Weekly Business Tip #11 from Snap Finance: How Investments by Apple and Google Are Shaping the Future of Furniture Sales
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Large tech companies like Apple and Google are allocating large amounts of money to technology called augmented reality or AR. Apple’s CEO Tim Cook stated on an earnings call with investors, “We are high on AR for the long run, we think there’s great things for customers and a great commercial opportunity.”1 And he is backing it up with a serious investment. According to Piper Jaffray, Apple has increased R&D into AR technology 21% this year, spending $10.4 billion.2 And Microsoft, Google, Facebook, and Intel are all investing billions into AR research and development as well.
So, why are Apple and other tech firms devoting so much money and resources to AR? And why does this matter to the furniture retail industry? First, a little background to give some context.
Augmented Reality (AR)
What Is Augmented Reality?
According to Investopedia, “augmented reality (AR) is an enhanced version of the real physical world that is achieved through the use of digital visual elements, sound, or other sensory stimuli delivered via technology.”3 In other words, it means viewing our world through an enhanced lens, in a way that improves our lives, without being intrusive.
How AR Differs From Virtual Reality (VR)
You may have seen or used virtual reality goggles for playing video games. These goggles and their technology allow someone to interact in a virtual space. VR takes you into a computer-generated world, whereas AR overlays virtual elements onto real world scenarios as you view it through a screen, like a smartphone, tablet, or eyeglasses.
AR and the Retail Shopping Experience
Augmented reality (AR) provides retailers with an opportunity to change how customers shop and interact with their brand. Customers can try on clothes without having to visit a store or confirm that a new piece of furniture will fit perfectly in their home. AR technology has the potential to individualize the customer experience in unprecedented ways, by allowing them to visualize how their purchase will look in their space.
The Future of the Furniture Retailer
The Harvard Business Review said AR has the power to “reshape retail.”4 The application of AR technology stands to do the following:
- Reduce customer pain points
- Elevate customer service
- Create a differentiated, personalized customer experience
Harvard Business Review goes on to say that retailers that successfully implement AR into retail models have the potential to “vastly change the way retailers are thinking about stores of the future.”
Reducing Customer Pain Points
A few of the pain points felt by furniture shoppers include things like:
- Inability to see the product in person
- Shortage of product education
- Lack of product inspiration both in-store and online
- Brand’s inability to connect with customers and fulfill their needs
These can be eliminated by effectively using the power of AR.
Elevated Customer Service
According to Statista, in 2019, retail e-commerce revenue from furniture and homeware sales amounted to $42.29 billion and are projected to increase to over $54.23 billion by 2024, accounting for 12.3% of total retail e-commerce sales in the United States.5
Many foresee that e-commerce is the future of retail, but it’s table stakes at this point. It’s not just a matter of having an e-commerce store, but how well it stands apart from the competition on meeting customer needs. According to a Centric Digital study, furniture is the top product US customers want to shop for using AR technology (60%). Other products include clothing (55%), groceries (39%), shoes (35%) and jewelry (25%).6
Shipping costs and logistics prevent “try before you buy” with furniture so this is a natural pain point that could be addressed with AR technology. Whether online or in a brick-and-mortar store, customers are seeking the ability to see how this sectional or mattress will look in their home.
Early AR Adopters in the Furniture Industry
- Ikea. The Scandinavian furnishings company created the “Ikea Place” mobile app that uses a smartphone camera so customers can take a photo of an area of their home, then browse IKEA furnishings and see how each item would look.
- Wayfair. Using the Wayfair app customers can see one stationary image of a piece of furniture but are also able to see a 3-D image that can be rotated and viewed from different angles, in real time. This is personalization at its finest.
- Lowe’s. The home improvement retailer developed “View in Your Space” within the Lowe’s app that allows customers to use AR to perceive the dimensions of whatever their smartphone is aimed at. This 3-D placement of virtual objects in real world spaces gives customers a visual of how a new fridge or stackable washer and dryer will look in their home.
Standing Apart From Your Competitors
Finding success with AR requires you to examine what level of investment you are prepared to make. It means looking at key differentiators to elevate your brand in a crowded industry.
Moving Forward With AR
Retailers looking to develop an AR strategy should consider the following steps:
- Be aware of emerging technologies. Gain an understanding of your own capacities to innovate using AR technology and keep an eye on what your competition is doing.
- Decide how and where to deploy funds for maximum impact and return on investment (ROI).
- Detail the value proposition for the technology you implement, and how it’s differentiated from your competitors. Explain how your AR solution solves customer pain points and adds value.
- Determine how the implementation of new technology fits within your overall business model and set goals to define success and KPI’s to evaluate the levels of success over time.
Room to Grow
The good news is that the implementation of AR technology is still in its infancy. There is a lot of room for innovation and growth. According to Cylindo, only 14% of the top 100 US furniture retailers have implemented an AR solution.7 This is an opportunity to carve out market share. Simply by understanding augmented reality (AR) sets you apart from the competition, while integrating an AR solution elevates you from others in the market.
So how do the investments in AR by Apple and others shape the furniture industry? Their investments are a leading indicator into what they believe is a viable and profitable technology for the future in various capacities and industries. They simply do not invest those sums of cash into technology that will fail. And since Apple and Google own most of the smartphone technology, your future customers will most likely have some form of AR technology in their pocket. Is your business ready to leverage that technology to enhance the customer experience? For forward-looking furniture retailers, it’s something worth considering.
1Taylor, H. (2016, Aug 10). Why Apple is pouring money into virtual and augmented reality. CNBC.
2Taylor, H. (2016, Aug 10). Why Apple is pouring money into virtual and augmented reality. CNBC.
3Hayes, A. (2020, Dec 2). Augmented reality. Investopedia
4McKone, D., Haselhurst, R., Steingoltz, M. (2016, Sept 9). Virtual and augmented reality will reshape retail. Harvard Business Review.
5Coppola, D. (2020, Nov 27). U.S. furniture and home furnishings e-retail revenue 2017-2024. Statista.
6Kovach, N. (2020, April 30). Augmented reality in furniture. Think Mobiles.
7Cylindo (2020). Top 100 USA furniture retailers 2020: ecommerce merchandising adoption & index ranking. Cylindo.
About the Author: Matthew Mack is a Senior Marketing SEO Content Writer for Snap Finance and has been a contributor to Furniture World Magazine, and AutoLink Magazine. To connect with Matt, visit www.linkedin.com/in/matthewdmack
About Snap Finance: Innovating the fintech industry, Snap Finance helps furniture retailers reach their full sales potential by offering credit-challenged customers flexible financing solutions. Interested in learning how Snap can help increase sales by reaching an underserved customer base? Contact Snap at 866-871-0311 or visit snapfinance.com
Weekly Business Tips from Snap Finance
Articles in Weekly Business Tips from Snap Finance