The potential of augmented reality in retail is immense. Research shows that the AR in the retail market will surpass $61 billion by 2031, up from just $2 billion in 2021. This is because modern smartphones and 3D rendering technologies make it possible to seamlessly weave new dimensions of “reality” into your typical shopping experience.

What is Augmented Reality in Retail?

Augmented reality (AR) in retail is like sprinkling a touch of magic onto the shopping experience.

It’s a technology that overlays digital content onto the world through devices like smartphones or AR glasses, creating an immersive blend of the physical and digital realms. Imagine strolling through a clothing store and virtually trying on different outfits without stepping into a fitting room or visualizing how a piece of furniture would look in your living room right from the showroom floor. That’s the power of AR at work.

In practical terms, AR in retail opens up a whole new dimension of customer engagement and interaction. Instead of merely browsing static images online or walking through aisles, shoppers can actively participate in decision-making.

Whether exploring product features, comparing options, or even receiving personalized recommendations based on their preferences, AR transforms how consumers shop by adding layers of information and interactivity.

Where can you Apply Augmented Reality in Retail? Key Use Cases

Retail is a fantastic candidate for AR transformation. Here are a few examples of how this technology can be used:

1. AR-enhanced product packaging

Packaging is more than just a container —it’s a canvas for storytelling and engagement. AR-enhanced product packaging transforms ordinary boxes and labels into interactive portals. By scanning product packaging with their smartphones, customers can unlock exclusive content such as behind-the-scenes videos, interactive games, or immersive brand experiences.

AR-powered packaging creates memorable moments of surprise and delight, turning every unboxing into a shareable experience and deepening the emotional connection between consumers and brands.

2. AR-powered product customization

With augmented reality, retail brands can offer interactive product customization experiences, allowing customers to tailor products to their unique preferences.

Whether designing custom sneakers with specific colors and patterns or creating personalized skincare formulations based on individual skin concerns, AR empowers shoppers to co-create products that reflect their tastes and needs.

Its customization is taken to the next level, enhancing the product value and the customer experience.

3. Interactive ingredient labeling

Fast-moving consumer goods (FMCG) is one of the most competitive sectors in retail. Transparency around exact ingredients – for example, in a skincare product or the nutritional content of a snack – can give brands a heightened competitive advantage.

AR can bring transparency to a new level by overlaying interactive ingredient labeling directly onto product packaging. Shoppers can use their smartphones to scan the item’s barcode and instantly access detailed information about its contents, including allergens, nutritional facts, and even sustainability credentials.

4. AR-enabled in-store navigation

Navigating large retail spaces can feel daunting sometimes – and customers may lose out on opportunities to discover new products, find alternatives within their budget, or explore unfamiliar brands. AR simplifies the process by providing interactive in-store navigation features.

Shoppers can open a store’s AR app, input their desired items or departments, and receive real-time directions on their smartphone screens. These AR-guided pathways lead customers seamlessly from aisle to aisle, maximizing their time interacting with products rather than searching for them.

5. AR-powered product education

Shopping isn’t just about buying — it’s also about learning. AR technology can enhance product education by providing in-store interactive tutorials and demonstrations. Customers can scan products with their smartphones to unlock immersive AR experiences that showcase how to use, assemble, or maintain the item.

From assembling furniture to mastering skincare routines, AR-powered product education empowers shoppers with the knowledge and confidence to make informed purchasing decisions. As a result, augmented reality in retail can increase the chances of purchasing more complex or DIY products.

Who Benefits from Augmented Reality in Retail?

Augmented Reality (AR) in retail isn’t just a fad — it’s a game-changer for customers and businesses, revolutionizing how we shop and sell.

AR in retail brings a whole new dimension to the shopping experience for customers. No longer confined to static images or limited by physical store layouts, customers can now interact with products in immersive ways. AR enables virtual try-ons, allowing shoppers to visualize how clothing, accessories, appliances, or furniture will look on them before making a purchase.

This feature eliminates the uncertainty of online shopping and enhances confidence in decision-making.

Moreover, AR empowers customers to explore products in context, whether envisioning furniture in their homes or trying out different paint colors for their walls. By bridging the gap between imagination and reality, AR enriches the shopping journey, making it more interactive, personalized, and enjoyable for customers.

However, the benefits of AR in retail extend beyond just shoppers — it unlocks material gains for businesses.

By leveraging AR technology, businesses can differentiate themselves in a competitive market and drive customer engagement. AR enables retailers to create immersive brand experiences that capture attention and foster deeper connections with their audience – often overcoming the physical constraints of traditional retail spaces.

Moreover, AR provides valuable insights into customer behavior and preferences, allowing businesses to tailor their offerings and marketing strategies accordingly. AR equips retail companies with the tools to enhance customer engagement, increase sales, and stay ahead in an ever-evolving retail landscape.

Implementing AR Solutions in Retail: What are the Steps?

To harness the power of augmented reality in retail, companies must follow a gradual, well-articulated roadmap:

• Define objectives and use cases: Identify specific reasons for incorporating AR into your retail operations. Based on this, determine use cases where AR can add value.
• Choose the right AR technology: Consider the appropriate AR technology for your objectives and use cases, such as marker-based AR, markerless AR, or location-based AR. Evaluate each technology’s functionality and user experience to make an informed decision.
• Develop or source AR content: This may include 3D models of products and interactive overlays. Utilize AR content creation software or collaborate with external agencies specializing in AR development if necessary.
• Integrate AR into existing systems: Ensure compatibility with existing systems, including e-commerce platforms and in-store kiosks—luckily, QR codes make this relatively simpler. AR features can also be added to websites or mobile apps to provide a cohesive omnichannel experience.
• Procure AR hardware: Based on your chosen AR technology, first determine hardware requirements, such as smartphones, tablets, or AR glasses. Then, provide the necessary devices to customers for in-store AR experiences.
• Test and optimize AR: Conduct thorough testing of AR applications to ensure functionality and usability across different devices and platforms. Gather feedback from users to identify areas for improvement.
• Train staff and provide support: Train retail staff to assist customers with AR experiences and troubleshoot technical issues effectively. Establish support channels for addressing AR-related inquiries or concerns from employees and customers.
• Monitor performance: Implement analytics tools to track AR usage, user engagement, and conversion rates. Analyze data to measure the effectiveness of AR implementations.

Augmented reality in retail has found significant traction. Nearly every major brand has experimented with the technology—for example, IKEA’s 3D Place app and Chili’s Stadium app. In the next few years, AR will progress from being a marketing lever to becoming an intrinsic part of customer experiences in the retail sector.