VR in Retail, What Would it Take and Where do We Go From Here

Virtual reality (VR) is one of those technologies that are forever “a couple of years” away from mainstream adoption. Those bullish on VR are often reluctant to be more specific than that. Shipments by each major VR hardware makers have recently been in the hundreds of thousands a quarter, a rounding off error when seen in the context of other consumer electronics form factors such as smartphones. It isn’t just low absolute shipment numbers, volumes of VR headsets tethered to a PC (i.e. the most powerful ones) have actually dipped in recent times

A host of ecosystem elements – both content and technology – needs to come together for VR to hit primetime. 

At the very least the following needs to happen: 

Content that goes beyond games and the gimmicky. Games have been the number one content type in the VR ecosystem, but VR needs to move beyond games for mainstream acceptance. Independent studios are trying, but the VR medium’s innate issues make storytelling tricky. In an immersive world, the audience can choose to not follow the content’s intended narrative, and instead explore an artefact or a facet endlessly, such as like the human power plant in the Matrix or the Vietnamese jungle in Rambo First Blood Part II. Should the content maker focus on the narrative or the immersive experience? These are problems can be solved but not in a matter of a years. It usually takes a generation before a new medium’s possibilities are fully tapped. It is said the first movies were little more than videotaped theatre. 

There is also the matter of content volume. A few inspired efforts by independent gaming studios and independent movie makers will not solve the problem. The recently released US$199 Oculus Go (and the industry’s great crossover hope) has 1,000 VR experiences, a drop in the ocean compared to what the open web and mobile app stores offer. Of course, the industry believes social could be the answer to the scalable content problem. That is the bet Facebook made with the US$3 billion Oculus Rift acquisition. Oculus Go’s Room feature allows avatars to cohabit a shared virtual space, watch movies, and play board games. The challenge is replicating the unspoken protocols of human communication in a constructed and contrived environment, especially in a medium where the denizens are wearing opaque snow goggles and cannot make eye contact. 

5G networks that enable untethered, low-latency experience. Tethering to a gaming PC is unwieldy, and rules out all but the most committed of VR geeks. What is needed is a standalone VR set that does not require a PC. But for a wireless experience to be truly immersive, latency must be low enough, and that is where current 4G networks fall short. Experts say latency of more than 15 milliseconds leads to motion sickness. The industry therefore awaits 5G.  

Computing that solves latency problem. Computing in VR headsets is still some distance away from refreshing the display when we look elsewhere at a rate the human eye and human mind perceives as real. The challenges of eye tracking, “foveated rendering” – or a higher resolution at the spot we are looking than the periphery, are all problems that remain partly unsolved. Experts say humans need 120 pixels per degree of view (at the focal point of attention, not the peripheries of vision), and the state of the art in head mounted displays achieves about 10 pixels.  

Headsets that have ergonomic design and are socially acceptable to wear. Most reviews say VR headsets can be worn only in spells, and extended usage is problematic. In addition, it was widely reported that Google Glass failed because the designers couldn’t bridge the social acceptability chasm. The Google Glass wearer simply did not look cool, or better still, anonymous. They stood out, and not in a good way. New hardware takes time to be accepted. The portable computer we walk around with every waking hour has been positioned as a phone (as opposed to, say, a pocket computer), which is part of making it socially acceptable. A similar, socially acceptable equivalent needs to be identified for virtual reality headsets. 

Price point that compares well with the carrier-subsidized price points of smartphones. Price points of over US$500 are not working for anybody except the most avid gamer. Tethered head mounted display also require powerful and expensive gaming PCs. Screenless headsets require top of the line smartphones. According to many, Oculus Go will be the one that cracks the code on VR, especially price. Oculus Go retails for US$199 for 32GB of storage. The US$199 price point was – perhaps not coincidentally – the price point of the first (2005) iPod Mini. The just-under-US$200 was also the price point of the vacuum cleaner robot Roomba in 2002, and a price point that helped launch the robotic cleaning industry. 

The above is a long list. And the confluence of all the above, a long shot. Now, the interesting part is B2B use cases can live with the above flaws because there is return-on-investment to be had even from technology that is less than perfect. A retail planner can live with nausea and tethering if VR can improve store design efficacy even by 10%. In fact Microsoft’s mixed reality go-to-market is entirely B2B. Microsoft’s HoloLens targets every conceivable business use case from surgical training to architecture. Microsoft apparently does not wish to risk a consumer play where the cost of failure is too high (recall Google Glass) 

VR could be the ultimate store analytics and store design solution. A retail executive can immerse herself in the store environment, with layers of data and insights on how products are actually moving, fully in the context of store design, layout, the planogram, promotions, traffic flows, and customer journeys through the store and down every aisle. A lot of contextual data is missed when data is viewed on a conventional two-dimensional screen. VR, even long before the stars align, device adoption achieves ubiquity, and the killer app is cracked, could become the ultimate retail productivity tool. 

VR devices could enhance the store experience, and might even bring footfalls. Retailers have already started letting store visitors play around with VR headsets, demonstrating experiences they could have with the products on offer. Again, this is particularly relevant for categories that are experiential. Exhibit A here is adventure sports gear and apparel company North Face’s in-store virtual reality experiences. VR headsets in North Face’s retail store takes the user to Yosemite, or to a snowy terrain, amidst a pack of huskies if they inquire about winter apparel. 

However, when the stars really align, which by the most informed estimates would be around 2023 and consumer adoption grows, the impact on retail will be significant. At the very least, the following would happen: 

The store experience would be accessible everywhere – omnichannel on steroids. From just about anywhere, a user will be able to experience the store environment – walk down the aisle, pick a product from the shelf, put it back, add something to a cart that quite literally looks like a cart (and not – you know – a UI metaphor). There would be a mad scramble to build VR replicas of stores post 2023 when all the elements come together. Again, this would be particularly true in retail verticals where the buying process is experiential, such as apparel, home decor, and furniture. What is also interesting is that the virtual store can be different for everybody. By the time VR goes mainstream, most leading retailers would have cracked the code on personalization. The combination of a hi-fidelity digital replica of a store accessible from anywhere and personalization would be in the ultimate in retail experience. 

The VR world will be one giant shop with products to be bought everywhere. To get a sense of what everybody tuned to VR would look like, it is instructive to study Second Life’s effort in that direction. Second Life began with much promise but did not cross the chasm to mainstream success. At its peak, it had about a million followers. Its, well, second coming is a VR enterprise called Sansar. Creators are building entire worlds, some replicating real world constructs like the San Francisco Golden Gate Bridge, and in many cases artefacts that are entirely digital. If Sansar takes off, there will be things to buy everywhere in the virtual world. For the marketer, VR will be a giant product placement problem. 

In summary, VR’s ubiquity is still some distance away, but when it arrives, it will fundamentally change retail. At that point, the future would belong to retailers that build the best and seamless VR experiences. But for a long time, at least until the early part of the next decade, VR will be a optimization tool for retail executives, taking store design and assortment planning, and more generally retail analytics to new levels of efficiency. 

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