technological integration: is augmented reality an ... · the purpose of this paper is to shed a...

Technological integration: is augmented reality an effective tool

for in-store retailing?

Exposé

EUROPEAN MASTER IN BUSINESS STUDIES UNIVERSITY OF KASSEL

Candidate: Gaia Sabbioni

Supervisor: Prof. Andrea Molinari

Technological integration: is AR an effective tool for in-store retailing? 1

Title: Technological integration: is AR an effective tool for in-store retailing?

Author: Gaia Sabbioni

Abstract:

The purpose of this paper is to shed a light on whether Augmented Reality (AR) can be a

source of strategic value for retail companies. Virtual Fitting Room is a type of AR-based

device that provides the customer with a 3D visualization of how a product fits without the

need of wearing it. VFR enlarges customers choices inside the stores and enhances the fun

factor characterizing the shopping experience. From the retailers’ point of view, VFR

represents a smart source to collect information and data about the visit in-store. Therefore,

VFR was chosen to embody the functionalities AR can add to the shopping experience in the

physical shop. Additionally, the interest towards this technology is explained by the lack of

academic assessment on its effectiveness in the light of recent investment and improvement

in the technology.

To understand if VFR functionalities would be appreciated by customers, an online

questionnaire will be conducted as a way to collect empirical data. With the results of the

survey, it will be possible to understand the functionalities that will be valued the most, with

the purpose of understanding if customers are more attracted by the hedonic value

represented by the perceived enjoyment or if the functional features are more recognized.

In the conclusion, the purpose will be to outline insights about the drivers that will lead

consumers towards the use of AR in a physical store.

Keywords: augmented reality, physical store, virtual fitting room, consumer attitude.


Table of Contents

1 Introduction ............................................................................................................................. 4

1.1 Background ...................................................................................................................... 4

1.2 Problem statement ............................................................................................................ 4

1.3 Purpose ............................................................................................................................. 5

1.4 Structure ........................................................................................................................... 5

2 AR Background ...................................................................................................................... 6

2.1 AR Definition and Differentiation with VR technology .................................................. 6

2.2 Overview of Architecture and Technology behind AR ................................................... 8

2.3 Overview of application’s fields of AR technology....................................................... 10

2.5 AR in experiential marketing ......................................................................................... 11

2.6 AR in Retail .................................................................................................................... 13

3 Theoretical background ........................................................................................................ 19

4 Theoretical framework .......................................................................................................... 21

5 Methodology ......................................................................................................................... 24

6 Analysis of the results ........................................................................................................... 25

7 Conclusions ........................................................................................................................... 25

7.1 Theoretical implications ................................................................................................. 25

7.2 Managerial implications ................................................................................................. 25

7.3 Limitations and further research .................................................................................... 25

8 Final conclusions .................................................................................................................. 25

References ................................................................................................................................ 26


List of Abbreviations

AR= Augmented Reality

VR= Virtual Reality

HDM= Head Mounted Device

VR= Virtual Reality

R&D= Research and Development

3D= Third Dimension

SAR= Spatial Augmented Reality

VFR= Virtual Fitting Room

PU= perceived usefulness

PEU= perceived ease of use

PE= perceived enjoyment


1 Introduction

1.1 Background

In the digital era, a key role is embedded in Augmented Reality. AR implies generation of

digital elements that overlays the real scenario. This type of technology has been around since

1960, often mentioned together with the immersive and more extreme version called Virtual

reality (Arth et al., 2015). AR benefited from several hypes that have contributed to spread and

empower its role as technological innovation. This aspect has been supported by the high

investments and expectations that major Tech companies have devoted to the technology in the

last decade. AR can be adopted by making use of several paradigms according to the level of

interactivity and immersion that is expected, for instance, virtual objects can be added to the

real scene through wearable devices or on displays equipped with webcams or Kinect sensors.

Therefore, the technology developed in different directions, penetrating several fields of

application. On the groundswell of this positive expectations, marketers and retailers have

adopted this technology with the purpose of improving and upgrading the store environment

and more in general aiming at enhancing consumer shopping experience.

1.2 Problem statement

AR in marketing and retail has been adopted with different purposes: to strengthen consumer

awareness, to engage customers, to increase brand loyalty, to enhance the customer’s

experience. In order to do so different types of AR systems and devices have been developed

and applied in retail, with wide adoption in both in-store and out-of-store environments

(Dacko, 2016). In the light of the strong technological component, previous studies mainly

focused on the IT and technical challenges embedded in AR application (Javornik, Rogers,

Moutinho, & Freeman, 2016). Therefore, the academic background is missing a clear,

complete and uniform view of academic research about AR applications in retail and a real

understanding of AR practical uses is lacking (Bonetti, Warnaby, & Quinn, 2017). Among

AR applications in retail, the first appearance of Virtual magic mirror can be dated to 2008

(Javornik et al., 2016), at a time when the technology was still under development

(Carmigniani et al., 2011) and people awareness about technological progress as well as

private technological embracement and internet access were fragmented and limited

(Bulearca & Tamarjan, 2010; Eyüboğlu, 2011). Even if first adoptions of VFR didn’t lead to


a wide and spread success, given technological progress, in-store appearances of VFR are

still recurrent, showing hopes and positive expectations regarding this technology. Hence, a

real assessment of the effectiveness of this technology is required in order to evaluate if they

are a valuable asset for in-store retail or if they represent a vain investment.

1.3 Purpose

This study aims at providing with an evaluation of AR adoption in physical stores. This purpose

will be addressed with a two-side approach. First of all, by contributing with an overview of

AR paradigms adopted in retail and their evolution, with a specific focus on Virtual fitting

room in-store. After this preliminary analysis on the offer’s side, the technology will be

analysed by considering the point of view of the consumer. The main purpose will be assessing

consumer attitude towards VFR by application of TAM model. By combining the outcomes

from the assessment of AR adoption in retail and the insights resulting from the customers’

point of view, this paper seeks to derive conclusions about the elements that will characterize

AR integration in retail and those that represent an obstacle or prevent its adoption.

1.4 Structure

The paper is structured in the following way: the first part is devoted to the general explanation

of AR technology taking into consideration the definition, its architecture and the main fields

of application. This introduction will lead to moving the focus on AR adoption in retail,

assessing its functions and some specific real cases of AR integration in store.

The second section of the paper is devoted to the quantitative research that will be developed

in order to assess what is the level of acceptance of consumers towards the installation of VFR

in store. As will emerge from the theoretical background, this type of technology requires

continuous assessment due to constant progress in the technology and in the light of users

‘increased familiarity with it. Consequently, in the rest of the section, the development of the

research and connected results will follow.

In the conclusion, the findings emerging from the survey will be commented according to the

elements identified in the real cases of adoption of VFR in retail.


2 AR Background

2.1 AR Definition and Differentiation with VR technology

AR is a multidisciplinary technological approach that enriches and enhances user’s

environment with real-time information (Carmigniani et al., 2011). AR implies the

combination of real-world pictures with real-time data generated by a computer. In this way,

real and digital information are combined to provide the customer with an augmented

experience. AR maintains and requires an overlay between the two worlds where the consumer

can interact (Huang & Liao, 2015).

Looking back at AR timeline, AR saw the light in the early 50’s when Morton Heilig, a

cinematographer, viewed in the cinema a way to connect the viewer to screen, by involving all

the senses in an effective way. Recalling AR beginning life, it is then important to mention

some of its milestones, starting from its realization in 1968 when Sutherland realized the first

AR system employing an optical see-through Head-Mounted Display. Interactivity was then

brought by Myron Krueger, by inventing the Videoplace, a room where it was possible to

connect with virtual objects (Carmigniani et al., 2011). Another pillar in AR development is

represented by the 1997’s first survey by Azuma that was including this approach and

clarifying the definition of AR as a combination of real and virtual data immersed in a 3D

interactive experience (Wagner, 2009). The new millennium saw the presentation of the first

AR game, ARquake, elaborated by Thomas Bruce and presented during the International

Symposium on Wearable Computers. After early 2000’s, AR started its booming development,

touching several areas of applications and being one the main pillars for technological

innovation. Nowadays many AR’s applications are worldwide adopted and thanks to

technological improvements many technologies that were designed for a specific purpose are

now adopted on a larger scale (Manuri & Sanna, 2016).

It is important to notice that in the second decade of the new millennium, Tech giants have

been involved in an exploding and frenetic race towards AR development. In 2012 Google

Project Glass was presented to the public, having a great impact on research, but even more,

they made the news for their significance on the mass perception of mixed reality technology.

However, when the glasses became available in 2013 they rose positive and negative

evaluations, mainly due to privacy and ethical issues (Arth et al., 2015).


Throughout 2014, Google announced Project Tango which is an Android smartphone equipped

with a full Kinect-like 3D sensor. Exactly after 3 years, Google launched an advanced version

of Tango to simplify the creation of AR apps (Salter, 2017).

During 2017 both Snapchat and Microsoft's HoloLens launched on the market Augmented

reality devices, respectively headset and Spectacles sunglasses. Meanwhile, Facebook

announced the involvement of its business branch Oculus in the development of augmented

reality smart glasses. Since the acquisition of Oculus in 2014, the social network bought

through the subsidiary 11 AR/VR companies. Accordingly, nowadays the quantity of AR apps

for mobile devices has expanded dramatically and it touches all possible fields of application

(Dacko, 2016).

Accordingly, from this overview, it is clear that all these investments generated several hypes

of interests toward AR technology and that this boosted confidence and expectations towards

it (Bellini et al., 2016).

The augmented information brought by AR can be delivered by two main types of devices. On

one side augmentation can be added by mobile devices, referring to devices that allow

experiencing AR during locomotion, such as wearable devices or smartphone (Arth et al.,

2015). On the other side, many AR applications require only the use of fixed hardware

equipped with webcams or other types of sensory detectors. However, in the next chapter, an

overview of AR system and devices will be discussed.

AR shares its history and has been developed and often mentioned with VR, Virtual Reality

(Carmigniani et al., 2011; Arth et al., 2015). For the purpose of this thesis, it is fundamental to

recall the differences existing between these approaches. As already mentioned, in the

continuum between real and virtual worlds (Milgram & Kishino, 1994), AR implies an overlay

of the surrounding environment with real data.

On the other side, Virtual Reality is a completely immersive experience where the consumer

loses any connections with the surrounding real environment. VR consists of devices that

enable the customer to eliminate any other contacts from real inputs, such as a visor, often

supplemented by headphones and controller gloves (Pita, 2017), in order to prevent other

sensorial connections. The Virtual Environment, as defined by Milgram (1994) deeply engages

the customer in a 3D experience that thanks to the comfortability of the device and the

credibility of the content, involves the consumer in an immersive/synthetic simulation (Bonetti

http://www.telegraph.co.uk/technology/2016/03/31/microsoft-hololens-hands-on-walking-on-mars/


et al., 2017; E Pantano, 2015). As already noticed by Caudell and Mizell (1992), in AR

approach fewer pixels have to be rendered, therefore, a lower processing power is required.

This is not only a different point, it can be considered one of the advantages of AR vs VR (Arth

et al., 2015).

However, estimations for expected growth for AR/VR market are extremely positive.

According to the study conducted by the research company Digi- Capital, AR/VR market will

reach dramatic results. The report delivered a real positive picture with a $108 billion VR/AR

market reached by 2021. According to the study, in case of negative performance the market

will still reach 94 billion, otherwise, an under evaluation of AR/VR potentialities could lead to

outperformance around 122 billion. The company underlines that AR will take the biggest

piece of the cake, contributing with a share of 83 billion and 25 billion as VR’s share. Similar

results are provided by another research promoted by The Goldman Sachs Group (Bellini et

al., 2016). According to the authors, AR/VR adoption will follow a similar path as smartphone

and tablets in the last 5 years. Similarly, the main drivers will be positive effects on the learning

curve, therefore a generation of cost reduction that will lead to a price reduction of 5-10%

(Bellini et al., 2016). This is mainly due to the fact that AR/VR devices require components

that are likewise common and in continuous development in Tablet and Smartphone devices,

such as displays, processors, action tracking sensors, wireless connection and storage/memory.

2.2 Overview of Architecture and Technology behind AR

According to Azuma (1997), AR technology is composed of 3 main characteristics:

1. combination of real and virtual elements;

2. real-time data interpretation;

3. 3D objects representation

There are two main steps that allow the augmentation. AR depends on the first process of

tracking and the second moment of rendering (Carmigniani et al., 2011). AR technology

implies that these two steps are performed by specific software. Firstly, they have to identify

precise and fixed points on the scene and track them. To perform this stage, it’s required to

capture head orientation and location information of the user. This is needed to recognize the

real scene the viewer is looking at. This information is then used to ensure the creation of virtual

objects and their alignment with the fixed points identified on the scene. Accordingly, in the


second step, the desired virtual contents are connected and overlapped to those real selected

elements allowing real-time interaction among all the components. Virtual objects are known

as assets and they can have different nature: text labels, animations, audio messages, 3D

models, and videos. Tracking head location and position information might be more difficult

for the creation and alignment of 3D models, animations and videos. Therefore, technological

improvements mainly concentrated in improving the computation of the user place-orientation

in the real world(Manuri & Sanna, 2016). The methods of tracking and reconstruction can

highly vary according to the real environment, the AR device and system characterizing the

AR performance.

According to Carmigniani et al. (2011), it is possible to categorized AR hardware platform into

3 main groups: Head-mounted devices, Handheld devices and Spatial devices. The main

difference relies on the type of mechanism that is used for the process of rendering, in other

words, how the virtual objects are created and overlapped to the real words.

In the case of the most recent types of HMD, assets and fixed objects are mixed by an optical

combiner (Manuri & Sanna, 2016). Indeed, this first category refers in particular to the AR

display devices that are worn on the head of the user, such as AR glasses. Specifically, the

viewers look at the scene through his own eyes and the virtual objects are combined via an

optical effect (Manuri & Sanna, 2016).

The hand-held group includes mainly smartphone and tablets. As explained by Manuri and

Sanna (2016) “the user perceives the real world through the video streaming coming from the

camera”, and precisely, the process of combination between assets and the real world is done

by video-see-through techniques. As shown by the recent commitment of Tech Giants in AR,

smartphones and tablets have been considered promising devices for AR widespread

(Carmigniani et al., 2011). Indeed, those devices are extremely portable and popular, in

addition, mobile companies focus on advancing their CPU, cameras, GPS, accelerometer etc.

In the third category, AR is monitor-based. In this case, the user is separated from the

technology and specifically, the technology is embedded in the environment. Indeed,

Carmigiani et al. (2011) explained:


“Spatial Augmented Reality (SAR) make use of video-projectors, optical

elements, holograms, radio frequency tags, and other tracking technologies to

display graphical information directly onto physical objects without requiring

the user to wear or carry the display” (p. 348).

Technological innovation concerning AR aims at improving the position-orientation tracking

system, in order to enhance AR precision and widespread applications.

2.3 Overview of application’s fields of AR technology

In 1997 Azuma identified 6 main application fields where AR had been employed at that time.

According to the author, AR was leaving room for several application areas but at the time only

these 6 classes were explored: medical visualization, maintenance and repair, annotation, robot

path planning, entertainment, and military aircraft navigation and targeting.

Apart from this categorization, AR applications can space from education to tourism, from

retail to architecture (Manuri & Sanna, 2016) and they increased and improved over time as

long as processing power is enhanced and technology has a pervasive role in people lives (Arth

et al., 2015).

In addition to this, application fields thrived AR improvements, for instance, medical

applications were one of the main drivers for overcoming AR problems such as tracking

precision and interaction with synthetic data (Manuri & Sanna, 2016).

Military AR uses represented another training and stimulating field for AR technology (Manuri

& Sanna, 2016). Compared to VR, AR gave to military simulations and training the possibility

to act not only in indoor context but also in the real environment.

However, Entertainment field was particularly responsible for AR improvements. It is not a

case that one of the milestones of AR history is the creation of the first AR game (Billinghurst,

Clark, & Lee, 2015). Indeed, as AR represents a bridge to close the gap between reality and

virtual reality, game players firstly saw in AR a way to enhance and improve their gaming

experience. An example is represented by the contribution brought by the gaming market to

AR is the case of Kinect, (Billinghurst et al., 2015) that was launched in 2010 with a success

that overcame any already positive expectations. Kinect posed the ground for next AR usage

in games and diversified application fields (Pachoulakis & Kapetanakis, 2012). Moreover, a

study conducted in 2015, showed that consumers were aware of AR applications in the gaming


field, while there was a lower consciousness of AR possibilities and pervasiveness in other

mentioned field such as Marketing and advertising (Stockinger, 2015).

The gaming market played an additional role in AR widespread with the launch of Pokémon

Go although, other similar games were already available (Tang, 2017). For instance, the game

Ingress was launched in 2013 and considered as the antecedent of Pokémon Go for different

reasons: first of all, it was based on the same technology, AR and a GPS system, additionally,

it was sharing the same creator, the company Niantic. However, Pokémon Go had a different

explosion bringing AR at the level of critical mass, reaching incredible downloading results in

just the first weeks of its existence as any other game app ever did, even if the AR technology

has been around for a while. If Ingress and other AR games were mainly appreciated in the

gaming market, Pokémon Go had a broader and crazy success. Going mainstream, Pokémon

Go directly had a great impact on increasing AR awareness among consumers that haven’t ever

tried and heard about this technology and that become actively engaged with it (Klamann &

Krastev, 2017). Many numbers and estimations twist around Pokémon Go, the most impressive

has been calculated in the market report Q3 2016 generated by App Nina (Sydow, 2016). Its

research affirmed that the game delivered $600 million mobile AR revenue in its first three

months alone, outstanding any results achieved during the year by the entire AR/VR games

software market in 2016. After years where Tech titans have invested money in AR technology,

Google’s, Facebook’s and Microsoft’s CEOs agreed in considering Pokémon Go as one of the

first wins for AR.

According to Dotson (2016), the key point explaining this success is not related to the

technology itself but it must be looked at the content provided. Indeed, both AR technology

and GPS system were not ground-breaking themselves, what made of Pokémon Go a crazy

success is the emotional content and the effective storytelling delivered by the combined

technology (Tang, 2017). The case of Pokemon Go underlines that neat technology is not

always successful if there is no content supporting it and keeping people’s attention. At the

same time, Pokémon Go outlined other issues for possible mobile AR evolution, such as all-

day-long battery life and mobile connectivity.

2.5 AR in experiential marketing

As AR had the role of closing the gap between the virtual and real world in order to provide

gamers with a more engaging and involving experience, likewise AR plays a significant role

in experiential marketing. According to Pine and Gilmore (1999), the ultimate stage

http://venturebeat.com/2016/10/20/pokemon-go-is-the-fastest-mobile-game-to-hit-600-million-in-revenues/

http://venturebeat.com/2016/10/20/pokemon-go-is-the-fastest-mobile-game-to-hit-600-million-in-revenues/

http://variety.com/2016/digital/news/facebook-google-apple-pokemon-go-earnings-call-mentions-1201826037/

http://www.cnbc.com/2016/07/11/microsoft-ceo-said-pokemon-go-could-be-gold-for-other-companies.html


characterizing modern consumer behaviour is represented by the research of added value

delivered by a product, in the meaning of its experiential value and not anymore based only on

the physical attributes of the product. The authors conjugated the term “Experience Economy”,

underlining the new values and feelings consumers were looking for. The concept has been

implemented and developed and the examples for experiential marketing are manifold. AR

contributions to experiential marketing are multiple, starting as a promotional tool, driver of

brand awareness and brand engagement and enhancer of costumers’ satisfaction. Indeed, AR

paradigms applied in marketing mainly take advantage of hand-held devices and SARs (Scholz

& Smith, 2016). Hand-held devices are fundamental for those AR applications involving AR

prints and packaging solutions (Yaoyuneyong, Foster, Johnson, & Johnson, 2016). In this case,

given elements and pictures can be augmented by virtual objects, therefore the trigger is

activated by the user himself via personal devices such as the smartphone. As shown in the

gaming industry, virtual objects can be added to the spatial environment. Similarly, the

augmentation is initiated by the users by using a hand-held device. This specific application is

especially used in the furniture industry where many mobile apps provide the consumer with a

preview of pieces of furniture in the real setting (Rese, Schreiber, & Baier, 2014). A more

specific explanation of this application will be provided in the next chapter. SAR is adopted

by those marketing applications that aim at enhancing user’s spatial environment or the user

itself. This is the specific case of Magic Mirrors, an AR application lately developed as Virtual

Fitting rooms (Pachoulakis & Kapetanakis, 2012) or Virtual try-on (Eleonora Pantano, Rese,

& Baier, 2017). The purpose is to provide the consumer with a virtual preview of how clothes,

makeup, glasses and shoes fit without physically trying on, therefore the consumer is directly

part of the augmentation. In 2016 a similar effect has been brought in people’s lives and devices

thanks to a mainstream social application, Snapchat Lenses (Kar, 2016). According to the

author, Snapchat Lenses cannot be defined as “true AR”, however, the mechanism behind is

close to AR paradigm: Snapchat Lenses imply an overlay of real-time virtual picture and

images on faces and environment. This social platform has facial recognition sensors that allow

to identify users’ faces and overlap filters to the real image. Many retailers have adopted this

new trend by providing consumers with specific stickers and objects directly connected to the

brand or the location of the nearest store, with particular reference to geofilters (Heine, 2016).

According to Scholz and Smith (2016), AR has great potentialities for brands and marketing

practices in general, however, the authors claimed that the technology has been used without

really focusing on the creation of unforgettable and unique experiences. In the research analysis


conducted in their study, it is underlined that AR paradigms adopted by marketers were strictly

connected and focused on the technology itself rather than on the value creation for customers.

Accordingly, this approach led to the success of Pokémon Go compared to other AR

applications that didn’t gain the same visibility and success. Therefore, in the guidelines

elaborated by the authors, the first step for designing immersive consumer experience is the

identification of campaign goals and not the mere adoption of new technologies. In fact, if there

is a misuse of AR that doesn’t meet or exceed consumer expectations, this might affect and

harm future application of AR in emerging fields or applications (Scholz & Smith, 2016).

Experiential marketing represents one of the most effective ways for retailers to attract and

retain consumer’s attention. In the era of the “Experience economy” consumers are engaged

and attracted by the experiential value, therefore many retailers became firstly deliver of

experiences rather than neat providers of products and services. Therefore in the next section,

the focus will move on AR adoption specifically in the retail sector.

2.6 AR in Retail

In order to deal with the challenges arising in the retail industry, companies are looking for

innovative and engaging ways to deliver their products. According to the retail industry report

published by Accenture in collaboration with the World Economic Focus (2017), the retail

industry is embedded in an era characterized by disruptive technologies that, despite different

rates of adoption, will modify, transform and in some cases revolutionize retail approaches.

Among those technologies, the consultancy company identified AR as a key contributor in the

new setting.

In the past, AR obtained the attention of many projects submitted to Cordis and then Horizon

2020, the European Research and Innovative Programme that provides funds and supports

innovative and outstanding projects in order to ensure European competitiveness. Among the

manifold fields of applications that have already been mentioned, one of the most recent project

submitted in the platform for 2017’s call aims at shaping the role of augmented reality

technology in retail, in order to outline a framework for outstanding consumer experiences by

consideration of “online and traditional retail” combined into “an integrated Omnichannel

system” (Horizon 2020, 2017).


AR in retail has been applied differently and it aimed at enhancing consumer’s experience by

answering the following questions:

1. “How does the product fit in a real setting?”

2. “How does the product fit on me?”

3. “What is this product? What are its functions?”

The main AR applications in retail will be presented by showing how they answer to these

questions.

1. “How does the product fit in a real setting?”

This function is particularly successful and therefore developed in the furniture sector. Mobile

applications allow users to identify a particular piece of furniture and visualize its real size in

the real setting. According to an online research conducted by Rese et al. (2014) in 2014, the

furniture sector appeared as the main adopter of AR application, providing the customer with

a virtual try or with informative content. The most recent case is represented by Ikea Place, the

Swedish company’s application that has been developed with this purpose. Ikea has been

addressed as one of the first furniture companies that applied and adopted AR’s functions by

producing catalogues that could be augmented by a mobile application. Thanks to this

augmentation, the interactive approach provided customers with additional informative content

about the pieces advertised (Yaoyuneyong et al., 2016). This function aimed at supporting

customers during the pre-purchase phase in the e-shop as well as in the physical store where

shopping assistants are not always available for further explanation for every customer. In

addition to this, in 2016 a collaboration between the furniture company Lowe’s, Google and

Lenovo already brought to customers the possibility to work on home improvement projects

with the support of a mobile application(Lowe’s Vision, 2016). In April 2017 the company

added to the application the in-store navigation function (Lowe’s, 2017b) that could improve

customers’ visit in the shop. According to the company’s release, the AR indoor mapping

application is currently available only in the stores in Sunnyvale, California and

Lynwood, Washington (Lowe’s, 2017a).

2. “How does the product fit on me?”


This function is embraced by those applications that allow consumers to virtually try on

different types of merchandise, from clothes to make-up. For the purpose of showing how

garments fit on the user, his image is reflected on the screen, therefore these augmented

displays have been called Magic mirrors (McCormick et al., 2014). The same task is performed

by Virtual Try-On (McCormick et al., 2014) and Virtual Fitting Room (Pachoulakis &

Kapetanakis, 2012). VFR has been considered an in-store evolution of digital signage

(McCormick et al., 2014) since they could provide with additional information about products

and a revolution for the shopping experience in both in-store and online purchases (Pachoulakis

& Kapetanakis, 2012).

3. “What is this product? What are its functions?”

Informativeness is a common feature of AR application that is visible in another branch of

retail that isn’t connected to fashion or furniture. At the beginning of 2017, the Italian grocery

chain Coop announced the inauguration of the first shop opening his doors to AR. The

supermarket took over the technology firstly prototyped and patented for ExpoMilano2015

with a collaboration between the group Coop and “Studio Carlo Ratti Associati”. At the

beginning of 2017, the project turned into a smart and interactive grocery store named Bicocca

Village (Coopitalia, 2017). The key point is represented by the implementation of 54 monitors

that can present an "enhanced label" of the products. The simple gesture of the hand in front

the product will allow you to get on the screens indications that go beyond what is shown on

the label packaging, with information on the origin of raw materials, disposal instructions and

ongoing promotions. Interactive tables match with 46 totem-touch scanners to display

information about all products on sale, regardless of their location (Coop, 2016).

Among these AR applications adopted in retail, VFR, at their first appearance, has been

addressed as the best opportunity to be applied in physical stores. The try-on paradigm has

been concretely adopted based on positive expectation towards the technology (Bernroth,

Uldall-Jorgsen, Wenstrom, & Andersson, 2014; Pachoulakis & Kapetanakis, 2012) and based

on technology-driven enthusiasm (Scholz & Smith, 2016).

The first appearance of an augmented display is recorded in 2008 (Javornik, 2016) at the Lego

store where a SAR display gave to children the possibility to visualize the final outcome from

the Lego box. Given the novelty represented by the technology, some fashion retail stores


introduced the virtual fitting room in their shops. The fashion retail company TopShop was one

of the first company to adopt this technology in store. The Virtual fitting room was launched

in 2011 in a flagship store in Moscow. Even if the company’s technological innovativeness

was appreciated, many bloggers (Indvik, 2011; Methananda, 2011) commented that the final

result was awkward and the clothes resulted as copied on the body with photoshop and they

didn’t fit properly the body characteristics. These technical constraints were also underlined by

the analysis conducted by Carmigniani et al. (2011). They particular referred to Cisco’s

adoption of magic mirrors: the technology lacked precision with specific reference to the

tracking system. The same criticism has been voiced by Stefan Weitz, chief product and

strategy officer of Radial, who recognized that first-generation products were slow, with a

difficult interface for navigation or with a discouraging interface (Raphael, 2017). Regarding

TopShop case, according to the information delivered by the company with the online customer

service chat, magic mirrors are now no longer available (personal communication, October 16,

2017). Indeed, in the light of the technical constraints embedded in the technology VFR were

dismissed. After this first hype of adoption, AR continued its path of improvement. As

underlined in the previous paragraph AR progress was particularly boosted by the fields of

applications where the technology was successful, in particular in the gaming sector. Given the

increased penetration of technology and its improvement, additional investments have been

devoted to Virtual try on in the retail sector. Among make-up companies, a company case that

is often mentioned for being the one bringing Magic mirrors in the store is Sephora. The

company launched the possibility to visualize makeup on the customer's face without

physically putting it. The virtual try-on was available in 2014 in Milan store, with the

perspective of installing additional devices in other stores (Nesbit, 2014). Nowadays, every

Sephora’s customer has the possibility to preview how the makeup fits without physically wear

it. As claimed by the online customer service chat, magic mirrors are not available anymore

because their functions have been embedded on a web service and mobile app that provide the

customer with this preview (personal communication, October 16, 2017).

On the other side, or better in another continent, Shiseido CEO and Vice-president presented

in 2015 (Sekine & Nagai, 2015) the company’s vision by 2020 underlying the company’s

engagement in delivering a product completely consumer oriented. In this company scenario,

a key role is entitled by Beauty Consultants that help and support customers during their

experiences. Part of the company strategy is the adoption of magic mirrors that enable a makeup

preview by looking at the mirror. Thanks to technological improvements this service is no


longer available only at Giza’s store. Indeed, beauty consultants are provided with tablets to

collect real-time customers’ feedback and thanks to these tablets, magic mirror preview is

available in the shops nationwide. With regards to a specific focus to the European Market, the

smallest market where the company is active, according to the information provided by the

online customer service chat, magic mirrors are not available in any case (personal

communication, October 16, 2017).

As shown by Sephora case, in the last years VFR become popular mainly as web service or

mobile app available for portable devices. Therefore, the main field of application for VFR in

retail become the adoption in e-commerce. VFR provides customers with the same try-on

experience that otherwise would be available only in the physical store. Thereby, this allowed

a direct product experience, with the hope of reducing the disadvantages of online shopping

(Cho & Schwarz, 2012), consequently, Virtual fitting rooms are really functional for decreasing

the rate of return for online purchasing (McCormick et al., 2014). Consequently, VFR

represented a boost in the development and successful usage of mobile AR shopping apps

(Dacko, 2016).

As previously mentioned, the diffusion of Pokémon Go contributed to generating an increased

awareness towards AR technology and some retailers saw in this gamified AR application a

way to bring the customer in the store and take advantage of smartphone penetration. Indeed,

significant cases are presented by two retail companies that have engaged their customers in

mobile games based on the same model as Pokémon Go (K. Lee, 2017). Customers had to find

specific virtual objects located in the physical stores, catch them and incentives were offered

in terms of discounts, promotions, coupons to the winning players. The first retail company

was Emart that in December 2016 launched a mobile game in Electro Man stores and the game

was actually called “Electro Man Touch Attack” (emart, 2016). Another mentioned case is the

company E-land that offered a similar game (“Mirijoom”) for its customers and registered an

increase of in-store sales during the limited-time event (K. Lee, 2017). Furthermore, the

percentage of AR mobile shopping apps that are based on playfulness is 11.8% of all the apps

(Dacko, 2016).

The spread of VFR in e-commerce (Eleonora Pantano et al., 2017) is significant of the

advanced progress done in the final resolution of VFR. In addition to this, the development of

technologies that are not strictly connected to retail has increased consumers’ familiarity with


the laddering of virtual objects on real scene and familiarity with AR in general. This means

that the first technical constraints identified in the first cases of adoption are overtaken and

there is the technology to come up with a realistic result. Indeed, retailers showed increased

interests for the advantages brought by VFR in the shop as this technology has been mentioned

for bringing several benefits to the store experience(McCormick et al., 2014). VFR enables

consumers to try many garments in a faster way without the need to change clothes every time.

In addition to this, VFR can provide direct access to a wider inventory, providing customers

with additional alternatives and possibilities, by accessing even products not directly available

in store in term of size and colours. Therefore VFR has been described as supporting tool for

customers decision making (E Pantano & Di Pietro, 2012). As VFR represents a way for

customers to save time and dispose of a wider product range, at the same time, VFR provides

shopping assistant with a clear and real-time picture of the available inventory. In May 2017,

Bait Al Kandora, an Emirati menswear brand, installed a SenseMi VFR that enables male

customers to try the full range of products and change garments just by a swipe gesture

(SenseMi, 2017). In the company press page of Memomi (Memomi, 2017), a company

producer of Magic mirrors, the CEO Salvador Nissi Vilcovsky underlined that this technology

allows retailers to acquire additional information regarding the in-store experience of the

consumer. In the online context, it is easier for the retailer to track consumers’ “journey” inside

the e-store, by knowing the visited pages and the items added to the shopping cart. On the other

side, in a physical store, the collection of similar data results more challenging. Thanks to VFR

retailers can have a clearer picture of the items that have been tried, as well as which outfit and

combination style were preferred. The senior editor of retail intelligence at the firm WGSN,

Petah Marian (Raphael, 2017) emphasized that data can support future customization for

advertising and promotions like in the e-commerce sphere. In South Korea, a 360^ virtual try-

on technology is installed in MEH shop, The Ridge 354 in Pyeongchang (K. Lee, 2017).

According to the description of the South Korean adoption of Magic mirror, the technology

provides the function of promoting different and additional clothing choices according to

previous purchase and preference’s pattern shown by the specific customer. This function

implies another advantage that was recognized in the adoption of Virtual try-on that is the

increase of brand awareness and brand loyalty (Bloemer & de Ruyter, 1998; McCormick et al.,

2014). Even if there is a wide range of mobile applications that allow users to experiment with

makeup look, the application Perfect365 is experimenting the opposite trend by bringing its

display in the physical shop. Indeed, in summer 2017, Perfect365’s display was available at

the beauty- corners of the American store Nordstrom Walnut Creek to show to customers its


functionalities, as visible in the Official Instagram profile of the app. Therefore, the company

saw in the shop a good channel to increase customer’s awareness and therefore attract

additional users. Recent interest towards VFR is shown also in a grocery store chain that

entered the fashion retail sector. The German retail company Lidl presented in September 2017

its new fashion brand Esmera designed by the top model Heidi Klum (Lidl, 2017). Before

launching the collection in stores, the company engaged customers’ attention by opening for

four days a pop-up store in Dublin where the visitors could have a preview of the collection.

The company through its Facebook profile stressed an additional key feature of the pop-up

store, that was the possibility of trying on the clothes thanks to a virtual fitting room installed

in the shop. The purpose of the company was to provide customers with two novelties: the

collection and the augmented experience.

In the light of this revival and these renewed investments towards the adoption of VFR in store,

the purpose of this paper is to assess if VFR installed in the store is considered attractive from

the customer point of view. This evaluation would help to define if the investments are for

Tech’s sake or if there is a real enhancement of the shopping experience that is perceived by

the consumer. In order to define the effectiveness of AR application in stores and at which level

of adoption or integration this technology can really blur the boundaries between physical and

online stores it is fundamental to assess the level of acceptance of AR technology from the

customers’ point of view (E Pantano & Di Pietro, 2012). This evaluation plays a key role in

the light of the technological progress that increased consumers’ familiarity with IT devices

(Howland, 2016) and the increased awareness about AR generated by recent events (Klamann

& Krastev, 2017) recalled along with the first part of this section. By embracing customers’

point of view, it will be possible to drive a clearer picture of how AR in-store integration can

be a leading factor for in-store purchases.

Next section will specifically deal with previous studies that focused on the analysis of

consumer perception and therefore consumer acceptance towards AR technology in retail.

3 Theoretical background

AR is a multidisciplinary technological approach that enriches user’s environment with real-

time information. According to Stockinger (2015), in 2013 customers’ perception of AR

technology was mainly connected to the application scenario of gaming, while consumers were


partially aware of advertising, marketing and shopping applications. Nowadays AR technology

is adopted and applied in retail, however, due to the interdisciplinary nature and application

field of the technology, so further and continues research is needed (Bonetti, Warnaby, &

Quinn, 2017).

Recent studies have assessed consumer’s experience and attitude towards AR application

providing virtual try-on experiences as supporting technologies for online shopping. (Eleonora

Pantano et al., 2017; Poushneh & Vasquez-Parraga, 2017) Poushneh and Vasquez-Parraga

(2017) drew their attention on the consumer’s experience by considering the willingness to buy

and consumers’ satisfaction while buying a pair of Ray-ban glasses in the online store with the

try-on mirror. The research implied a laboratory experiment where respondents were asked to

simulate an online purchase and then answer to a survey. The main findings of the study

showed that consumer’s experience is particularly empowered by the entertaining features of

the technology. This supports the point that hedonic values are enhanced by AR. (T.-L. Huang

& Hsu Liu, 2014)

Pantano et al. (2017) have conducted a laboratory experiment in order to analyse the influence

of technology characteristics on the behavioural intention of consumers in online purchasing.

In order to assess consumer’s attitude, they applied the Traditional Technology Acceptance

Model (TAM). The laboratory experiments involved youngers from two nationalities: Italian

and German students were required to buy a pair of Ray-bay glasses in the online store. The

results showed a positive attitude towards augmented reality application in online decision

making thanks to the characteristic features of the technology. However, the authors underline

that the limited youth sample and the laboratory settings might have affected the results and

that additional study to assess AR impact on other retail channels would be required. In

particular, the authors argued that AR application is relatively new in Europe compared to

countries such as South Korea and Singapore where those technologies are more integrated

into the retailing environment.

Another relevant study is the one developed by Yaoyuneyong et al. (2016) in order to assess

consumer perception and attitude towards AR in advertising. In this case, a mixed-research

designed questionnaire has been developed and sent to students. The study showed a favourable

attitude towards AR advertising. However, according to the authors, this positive perception

might have been only due to the novelty value characterizing the technology.


Pantano (2015) supported that customers are more willing to go shopping at stores showing a

proactive adoption of technological innovation, however, those findings are mainly based on

observations done in London shopping environment taking into consideration store’s adoption

of technology like digital signage and interactive screens that support customer’s experience

(Kent, Dennis, Cano, Helberger, & Brakus, 2015).

In addition to this, there are different findings regarding the drivers of consumer’s choice.

Indeed, Zagel (2016) discussed the in-store use of AR by presenting virtual fitting rooms that

offer recommendations, personalized offers and product location. Therefore, the focus is on the

functional value enhanced by the presence of AR in physical stores.

According to Javornik (2016), “Future research on AR should explain if affective commitment

and experiential value are of a higher relevance and a stronger motivator for consumers to get

engaged with it than the rational, cognitive commitment and the pursuit of more utilitarian

values”. Therefore, consumers’ attitude towards VFR in a physical store is an unclear point.

As underlined by McCormick et al. (2014) there is a need for continuous studies assessing

consumer perception towards AR in the light of the constant development of the technology.

By assessing consumer’s attitude, it will be possible to draw additional and clearer insights

regarding the drivers of consumer’s choice at the pre-purchase phase. This information could

provide retail companies with insights about the most effective features of VFR technology to

be implemented while the technology in store. Thanks to this information it would be possible

to design AR experiences in stores that result in a more effective source of attraction for the

consumers.

4 Theoretical framework

According to previous literature, manifold models and theories contributed to the assessment

and understanding of consumer behaviour towards innovative technological forms. According

to the overview provided by Kotler, Keller, Brady, Goodman and Hansen (2012, p. 160) five

main approaches on such behaviour are presented: the theory of planned behaviour, the

technology acceptance model, the theory of adoption of innovations, the trade-off/transaction

costs perspective, and the perceived risk perspective. However, the most widely adopted

theoretical framework (Venkatesh & Davis, 2000) in order to assess the level of acceptance

and familiarity of a certain technology is the Technology Acceptance Model (TAM). This

information system model was introduced with the purpose of assessing the future adoption of


the internet, based on four main constructs: perceived usefulness (PU), perceived ease of use

(PEU), attitude and behavioural intentions. (Davis, 1989). Several studies assessing

technological strategies adopted in retail proceeded to investigate consumer acceptance by

consideration of those variables and along with its application, the model had been advanced

and additional variables have been considered (Pantano, 2014). More specifically, PU and PEU

have been considered as extrinsic constructs (H. Lee, Chung, & Jung, 2015) behind consumer

attitude, as T. L. Huang and Liao (2015) defined “rewards and benefits of using a specific

technology” (p. 273). On the other side, among the additional variables introduced in following

elaboration of the model, entertainment (E Pantano & Di Pietro, 2012) has a clear influence on

PEU (Eleonora Pantano et al., 2017) as part of the intrinsic contributor of consumer behaviour.

(H. Lee et al., 2015). Therefore, in the case of VFR adoption in a physical store the following

hypotheses are defined:

H1: Perceived ease of use (PEU) has a significant and positive relationship with consumers’

attitude towards virtual try-on displays in physical stores.

H2: Perceived usefulness (PU) positively and significantly influences consumers’ attitude

towards VFR in physical stores.

H3: Attitude towards VFR in physical stores positively and significantly influences the

subsequent behavioural intention to use this system.

As already anticipated, TAM has been further developed by the inclusion of additional

constructs in order to present a complete model. Among those constructs, further investigations

have been addressed towards the role of perceived enjoyment. PE refers to the hedonic pleasure

that is connected and expected to a specific performance and that has an influence on the

consumer usage of a certain device or system. (Eleonora Pantano & Servidio, 2011; Venkatesh

& Davis, 2000) As intrinsic feeling (H. Lee et al., 2015) entertainment has been studied

likewise playfulness with regards to the interactive function embedded in VFR applications.

Indeed, consumers that showed hedonic values while shopping, are more attracted by shopping

environment that provides with a gamified service. (Ha & Stoel, 2009) Therefore, since

enjoyment has a positive influence on users’ satisfaction using a certain technology, perceived

enjoyment plays a significant role likewise utility and ease of use. (E Pantano & Di Pietro,

2012; Eleonora Pantano & Servidio, 2011)


H4: Perceived Enjoyment (PE) has a positive and significant role in consumers’ attitude

towards VFR installed in the store.

Interactivity has a positive influence on consumer affective involvement, (Kang, Mun, &

Johnson, 2015) due to the hedonic values that are stimulated by the interaction with technology.

By definition, AR applications are embedded with interactivity as they allow communication

and reciprocal action with the type of device involved (Billinghurst & Kato, 2002).

H4a: Interactivity with VFR positively and significantly influences PE.

As users demonstrated a positive attitude towards technologies that embedded functional

values (Davis, 1989; King & He, 2006; Venkatesh & Davis, 2000), the purpose of this study is

likewise to assess the items that influence perceived usefulness for AR adoption in retail. As

mentioned in the previous section, AR provides consumers with a deeper and wider range of

information regarding the products. Significant and practical product information helps

consumers to enhance clarity about the item and to increase the post-purchase satisfaction

thanks to a satisfactory choice (Chen & Tan, 2004; Rese, Baier, Geyer-Schulz, & Schreiber,

2015). In the same direction, (Yaoyuneyong et al., 2016) AR application in advertising showed

its role as a functional tool for delivering additional information and this function is positively

noticed and appreciated by consumers. Likewise, consumers experience is enhanced by the

possibility of trying products that might not be physically available in store, both in terms of

size and colour. This function cannot be addressed without the adoption of AR in-store

displays. Therefore, these benefits embedded in AR application will be tested under the

construct Informativeness.

H2a: Perceived Informativeness has a positive and significant role on perceived utility of VFR

application in store

H2b: Perceived Informativeness positively depends on the quality of additional information

delivered by VFR

H2c: Perceived Informativeness positively depends on the enlarged product range that is

available thanks to VFR application.


VFR allows consumers to save time while waiting in the queue, in particular during the sale

period (Boonbrahm, Kaewrat, & Boonbrahm, 2015). In addition, it can be a faster way to look

for garments in the store that could complete a particular outfit and to try on many combinations

without wasting the time of changing clothes every-time. Since many VFR nowadays are

equipped with cameras that can record the previous trials, customers can easily compare

different outfits without the need to wear them again and again. Therefore, the last item that is

considered valuable for defining perceived usefulness is the time that consumers can save by

taking advantage of AR presence in-store.

H2d: Saved Time has a significant and positive influence on perceived utility of VFR in store

5 Methodology

To validate the hypotheses above described, an online survey will be distributed. The

questionnaire will be designed with the survey software Sphinx iQ2 and has the purpose of

gathering primary data for the sake of this paper.

For the divulgation of the questionnaire, the main channel will be through social networks as

Facebook. This choice is supported due to their broad reach and respondent’s familiarity with

them. As a result, this means a relatively fast return in terms of responses, and thus a valuable

and cost-effective method.

The questionnaire will be divided into four main sections. The first three are devoted to the

assessment of the main construct: PU, PEU, PE while the last one will deal with demographics

questions.

The primary data collected are intended to be analysed via a regression with multiple variables.

WORK PLAN

23/10/2017 Exposé submission


From 24/10/2017 until 5/10/2017 Survey development and pre-test

From 6/10/2017 until 26/10/2017 Data collection and further development of

the first section of the thesis

From 27/10/2017 until mid of December Data cleaning and data analysis

From mid of December until mid of January

(10/01/2018)

Conclusion

10/01/2018-24/01/2018 Defense preparation

6 Analysis of the results

7 Conclusions

7.1 Theoretical implications

7.2 Managerial implications

7.3 Limitations and further research

8 Final conclusions


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