Periscope By McKinsey study finds enthusiasm for multichannel, AR and VR

The study aksed consumers about their attitude towards in-store AR

More than 70 per cent of shoppers are willing to try cross-channel shopping methods, according to the results of a study carried out by Periscope By McKinsey.

The company polled 2,624 consumers online in the UK (504 consumers), US (1101), France (503) and Germany (516) to shed a light on attitudes towards multichannel, augmented (AR) and virtual reality (VR) and other digital retail initiatives. Respondents were aged between 18 and 69 and responses were selectively evaluated by age category, income, gender and residential location (urban or rural).

The resultant study, entitled, ‘The Future of Shopping: connected, virtual and augmented’, highlights the speed with which cross-channel retail is evolving, and how consumers are eager to try new digital channels that eliminate friction or frustration from their in-store shopping journeys.

60 per cent or more of consumers in Germany, the UK and US say they engage equally with online and offline shopping channels. Only France, at 35 per cent, lags behind the trend, with 44 per cent of French respondents they primarily or only shop in stores.

Bricks and mortar rules
Despite this surge in multichannel behaviour, the physical store still remains king, with 50 per cent of consumers in all countries surveyed saying that the bulk of their shopping activity in the past year was in store.

Online shopping via a PC is the second most popular method for shoppers in France, Germany, and the UK, but in the US, the immediacy of smartphone shopping has caught up with the popularity of the computer, both cited by 19 per cent or respondents.

For 18-39 year-olds, despite in-store remaining a powerful channel, it is clear that the smartphone is now their second go-to channel. Perhaps surprisingly, however, interest in voice-activated internet-connected devices such as smart speakers, appealed to only 4-6 per cent of shoppers in all markets.

Virtual shopping
New virtual and augmented technologies are enabling customers to interact digitally within the physical store environment to address immediate needs and preferences. They remove friction and allow retailers to reinvent their store experience.

Over 60 per cent of consumers in all countries surveyed had yet to encounter VR or AR applications in-store, yet the majority had future plans to utilize a virtual shelf for a number of activities that they say would improve their in-store shopping experience. When asked which AR/VR applications they would definitely/probably utilize, those that made it easy to access additional product information or ‘virtually’ explore product functionality/suitability scored most highly with consumers in all markets.

The ability to conveniently tap into more extensive product information on-demand held a particularly strong appeal for all shoppers. This was especially true in France, where 65 per cent said of respondents that they would definitely/probably use VR/AR applications that provided more information, followed by the US (62 per cent), the UK (57 per cent), and Germany (54 per cent). 62 per cent of French respondents also said that they would definitely/probably use VR/AR applications to see a product in context – for example, “test outside store”, where a consumer may visualize how a paint colour would look on a wall, for example. This sentiment was also echoed by shoppers in the US (59 per cent) and the UK and Germany (56 per cent).

When it comes to interacting with digital in-store extensions, AR/VR applications that deliver an enhanced experience were the least appealing to consumers in all markets, most notably in Germany, where only 41 per cent said that they would definitely/probably use AR/VR applications for this purpose.

Smart shelves
The touch screen or smart ‘virtual shelf’ gives consumers visiting stores fast fingertip access to the entire product portfolio, while also supporting features they’re already familiar with from online retail. The overwhelmingly positive attitude of respondents in all geographies highlights the appeal of virtual shelves for consumers.

Browsing products was the top use-case for respondents in France (65 per cent), the US (64 per cent) and the UK (59 per cent), followed closely by receiving similar product recommendations (US 59 per cent, France 58 per cent, UK 54 per cent). For German consumers, browsing products (54 per cent) and getting similar product recommendations (54 per cent) scored equally high as the top application choice.

Interestingly, the convenience of being able to use a branded virtual shelf outside a store’s location to make purchases held a universally strong appeal for consumers in the US (58 per cent), France (55 per cent), the UK (54 per cent) and Germany (46 per cent).

Mobile payments
In-store shoppers embrace convenient (mobile) payment options
Today consumer has a vast array of payment options to choose from, and the study found that more consumers plan to use mobile payment options when shopping in-store in the future.

For future use of mobile payments, US consumers lead the way, with 65 per cent saying they are definitely/probably likely to opt for making payments at the cashier with their smartphones. They were followed closely by UK (61 per cent), French (53 per cent) and German (52 per cent) shoppers.

Similarly, consumers expressed a particularly strong intent to make more use of their phones to scan-pay-go in the future – thus avoiding the need to go through a checkout process. Once again, US consumers (60 per cent) are most eager to embrace this option, but a significant number of consumers in the UK (55 per cent), Germany (49 per cent) and France (48 per cent) also plan to use this method.

Eliminating friction in retail through digital innovation is great, but retailers should appreciate that consumers are concerned about how these innovations could impact privacy and security. For example, having in-store movements tracked was the top security concern for German (43 per cent) and UK (39 per cent) consumers. In the US, meanwhile, the top concern was the need to surrender phone and email information (38 per cent). In France, the biggest concern was putting payment card information online (47 per cent), which came second in Germany (40 per cent) and the US (37 per cent).

The research also highlighted the fact that Generation Z and Millennial shoppers are just as concerned about security and privacy risks, and not as apathetic as they are often portrayed. Having their in-store movements tracked proved a top concern for consumers aged 18-39 in Germany (45 per cent) and the UK (35 per cent). However, for 46 per cent of French and 37 per cent of US shoppers in this age group, placing their card information online was their biggest concern.

“Consumers are eager to embrace innovations in retail technologies and demanding more from retailers” said Brian Elliott, partner and head of innovation at Periscope By McKinsey. “In-store experiences are getting a new lease on life, and for those retailers able to bridge their online and offline channels in a way that consumers can seamlessly interact with will be the winners. The real challenge for retailers is learning how to personalize the experience for individual consumers by powering cross channel analytics using the data available to them, without neglecting customers’ security and privacy.”

You can download the report here.