Presented by Obsess
Consumers want more meaningful, engaging and personalized shopping journeys and virtual stores are delivering in record numbers. Ecommerce is expected to increase to $5.4 trillion, with $1 billion of that generated via virtual stores alone, a recent study from Coresight Research in partnership with Obsess found.
That’s why immersive experiences are a key strategic priority for retail companies this year and are set to reshape the retail landscape and consumer expectations. It’s a tremendous opportunity for VCs and strategic partners, with the virtual store market expected to grow at a strong CAGR of 27.0% to $7.1 billion through 2030.
Notable examples of brands and retailers leveraging immersive experiences such as virtual stores, gamified shopping experiences, social shopping and data/AI-enabled content for personalization driving true one-to-one personalization are all growing, says Neha Singh, founder and CEO of experiential ecommerce platform Obsess — and there’s a reason for that.
“Shoppers can experience the brand’s personality and ethos and make informed purchasing decisions in ways that traditional ecommerce cannot match,” Singh explains. “Such heightened levels of engagement can drive long-term customer loyalty and drive real business benefits as a result. Success stories from the retailers and brands that have already taken the leap showcase the unique ability of virtual stores to engage customers on a deeply personal level.”
Here’s a look at how U.S. brands and retailers plan to invest in and offer such experiences, and where the opportunities for technology vendors and investors lie.
Immersive experiences become an investment priority
According to the report, immersive experiences are among retail companies’ top three investment priorities, with data/AI-enabled content for personalization, virtual try-on and virtual stores ranked in the top three by two in five respondents. Every company surveyed is considering increasing their investment in immersive experiences over the next 10 years — and 93% will “probably” or “definitely” do so in the next three years.
When investing in immersive experiences, click-through rate, average order value (AOV) and net promoter score (NPS) are the top three metrics that surveyed brands and retailers consider. And some have already taken the leap, with 61% now investing in virtual stores, and around nine in 10 reporting moderate or significant increases in total sales and online sales as a result.
“This demonstrates a high level of urgency to implement technology-driven customer-engagement and selling strategies,” Singh says. “Virtual stores bring the best of the physical shopping experience to the online channel, while improving sales performance.”
The survey found that 71% of surveyed brands and retailers invested in data/AI-enabled content for personalization, which have increased click-through rate, time spent visiting stores and NPS, highlighting the effectiveness of personalization strategies in enhancing user interaction and satisfaction.
About 40% of surveyed companies have invested in gamified shopping experiences, with more than three-quarters reporting a significant or moderate increase in online sales as a result. Meanwhile, social shopping — which 65% of surveyed companies have invested in — positively impacts customer engagement and acquisition for brands and retailers. By expanding their customer base, social shopping offers revenue growth opportunities for fashion companies in particular.
How AR and VR are unlocking new retail experiences
Immersive experiences are brought alive with augmented and virtual reality technologies, which have become accessible across a wide range of platforms and devices — and their growth is explosive. The AR market is set to total $18.2 billion by the end of 2023 and grow to $31.3 billion in 2027, while the smaller but faster-growing VR market will total $20.7 billion in 2027, a jump from $12.9 billion in 2023.
“The rapid growth of these markets suggests that there is significant interest, investment and innovation in immersive experiences,” Singh says. “Future growth will be driven by the emergence of new use cases and applications as the tech becomes more advanced and accessible.”
Immersive, gamified experiences on online platforms like Roblox, Fortnite and Decentraland are growing in popularity too. They’re actively working with brands and retailers to build gamified shopping experiences, including Adidas, Coca-Cola, Dominos, Heineken, Balenciaga and Moncler. Ralph Lauren’s online game with Fortnite garnered more than 400 million registered accounts, primarily from 18–24-year-olds.
“It’s clear that brands and retailers that effectively leverage gaming experiences like these can tap into engaged user bases, especially younger demographics, and create innovative shopping experiences that drive revenue and brand loyalty,” Singh says.
The implications for brands and retailers
Immersive experiences can redefine customer engagement and connection. Retailers and brands have seen positive impacts on metrics such as click-through rate, NPS/customer satisfaction, time spent visiting stores, number of new customers and brand equity, from every kind of immersive experience — all indications that consumers are more engaged and satisfied after visiting virtual stores.
While the survey showed that gamified shopping has seen less widespread adoption than other types of immersive experiences, businesses are recognizing the potential to captivate and convert a new audience of younger, tech-savvy consumers. Singh notes that gamification in virtual stores leads to up to 10X higher add-to-cart rates and over 350% higher session times.
“A Global Consumer Brand, for example, recently worked with Obsess to encourage shoppers to engage with their content and products beyond a single point of sale,” she says. “We showcased the brand’s hero collection and expanded storytelling for each product, and added games that ranged from scavenger hunts to quizzes, memory games and more.”
The brand achieved a 1,000% higher session time in the virtual experience, compared to its traditional ecommerce channel — with an average of 22 interactions per user and a 25% add-to-cart rate.
Implications for ecommerce providers
“Implementing immersive strategies demands a seamless user interface and consistent optimization based on customer feedback and analytics,” Singh says. “Brands and retailers benefit from working with technology vendors that have established data and insights about consumer interactions in immersive and 3D environments — and technology companies will recognize new opportunities in this space as the demand grows.”
Data analytics solutions will be in demand, to deliver insights from 3D spatial data and help companies develop personalized immersive experiences. Vendors should not only focus on providing robust data analytics tools but partner with other companies that can offer new forms of first-party data to offer insights for brands and retailers.
The fashion industry is an especially promising opportunity offering AI and data-driven personalization technology. It’s shown particular promise in driving metrics such as new customer acquisition and conversion rate.
Seamless user interfaces are essential for immersive experiences. Ecommerce platforms should prioritize user-friendly design and ease of navigation to ensure that customers can fully engage with the technology. Consistent optimization based on customer feedback and 3D spatial data is also crucial for a positive user experience.
Implications for technology investors
Driven by the growing emphasis on immersive experiences, there are significant investment opportunities in companies that develop and provide immersive technology solutions, particularly in virtual stores and data/AI-enabled personalization.
And with gamified and social shopping as a rising area of opportunity for brands and retailers, brands will need to integrate these experiences seamlessly into their ecommerce platforms, unlocking investment opportunities in companies specializing in ecommerce software and solutions that can support gamification features like avatar-activated shopping as well as social commerce tools and features to support social shopping.