The Rise of Virtual Stores
Consumers are increasingly looking for more meaningful, engaging, and personalized shopping journeys. Virtual stores have emerged as a solution to meet these expectations, with ecommerce projected to reach $5.4 trillion in value. According to a recent study conducted by Coresight Research in partnership with Obsess, virtual stores alone are estimated to generate $1 billion of that revenue. This highlights the growing significance of immersive experiences in reshaping the retail landscape and consumer expectations.
The virtual store market presents a tremendous opportunity for venture capitalists and strategic partners. It is anticipated to grow at a strong compound annual growth rate (CAGR) of 27.0% to reach $7.1 billion by 2030. Notable brands and retailers are already leveraging immersive experiences such as virtual stores, gamified shopping, social shopping, and data/AI-enabled content for personalization to deliver true one-to-one experiences. Neha Singh, the founder and CEO of experiential ecommerce platform Obsess, emphasizes the immense potential of virtual stores to create deep engagement and drive long-term customer loyalty and business benefits. She explains, “Shoppers can experience the brand’s personality and ethos and make informed purchasing decisions in ways that traditional ecommerce cannot match.”
“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.” – Neha Singh, Obsess
The Strategic Priority for Retail Companies
Immersive experiences have emerged as one of the top three investment priorities for retail companies. According to the aforementioned study, retail companies are focusing on data/AI-enabled content for personalization, virtual try-on, and virtual stores as key areas for investment. The study reveals that all surveyed companies are considering increasing their investment in immersive experiences over the next decade, with 93% planning to do so within the next three years.
When it comes to evaluating the success of immersive experiences, click-through rate, average order value (AOV), and net promoter score (NPS) are the top metrics considered by brands and retailers. The survey findings indicate that companies that have already invested in virtual stores are witnessing moderate or significant increases in total sales and online sales. This showcases the urgency to implement technology-driven customer-engagement and selling strategies. Virtual stores not only bring the best of the physical shopping experience to the online channel but also improve sales performance.
“Virtual stores bring the best of the physical shopping experience to the online channel, while improving sales performance.” – Neha Singh, Obsess
Moreover, the study highlights the effectiveness of other immersive experiences. Data/AI-enabled content for personalization and gamified shopping have both resulted in increased click-through rates and customer satisfaction. Social shopping, which allows retailers and brands to expand their customer base, has positively impacted customer engagement and acquisition. The fashion industry, in particular, has found revenue growth opportunities through social shopping.
Underpinning these immersive experiences are augmented and virtual reality technologies. Both AR and VR markets are experiencing explosive growth, with AR projected to reach $31.3 billion and VR expected to total $20.7 billion by 2027. This growth in the market signifies significant interest, investments, and innovation in immersive experiences. As these technologies become more advanced and accessible, the emergence of new use cases and applications is expected to drive future growth.
Online gaming platforms like Roblox, Fortnite, and Decentraland are also actively collaborating with brands and retailers to create gamified shopping experiences. This partnership has resulted in increasing engagement and revenue generation. For example, Ralph Lauren’s collaboration with Fortnite garnered over 400 million registered accounts, primarily from the 18-24-year-old demographic.
“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.” – Neha Singh, Obsess
Immersive experiences redefine customer engagement and connection. Metrics such as click-through rate, NPS/customer satisfaction, time spent visiting stores, number of new customers, and brand equity have all seen positive impacts as a result of immersive experiences. While gamified shopping is still gaining traction compared to other immersive experiences, businesses recognize its potential to captivate and convert a new audience of tech-savvy consumers. The statistics show that gamification in virtual stores leads to significantly higher add-to-cart rates and increased 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. 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.” – Neha Singh, Obsess
Implementing immersive strategies requires seamless user interfaces and consistent optimization based on customer feedback and analytics. Brands and retailers benefit from collaborating with technology vendors who possess established data and insights about consumer interactions in immersive and 3D environments. Additionally, data analytics solutions are in demand to deliver insights from 3D spatial data and enable personalized immersive experiences. The fashion industry offers significant opportunities for AI and data-driven personalization technology, showing promise in driving metrics like new customer acquisition and conversion rate.
Ecommerce platforms should prioritize user-friendly design and ease of navigation to ensure a positive user experience with immersive technologies. Consistent optimization based on customer feedback and 3D spatial data is crucial for enhancing user satisfaction. The growing emphasis on immersive experiences creates diverse investment opportunities in companies that develop and provide immersive technology solutions. This includes virtual stores, data/AI-enabled personalization, ecommerce software, and solutions supporting gamification and social commerce features.
The future of retail lies in delivering immersive experiences that connect with customers on a deeply personal level. By leveraging the power of virtual stores and other immersive technologies, brands and retailers can create long-lasting customer loyalty, drive revenue growth, and stay ahead in the evolving retail landscape.
