How are brands accessing the $56B augmented reality opportunity?

If last year was marked by the artificial intelligence (AI) boom, this year is poised to be defined by augmented reality (AR). The luxury sector has over the past year widely adopted the tech, which superimposes virtual overlays onto the physical world. The numbers demonstrate why. According to Precedence Research, the global AR market was worth $56.3 billion in 2023. The industry is predicted to reach $1.46 trillion by 2033, and grow at a CAGR of 38.33 percent from 2024 to 2033. While AR may not have generated as much mainstream buzz as AI, its potential is igniting a major retail upheaval. “At the height of the pandemic, AR quickly shifted from 'a nice to have’ feature to a necessity, proving it was more than just a gimmick and could solve a real pain point,” says Helen Papagiannis, who worked with Louis Vuitton for its 200th birthday in 2021 on an AR-powered artwork reimagining the maison’s iconic trunk. Joining LV in the race, other luxury contenders have rushed to deploy the technology. From Prada harnessing Snap’s Lenses tool to Coach’s virtual try-on mirrors, which route yields the highest return for brands? The Snap effect The low-hanging fruit is an activation on Snap. Recording over 800 million monthly active users worldwide, the application has emerged as a low-risk, high-reward launchpad for brands piloting AR. It’s an effective method of targeting the digital-savvy Gen Z, which reportedly makes up around 51.1 percent of Snap’s audience base. For its collaboration alongside Yayoi Kusama last year, Louis Vuitton tapped the platform’s Landmarker Lenses feature to target young global shoppers. Users could hold their smartphones up to landmarks to decorate them in Kusama’s trademark polka dots. Marc Jacobs’ fragrance arm followed suit, launching an AR filter to promote its new perfume in April. Users could point their smartphone to any face or object to decorate it in the fragrance’s iconic daisy emblem. Dmytro Kornilov, founder of Ffface.me, the tech provider behind Marc Jacobs’ campaign (the startup has also developed AR-powered experiences for Ralph Lauren, Prada, and L’Oréal), notes that netizens native on Snapchat and Instagram favor content that offers a quick dopamine hit – something that interactive filters can deliver. “People are looking for relevant AR filters to create content themselves and receive fast digital dopamine in the form of reactions,” Kornilov adds. Virtual try-ons With the global virtual fitting room market projected to grow from $4.79 billion in 2023 to $18.31 billion by 2030, brands are investing heavily in the arena. One area experiencing mass mainstream acceleration is AR mirrors. The medium enables consumers to virtually try on products before purchasing, while leveraging the experiential capabilities of brick-and-mortar locations. The device is demonstrating repeated success in increasing sales and brand awareness, writes Zero10’s George Yashin for Jing Daily. Zero10 is the facilitator behind Tommy Hilfiger, JD, and Coach’s AR mirrors. “Unlike previous embodiments of AR, which allowed either abstract business results or a clumsy user experience, AR mirrors enable a seamless user experience and placement at the touch point where it can generate maximum sales conversions, offline,” Ffface.me’s Kornilov adds. “It’s critical to ask how will this technology extend the brand’s storytelling, and support the customer in their shopping journey in a way that elevates the brand messaging and experience?” Kornliov believes that the tech has made such impressive headway thanks to its accessibility. “We understand that people are tired of classic brand pop-ups and are looking for something unusual yet easy to use and understand,” he adds. “The AR mirror serves these purposes perfectly.” Virtual try-on (VTO) is also gaining ground across e-commerce. Against an increasingly volatile economic backdrop, multi-brand retailers are improving their infrastructure and user experience via AR. Last year, Farfetch acquired AR-infused platform Wanna to bolster its virtual try-on capabilities, before launching new try-on solutions for handbags and clothing. Deepgears, the VTO tech provider for Mr Porter, reports that brands using the tech have achieved an average 25 percent decrease in return rates on their products. Holograms making headway Though the tech remains in its infancy, luxury brands are gradually tiptoeing into the arena of holograms. Early adopter Hugo Boss took things to the extreme with its 30m holograms of model Gisele Bündchen and South Korean actor Lee Min-ho in February. The digital stunt made media headlines, and marked the first time a fashion brand had deployed large-scale holography in a major global campaign. The Metropolitan Museum of Art’s Costume Institute likewise harnessed holograms as a means of “reawakening” its recumbent garments, enlisting the help of ShowStudio’s Nick Knight to create the spectacles. According to culture publication The Cut, the technology took seven months and 14 different simulations to perfect. As one of AR’s more niche components, it will likely be a while before the tech fully takes off among luxury. But receiving endorsement from industry veterans such as Boss and The Metropolitan Museum of Art is helping boost awareness. Apple Vision Pro Another development was thrown into the mix this year in the form of Apple’s Vision Pro. Coined the biggest tech advancement from the company in its post-Steve Jobs era, the gadget was initially met with skepticism from the fashion community. But within four months of its public release (the headset went on general sale on February 2), brands including MyTheresa, Gucci, StockX, J.Crew, and Taobao have jumped onboard to make full use of the wearable’s AR capabilities. According to research company GlobalData, the AR headsets market is expected to expand at a CAGR of 56.3 percent between 2022 and 2030, as new devices are introduced. The headset’s use cases are already evolving as brands vie for consumers’ attention. Gucci, for example, chose to flesh out newly-appointed creative director Sabato De Sarno’s narrative, by airing an AR-infused version of its documentary Who Is Sabato De Sarno? A Gucci Story via the Vision Pro. Which route should brands take? Whichever avenue brands opt to take, success isn’t guaranteed. Selecting a strategy that works for each brand requires careful consideration, says Papagiannis. “It’s critical to ask how will this technology extend the brand’s storytelling, and support the customer in their shopping journey in a way that elevates the brand messaging and experience?” she adds. Rather than relying on gimmicks or blindly chasing trends, Kornilov stresses that brands shouldn’t focus too much on the tech itself, but what consumers can gain. “Consumers are the force that turns brand communication into business results,” he adds. “We need to focus on delivering value for consumers first.”

How are brands accessing the $56B augmented reality opportunity?

How Bottega Veneta weaved China’s forever it bag

Upgrade to Pro

Sectors

Insights

Company

How are brands accessing the $56B augmented reality opportunity?

How Bottega Veneta weaved China’s forever it bag