AR in Retail: How to Strategically Boost Conversion & Engagement

Imagining a New Retail Strategy

What if your packaging could talk to your customers?

Or if your loyalty program felt like a game rather than a chore?

What if you could reduce returns, boost conversions, and create a shopping experience that people genuinely enjoy?

That’s exactly what Augmented Reality (AR) in retail is already doing, and the results are worth stopping to look at:

• Shoppers who use AR are 20% more likely to convert, spend 21% more time browsing, and explore 1.3x more products per session (Harvard Business Review, 2022).
  
• In-store, AR-enabled try-ons lead to shoppers engaging with 7.5x more products and spending nearly 50% longer at display fixtures (Harvard Business Review, 2022)
  
• In Saudi Arabia, where AR is widely used in retail strategies already, over 70% of consumers say that AR experiences directly encourage them to make a purchase (PwC, 2023)

So if the impact is clear, why is there still hesitation in the market towards AR?

From Novelty to Necessity: How AR Fits into Retail Strategy

This blog explores how augmented reality is transforming modern retail strategy, helping brands improve engagement, reduce friction, and drive sales. You’ll learn:

• What AR looks like in different retail strategies and use cases, including some of our own case studies,
• Why adoption of AR in retail is still lagging despite the clear ROI,
• And how to get started with purposeful AR to boost your own sales.

Whether you’re a marketing lead, digital strategist, or product owner, this is your blueprint for unlocking AR’s potential in your retail strategy!

What does AR in Retail Look Like?

Augmented Reality (AR) adds interactive digital layers over the real world, typically through smartphones or tablets. In retail, that could mean:

• Trying on clothes or accessories virtually
• Fitting and styling furniture in your living room before buying
• Using packaging or signage to give access to activation games, discounts, or demos

What once felt futuristic is now a growing customer expectation, especially among Gen Z and Millennial shoppers. The tech is mature, the devices are everywhere, and the value is clear.

Top Use Cases of AR in Retail to Drive Innovation

Here are some consistently performing examples of different use cases of AR in retail to get your creative juices flowing and to give you some ideas of how to use AR for your own products.

Product Visualisation

From fashion to furniture, customers can try before they buy – virtually. This leads to more confidence in the consumer and a higher conversion rate. Deloitte reported that a leading furniture retailer using AR saw 65-69% conversion rates through their app, along with double-digit sales growth.

Loyalty Programs & Promotions

Gamified experiences drive participation and emotional engagement rather than just impressions. Our Pick n Pay Easter Egg Hunt used AR to create an in-store digital adventure that rewarded shoppers with prizes from a pool of R500 000 in a 4-hour window. Despite being a one-day promotion, it led to a huge spike in foot traffic and an experience that caused mass hype for our client.

Interactive Packaging

AR is able to turn packaging into an “always-on” media channel. By scanning the label, customers unlock tutorials, hidden discounts, or mini-games that create deeper post-purchase engagement. These unique value-adds are exactly what forms emotional connections with customers through creating new dimensions of digital value attached to physical products. It’s this type of digital value that allows some brands, like Free Water, to completely offset the cost of their product by monetising the interaction layer instead.

Location-Based Campaigns

In our campaign with Burger King x Pepsi, users joined a mobile AR treasure hunt, collecting virtual tokens in physical locations to unlock Whoppers, NFTs, and exclusive art.The result was thousands of interactions and an exciting location-based campaign that felt more like a summer event than a traditional promo. By using AR in this way, you’re able to gamify the process of directing customers to your store, even having the potential to divert them right in front of competitors’ doors!

What’s Holding Brands Back?

Despite AR’s growing role in retail innovation, many brands still hesitate due to common misconceptions – here’s what’s really true:

• “AR is too expensive”
  • Pilot programs are scalable and budget friendly, allowing proof of concept to put you at ease.
    
    
• “It’s complex to implement”
  • AR can be layered onto existing digital channels and physical materials, or even made independently on custom-build websites within as short as a week, depending on the parameters of the campaign.
    
    
• “It just looks cool, it doesn’t make a difference”
  • Data shows that AR significantly improves conversion rates, boosts time on site, and expands product discovery, making it a legitimate tool for driving customer engagement and brand loyalty.
    
    
• “We don’t have the skills”
  • You don’t need them in-house, you just need the right partner.

Once these misconceptions are cleared up, the path becomes much easier to walk. So what’s holding you back from improving your retail strategy with AR?

Let’s Build What Comes Next

Today’s customers don’t just want to buy. They want to explore, to try, and to connect. Brands that meet them there are already seeing stronger engagement, reduced return-items, and much deeper loyalty. We’ve helped bold retail brands across various industries transform AR from concept to conversion – and we can help you do the same.

Whether you want to prototype a try-on experience, turn packaging into content, or launch a campaign that connects physically and digitally, we are ready to bring it to life!

Virtually, anything is possible with Inner Reality!