Augmented reality (AR) and virtual reality (VR) — collectively known as extended reality (XR) — are not new technologies. They've floated around the periphery of the technology sector for well over a decade now. Unfortunately, they've been barred from widespread adoption due to a combination of cost, complexity, and technical problems.
To say that circumstances have recently changed would be putting it lightly. The large-scale exodus from the real world to the virtual world that happened during the pandemic exponentially increased interest in XR technology. And that has had a ripple effect across multiple industries.
In Europe, for instance, the XR market reached $8.03 billion in 2020, with a projected compound annual growth rate of 37.5% through 2027. Spending is also seeing a sharp increase, with double- and triple-digit growth rates across all verticals. Notably, the European XR market is even expected to outpace the United States by 2023.
This article is the second installment in our Global AR series where we will explore the top trends shaping the AR/XR commerce sector in Europe. Read the first installment that focuses on AR commerce in the US here. At the end of this article, you will better understand how European users respond to – and embrace – the technology.
Before we continue, it's important to differentiate between AR, VR, and XR.
Augmented reality generally applies an overlay to the real world, typically requiring only a smartphone. In commerce, AR is generally used to add context to a product listing or enhance the purchase. Someone interested in purchasing jewelry, for instance, could use AR to virtually try on a particular bracelet that caught their eye.
Virtual reality is entirely divorced from the physical world, leveraging technology such as specialized headsets and haptic feedback devices for full immersion.
Extended reality is basically an umbrella term that encompasses AR, VR, and all related technologies. Interestingly, it may also refer to their intersection. Some retailers have begun providing customers with a VR shopping experience and pairing it seamlessly with AR.
The XR market in Europe is booming. By 2025, it's expected to create as many as 2.4 million new jobs. The retail XR market, meanwhile, is expected to reach $5214.75 million by 2028 at a CAGR of 25.8%. The majority of businesses currently driving AR adoption, both within commerce and without, appear to be small and mid-sized enterprises. Case in point, a 2021 census of the European XR industry found that 90% of involved companies are SMEs.
Businesses operating in Europe are no stranger to strict legislation — the General Data Protection Regulation is still held up as the gold standard of privacy law by multiple other nations. On the one hand, this is excellent news for consumers, who can rest assured that their data is and will remain their own. On the other, it can occasionally act as a roadblock to innovation.
For instance, a recent ruling by the European Court of Human Rights noted that AR may fall within the scope of private life, and be subject to all the rules that entails. Regulators are also eyeing the metaverse as a possible next target for regulation.
For commerce, this could have a negative impact on the functionality of some augmented reality tools, while also making them more challenging to implement.
Europe's AR commerce market is still very much in its nascent stages. Only 19% of the region's top 100 furniture retailers currently offer an AR experience. Yet AR is also something European audiences increasingly demand.
58% of online shoppers in Europe have expressed their desire for immersive technology, such as AR in their shopping experience. Any retailer that manages to fulfill this desire will thus enjoy a significant competitive advantage.
The technology also has very real applications outside of apparel and furniture, and could be implemented for products from consumer electronics to automotives. With demand clearly there, expect to see more European companies start prioritizing creating engaging AR experiences.
In 2019, researchers from the University of Manchester collected and examined qualitative data regarding the use of AR technology in-store. They found that consumers who used AR experienced greater immersion and a more favorable perception of the store environment.
Finally, and perhaps most importantly, they acknowledged that AR increased their desire to give repeat business to a brand. It's one thing to see data like conversion rates and spending. But this is evidence right out of the mouths of customers — people love augmented reality, and you have a great deal to gain if you use it effectively.
Much like the United States, the European AR market is on the verge of an explosive boom. And despite projections showing that the US may have a bigger theoretical market in the coming years, there is extensive interest in the technology as big businesses continue to develop exciting use cases for this transformative technology.
Europeans continue to invest hundreds of millions into extended reality tech, while both businesses and consumers acknowledge its inherent value. In spite of that value, however – and in spite of considerable investment – market penetration of AR technology into retail is still relatively light, a trend that is consistent with adoption rates in the US.
A business capable of quickly deploying a full-featured AR platform could see itself with a considerable edge over the competition. And that's exactly what Tangiblee provides. Our comprehensive AR platform is easy to integrate within your online storefront, ensuring you'll be perfectly positioned to experience the technology's true potential.
If that sounds interesting to you, book a demo with an AR expert today to discover how Tangiblee can transform your customer experience.