, XR has gone from a ‘nice to have’ to a necessity. For retailers that rely on consumers’ ability to interact with products, XR technology has presented a priceless bridge between the offline experience and the convenience (and safety) of buying online.

3 Brands that are doing XR right

Charlotte Tilbury

a display of beauty model images with text: ‘shop charlotte tilbury award-winning magic cream’; ‘new! virtual consultant’; ‘my magical fairies do your holiday shopping for you!’

In 2020, the U.K. makeup brand partnered with VR platform Obsess to launch an immersive virtual store, where customers can navigate a 3-D shopping environment from the comfort of their own home. It aims to recreate the touchpoints of an in-store visit by allowing visitors to get personalized product recommendations, watch tutorials, join live events, and even invite friends to shop with them via video call.

What Charlotte Tilbury got right: By dispensing with VR headsets and making their experience accessible via web browser, Charlotte Tilbury has found a way to bring VR to the masses. By pulling together existing content in the form of beauty tutorials and product catalogs, they’ve added genuine value to the online shopping experience – and primed their customers for future XR initiatives.


a person holding a smartphone in their hand with an AR character on the screen

Nike has recently added another engaging offering to its House of Innovation in New York City; an AR-based discovery center. Designed to promote the release of its All Conditions Gear product line, the experience features a geofenced area where participants use their smartphones to activate QR and AR markers that spawn virtual wildlife and information about the design process behind the collection. An interactive map and checklist encourage consumers to complete a series of challenges to be rewarded with a gift at the end.

What Nike got right: Nike has proven that gamified XR can be used to promote a brand or product while still putting the customer at the center of the experience. By seamlessly weaving in QR codes and geofencing into the AR experience, it’s a great example of how ‘old tech’ can be used to support new innovations and create even more immersive experiences. And with many consumers still avoiding in-store retail due to the pandemic, they’re also provided a major incentive for customers to explore the very best that physical retail has to offer. 


A person holding a smartphone in front of a football field. on the screen are lacoste products and other images in a collage

French sportswear brand Lacoste has combined AR and 3-D scanning in their in-app shopping feature to allow customers to virtually try on shoes in-store. Consumers can point their smartphone camera on a graphic on the floor to bring up a range of footwear options, helping them to narrow down which shoes they actually want to try on.

What Lacoste got right: Lacoste’s AR fitting experience is notable in that it isn’t trying to replace the in-store experience, but to remove the frictions involved with trying on footwear and waiting for store assistants. For example, the app could allow a customer to only try one or two pairs of shoes before finding the perfect pair, as opposed to dozens. It caters to how many consumers still prefer to purchase footwear in-store, but want a faster, more seamless experience that allows them to use other tools to research and make purchasing decisions. 

How to approach adopting extended reality technology to understand your customers’ pain points

If you’re thinking about adopting XR technology to enhance your online or in-store experience, there’s a lot more to this decision than just the technical aspects. 

As we discussed earlier, many brands in the past have caved to the temptation of using new technology just because it’s there. Now that XR has matured, it’s no longer enough to provide consumers with entertainment-based activations; while this might create some buzz, it’s a lot of expense for the sake of short-term novelty. 

It’s important to start out by looking at genuine pain points in the customer experience, and where XR could provide a genuine solution. This allows you to design at XR experience with purpose, rather than just trying to make your brand look like it’s at the cutting edge of retail tech. It’s also important to continually integrate customer feedback into your activation to ensure that it keeps delivering on its initial value proposition.

Decide which medium will work best for you

Even as VR hardware becomes cheaper and more accessible, making this a requirement for participating in your XR experience is clearly a major barrier to widespread use. However, the same can also be said of AR or VR that requires consumers to download an app or have a particular model of smartphone for use. 

While an in-app offering is easier from the standpoint of connecting your XR activation with your selling channels, the suitability of this approach really depends on your goals. If you’re trying to appeal to already loyal customers, this won’t present much friction – especially if it’s built into an existing branded app. 

But if your objective is to reach a wider audience via an XR ad campaign, a web-based experience is far more accessible to the masses, helping to attract curious onlookers who want to learn more – but who wouldn’t be willing to let your brand take up space on their phone.

Focus on discovery, not sales

XR has been slow to take off not just because of the cost, but because it doesn’t always lend itself to boosting sales directly. A customer might play around with a virtual try-on filter out of curiosity, but it doesn’t mean they’re going to buy just because it’s there.

That’s why XR needs to be packaged as part of wider efforts to empower consumers to explore a brand’s offerings in depth. Rich, immersive experiences that lend themselves to building brand affinity will have a much bigger impact than those which only steer customers towards a particular offering.

Sephora’s Virtual Artist app has succeeded not because it helps consumers find the perfect shade of lipstick, but because it allows them to navigate a confusing maze of different brand offerings – including those they wouldn’t have discovered otherwise. It primes customers for further interactions, rather than just a one-off purchase.

There’s no doubt that XR is helping to improve customer decision-making and enhance the brand experience online and offline. It also helps retailers to increase engagement by adding a sense of exploration to the shopping experience. As the barrier to entry lowers, we can expect to see more brands dipping their toe into the XR space.

But adopting XR can also be fraught with difficulties and pitfalls. As the novelty of the technology wears off, consumer expectations for the quality and usefulness of these experiences are only going to grow. Brands who struggle to deliver on this premise are unlikely to benefit from introducing XR experiences. It’s only by putting the consumer first and addressing their needs that retailers are going to add lasting value to their brand.

Consumers are ready to embrace innovative shopping that breaks the mold – the question is whether brands are ready to take up the challenge.

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