With insight coming thick and fast from the London Tech Week retail track, we caught former VP and CMO at IBM Simon Edward’s session on extended reality (XR). Joined by Wayfair, Selfridges and Team Internet, a digital identity and performance marketing tech provider, they explored how XR is pushing retail boundaries and what brands can do to scale the technology to drive adoption and effectiveness.

More than a conversion tool

While driving a conversion lift was one of the main motivations for deploying XR, the panel indicated that the tech goes beyond just driving a sale. For Michael Riedl, CEO of Team Internet, even though “conversion pays the bills,” he said XR had a wider role in omnichannel customer experience by helping reduce friction points within the buying journey.

Selfridges’ CTO, Ross Beaumont, agreed that while conversion is the “aim of the game” when it comes to XR deloyments, it has another key benefit past the point of purchase – namely, returns. Beaumont gave the example of U.S. retailer like Macy’s who are experimenting with AR on their clothing lines, which enabled them to significantly reduce returns, dropping to ~2%. “It’s about being able to demonstrate the business benefit [of XR] that will help the technology stick,” he said.

Conversions also played a key part with how Wayfair assesses the impact of XR, but it also tracks against AOV and returns as key success metrics, Fiona Tan, Wayfair’s CTO explained.

“First, we’d looked at it as a way to improve CX and inspire customers by being able to envisage the items in their homes,” Tan said. “However, with big ticket – and often large and bulky – furniture products, lowering returns rates also delivered a big benefit to us, not just for customer experience but also in significantly reducing returns and our reverse logistics costs.”

Has the Metaverse hype gone away for good?

A few years ago, the Metaverse became an overnight poster child for XR, touted as the tech that would revolutionise next dimension retail. But, almost as quickly as it rose to fame, the hype soon dissipated.

Beaumont described Selfridges’ foray into the Metaverse, explaining how it had created a virtual store experience where customers could shop as well as create and style their own digital avatar within Selfridges’ Metaverse space. But users spent more time styling their avatar than they did making purchases, so while it provided a new customer experience, the commercial benefits didn’t stack up.

Beaumont acknowledged that perhaps Selfridges had been a little too ambitious with its Metaverse play at the time. He pointed to digital participation not yet being strong enough to change shopper behaviour from experience mode into buying mode. However, while it didn’t necessarily generate the sales it had initially hoped for, it did position Selfridges as a digital innovator.

Deploy the right tech experience for the right buying journey

“Nobody puts on Apple Vision Pro glasses to buy a tube of toothpaste,” Riedl said. So retailers need to think about the buying journey first and whether XR use cases makes sense within that shopping experience – if the answer is no, don’t expect adoption or results to be high, he advised.

Wayfair currently uses XR to showcase its SKUs in home setting scenes to bring the product to life. When it was first released its XR a few years ago, consumers were much more forgiving about the tech, Tan said. “They’d forgive XR generated images being a bit ‘clunky’ or not quite rendering fully within the app, as it was a new experience… but this has advanced a lot since then.”

Now Wayfair uses Gen AI to integrate other items in its catalogue that complement the product selected by a shopper, showcasing them alongside it in the AR experience. This means it can blend clientelling and styling recommendations in one go, helping shoppers style the entire room and providing cross-sell opportunities to boost AOV

Gamifying XR to drive engagement

Selfridges is currently trailing an Augmented Reality (AR) treasure hunt in-store, which Beaumont described as being “a bit like Pokemon Go.”

Designed to deliver deeper funnel engagement, the AR treasure hunt encourages shoppers to interact digitally within its physical store, scanning images within the store to unlock tiered loyalty scheme points. It aims to boost engagement and store dwell-time, as well as opening up the opportunity for brand partnerships or sponsorships in the future. Currently, Selfridges is testing the treasure hunt among colleagues, and is yet to roll out the AR experience to customers.

How can XR play well with AI?

Moving forwards, XR will “need to play well with AI agents”, said Tan. And to do so, it will need good quality product information to be able to serve the right product to the right shopper. Yes, AI-powered XR needs to ingest good quality and accurate product data, but it also needs to surface these recommendations at the right time in the buying journey to create the connection to drive a conversion. And that means there still needs to be a human in the loop to deliver those nuances that AI perhaps can’t yet.

“We’re not at the stage where AI can replace personal shopping,” noted Beaumont citing an example of a Selfridges customer who had come in-store to drop off a repair. Working from a mobile device, offering access to customer data, the serving associate noticed the customer had a wedding anniversary coming up and that his wife regularly bought earrings from the retailer. By combing data with the personal touch, that repair turned into the sale of a £58k pair of earrings, showcasing the power of human-to-human experiences powered by data and insight.

“XR can’t just be about showing or recommending products in isolation, it needs to be about building in emotion connections with shoppers and this requires a multi-sensory approach – video, facial recognition of customer expressions,” Riedl summarised.