Augmented reality: Merging imagination with retail innovation

The marketing landscape is evolving at an unprecedented pace, with new technologies consistently reshaping how brands engage with consumers. Among the most disruptive of these innovations is augmented reality (AR). Unlike virtual reality (VR), which immerses users in a fully digital world, AR merges virtual elements with the physical world, creating novel, interactive consumer experiences.

AR offers transformative implications for marketing, from virtual try-ons to immersive brand storytelling. According to research, AR is not just a fleeting trend—it is poised to alter consumer behaviour and brand engagement fundamentally.

AR’s role in retail is expanding rapidly as brands search for innovative ways to bridge the gap between the convenience of online shopping and the tactile, immersive experience of physical stores.

IKEA’s AR app, for example, allows users to place virtual furniture in their homes, offering a realistic sense of how items will fit in their spaces before making a purchase. This feature—referred to as ‘contextual embedding’—is just one of many ways AR is transforming the shopping experience by helping customers make informed decisions.

The real power of AR

AR’s power goes beyond utility. By blending the virtual with the physical, the tech provides a visually engaging experience beyond static product images. Imagine virtually trying on a pair of sunglasses through an AR filter or seeing how a new piece of furniture would look in real-time within your home.

According to Kumar et al. (2024), In the year 2024, my colleagues and I conducted research on a theoretical framework for AR marketing applying Means-End Chain Theory, which was later published in the Information and Management journal.

We found that AR doesn’t just show products—it enhances the decision-making process, builds confidence, and heightens consumer enjoyment. The study identifies specific AR features that deliver concrete benefits to users, linking them to deeper, more abstract values that drive consumer behaviour. These insights are encapsulated in the SEAD and SALES frameworks as given below.

SEAD: AR’s consumer benefits

The SEAD (sensory, efficiency, assessment, and discovery) framework organises the primary benefits that consumers derive from using AR in shopping environments. Each component speaks to a fundamental aspect of consumer decision-making:

Sensory: AR enhances the sensory experience by allowing consumers to visualise and virtually feel products in real-world settings. For example, AR helps them overcome the limitations of online shopping, where they cannot physically touch or see the product in a tangible context. By making virtual products feel more real, AR helps reduce the intangibility of digital shopping.

Efficiency: One of AR’s most powerful features is its ability to streamline the shopping process. Whether it’s saving time by offering quicker comparisons or allowing for immediate visualisations in real-world contexts, AR makes decision-making faster and more intuitive. This efficiency improves customer satisfaction and leads to quicker conversions and reduced cart abandonment.

Assessment: AR gives consumers the ability to assess products in detail, offering them a better understanding of fit, size, or appearance in a given space. The ability to ‘try before you buy’ mitigates risks and allows consumers to feel more confident in their decisions, reducing the likelihood of returns.

Discovery: Lastly, AR enhances product discovery by inspiring consumers to experiment with more ideas. Whether it is trying new product configurations, colour combinations, or personalising choices to fit their needs, AR enables consumers to engage with products in ways traditional e-commerce simply cannot match.

These four benefits together help explain why AR is perceived as an exceptional tool in retail marketing. According to the research, consumers do not merely use AR to view products—they experience them, which fosters a more engaging and satisfying shopping experience.

SALES: The underlying values

While SEAD explains the functional benefits of AR, the SALES framework identifies the deeper motivational values that these benefits help fulfil. SALES stands for status, achievement, lifestyle, economy, and safety—each representing a key driver behind why consumers are drawn to AR shopping experiences.

Status: Many consumers value AR because it enables them to showcase their lifestyle choices in ways that enhance their social status. By using technology to interact with brands and products, consumers feel like they are innovators themselves. AR’s ability to share interactive experiences with others—such as trying on virtual fashion pieces—also taps into the desire for social influence and validation.

Achievement: AR satisfies consumers’ need for achievement. The ability to make informed and confident decisions—while saving time and money—provides consumers with a sense of accomplishment. Whether it is selecting the right furniture for their home or picking out the perfect outfit, AR allows users to feel like they are making better, more successful choices.

Lifestyle: For many consumers, AR’s personalisation capabilities appeal to their desire to express their unique identity and lifestyle. By allowing customisation and contextual visualisation, AR helps consumers align their purchases with their tastes and preferences, creating a stronger emotional connection with the products they buy.

Economy: Economic value is another key driver of AR adoption. AR improves decision-making efficiency, reduces product returns, and ensures customers are satisfied with their choices. As a result, consumers are more likely to feel they are getting good value for their money. This is especially important in today’s economy, where consumers are selective about where and how they spend their money.

Safety: Finally, AR reduces the risks associated with online shopping, offering a sense of security. By allowing consumers to visualise products before purchase, AR reduces uncertainty, enhances decision comfort, and diminishes the fear of post-purchase regret. This is especially critical in high-involvement purchases, where the perceived risk is often greater.

The findings of our study demonstrate that AR’s potential in marketing is far from speculative—it is grounded in real-world applications that are already delivering significant value to both, consumers and brands. By addressing both practical needs (through SEAD) and emotional drivers (through SALES), AR presents a holistic solution to many of the challenges faced by modern retailers.

Despite its current success, AR still faces challenges, such as high development costs and privacy concerns. However, as AR technology becomes more accessible and refined, these barriers are likely to decrease, paving the way for even broader adoption. Retailers that invest in AR now will enhance the shopping experience for their customers and position themselves as pioneers in the next wave of digital transformation.

— Dr Harish Kumar, chairperson–research, assistant professor of marketing, Great Lakes Institute of Management, Gurgaon.