Whether they are shopping for sandals or sofas, consumers have no shortage of augmented reality (AR) apps to assist them these days. Following the viral success of Pokémon Go in 2016, hordes of retailers have embraced the technology, including furniture retailers.
Home Furnishings Association member Jerome’s Furniture recently deployed its Photo to Floorplan technology powered by Marxent 3D Room Designer. Using the program on Jerome’s website, shoppers can design whole rooms from photos, buy the pieces they like and share the results with family and friends.
But AR’s promise doesn’t make it a great investment for every furniture retailer. The likes of virtual reality and 3-D TVs are still trying to find a home in the home furnishings industry. Such innovations may not prove worthless, but they are certainly worth less than tech dreamers imagined.
Harvard Business Review lays out some key questions (with answers):
Is there customer value?
Customers have a hard time telling retailers what they will want. That might be because they don’t know what’s available when it comes to technology. Case in point: There were not a lot of people clamoring for Pokémon Go until the AR-heavy game came out.
Whether retailers make or buy them, AR apps cost real money — anywhere from $300,000 to $30 million for development costs alone, according to HBR. Are customers willing to pay for that technology and convenience or would they rather have lower prices? The answer depends on whether your targets are aggressive adopters of technology, the app enhances your brand, and the purchase and usage of your product is sufficiently complex to justify the use of AR.
Furniture apps such as Ikea Place use AR to ease a notorious source of pain for shoppers — namely, the difficulty of predicting what a couch, bed or table will look like when brought home. Will it fit into the available space? Will it go with the existing furniture, carpets and walls? That’s a perfect problem for AR to solve. Consumers really suffer when they buy the wrong furniture online: They might lose eight weeks waiting for delivery only to be forced into the nightmare that engulfs those trying to return these bulky items. The value to the consumer is high relative to the cost of the innovation. That’s a plus for brick-and-mortar furniture retailers.
Can the math work?
Even if the math turns out to be wrong, it’s worth laying out how a technology such as AR is supposed to improve profits. Is it supposed to improve sales (the number of customers who visit each year, the frequency of shopping visits per year, the percentage of shopping visits that create purchases, the number of categories shopped, the number of items purchased per category, the average unit revenue per item)? Is it supposed to reduce costs (labor, materials, distribution, marketing)? Is it supposed to reduce inventory levels or capital expenses?
Limit the intangible benefits. Don’t just “imagine the PR power”; quantify the improvement in marketing expenses. With these kinds of estimates in hand, HBR says it’s easier to test initial assumptions, compare actual results with early estimates, improve investment proposals over time, and identify better ways of solving customer problems.
And don’t forget to look for creative sources of funding. Technology vendors often are willing to subsidize AR projects for learning and publicity purposes. Merchandise vendors may be willing to pay to have their products featured in the apps.
Is AR a priority?
Let’s face it: The technology systems of most furniture retailers are stone age. As a result, they become the choking points for almost every important innovation that retailers need to succeed. Yet the number of projects heaped onto this creaking infrastructure is growing fast. This is why the biggest question of all is how you should prioritize and sequence AR on your technology to-do list.
Given constraints on budgets and the hiring of tech experts, the results are often disastrous when retail executives add projects to this to-do list. Delays ripple across the existing backlog. Meanwhile, customer needs evolve and nimbler competitors charge ahead, making many of these stalled projects obsolete.
Furniture retailers can’t see technology projects piling up the way they can see sofas stacked in warehouses. But technology projects are every bit as expensive and perishable as your physical inventory. Retailers need to stop starting innovation projects and start finishing them.
As a tool, AR likely will get more powerful. It helps that billions of people will always have an AR-enabled gadget in their pocket or handbag. But the appropriate role for it will vary significantly by retail sector and by the health of a retailer’s core technologies.
