A SCENARIO ANALYSIS OF AUGMENTED REALITY IN RETAIL

Abstract

The retail industry is undergoing one of the biggest transformation processes through history. In 2017, 8,053 stores were closed in the United States. This in comparison to 2008, during one of the worst financial crises for decades, when 6,613 stores were closed. Several disruptive technologies and competitive forces redraw the competitive landscape within the retail industry. One of the emerging technologies is Augmented Reality, which has gained attention from consultancies and academics all over the world. Augmented Reality is a technology that blends physical and digital by adding a virtual layer on top of the physical world through the use of, for example, a smartphone. The technology is expected to have a fast market penetration with 800 million AR ready devices on the market by the end of 2018. This study aims to investigate the role of mobile Augmented Reality (MAR) within retail in a fiveyear time-horizon. This by using scenario planning methodology, which is a long-term forecasting method, especially suitable when uncertainty is high and when the industry is expected to experience a significant change. The outcome of the analysis is not one probable future, but four plausible scenarios. The report covers the future development of retail as well as MAR which is based on an empirical investigation through consultancy reports and interviews. By combining the two fields into one analysis, a retailer can understand the role and functionalities of MAR, given the industry development. The analysis shows that the most critical uncertainties that will shape the future of retail are 1) the consumer's fundamental view of shopping (experiential or fast and frictionless) and 2) how central digital tools are in the service process (tech-driven or tech-supported). By combining the outcomes of the two uncertainties, four future scenarios are built which are called Show me to my room, Giants lead my way, Locally produced service and Convenience knocking on my door. Mathwick’s framework on consumer value is used to assign a role of MAR in each retail scenario. The study’s findings show that MAR could be effective and have a dedicated role in the first three scenarios. However, previous research shows that a majority of investments are made in functionality suitable for the fourth scenario where a low adoption is expected. This study can, therefore, contribute to an understanding how MAR can be used to leverage a competitive position within retail.