What will it take for consumers to embrace virtual dressing rooms?

KEY IDEAS

  • Virtual fitting rooms have been positioned as a way for retailers to increase online sales and reduce returns, but have largely failed to gain traction.
  • Investors, a new generation of tech companies and retailers are more optimistic about tools due to pandemic-induced changes in habits, technological development and brands’ desire to differentiate themselves.
  • To succeed, brands and retailers need to think about how to make virtual dressing rooms a more exciting and experiential proposition for consumers.

Since e-commerce has existed, so has consumer frustration in finding the right solution. Again and again, tech companies promise virtual sizing solutions that will boost sales and reduce returns.

So far, none of these promises have resulted in widespread adoption. But some recent twists have left retailers, fit-tech start-ups and analysts wondering if their mainstream moment has come.

On the one hand, pandemic-induced digital addiction has pushed the e-commerce industry forward years and, in turn, has also exacerbated its flaws, most evident in the record number of returns retailers are struggling with. taken. At the same time, consumers – especially younger ones with new purchasing power – are more comfortable with 3D technology given the metaverse movement in mainstream discourse and the ubiquity of augmented reality. through things like Snapchat filters. Brands are hungry for ways to differentiate themselves in a crowded market that has made retention difficult. And, more importantly, technology has grown to make virtual fitting rooms more cost-effective complete solutions.

“You have all these different pieces happening at the same time. It’s almost like a perfect storm,” said Whitney Cathcart, co-founder and chief strategy officer of 3DLook, an AI-powered virtual dressing room company that scans users’ bodies and creates personalized avatars. so they can see themselves in digitally rendered clothing. .

Raghav Sharma, co-founder of Perfitly, which creates avatars unique to customers’ bodies from photos or measurements to try on electronic clothing and recommend size, said the activity level in the space is 10 20 times higher than this. it was a year or even eight months ago. He added that investor interest has also increased significantly over the past year: 3DLook raised $10 million in a Series A round in November 2021, bringing its total fundraising amount from fund at $14.7 million; Perfitly raised $739,000 through equity crowdfunding in July 2021.

“We’re seeing markedly different conversations with investors in terms of the belief that now is the time for tech,” Sharma said. “From a purely business perspective, the valuations and the amount you can expect to raise are much higher.”

However, whether virtual dressing rooms catch fire still hinges on whether brands, retailers and tech companies can succeed where they haven’t before and ignite meaningful consumer desire for the service. .

“Even if something is, in theory, easier or more user-friendly, if it requires a change in behavior, that can be a really big hurdle,” said Katie Thomas, head of the Kearney Consumer Institute.

A new world

Although the upcoming changes have been announced before, proponents say this timing is different due to a mix of technological development, increased consumer demand and pandemic-induced changes.

“We’ve been trying and embracing new things at a pace that hasn’t happened before the last two years,” said Adam Pressman, general manager of AlixPartners’ retail practice. He points to AR simulations and the take-up of test tools in categories such as furniture, accessories and makeup as evidence of an increased appetite for new online experiences, but said the software industry apparel is in the early stages of building relationships and trust as well as understanding exactly what its consumer is looking for. Also, rendering clothes in 3D is much more difficult than showcasing static objects like furniture, Warby Parker-style glasses, or even shoes.

Today’s virtual fitting rooms aren’t those of the past – fit predictors that analyzed measurements and compared sizes between brands to give recommendations, or “paper doll” image overlays “which gave a vague idea of ​​what the garment might look like – says Sharma.

Now, companies can produce more integrated, all-in-one recommendation and fit visualization experiences, Cathcart said. Previously, 3DLook separated its fit and size platforms and virtual dressing platforms – this year it’s rolled everything into one. In the coming weeks, in a bid to further integrate with consumer discovery on social media and the desire to show off clothes on the site, it will launch a new plugin that will allow users to share their try ons. social networks. media.

Consumer devices caught up to Perfitly’s back-end capabilities around the release of the iPhone 11 in 2019, Sharma said. Previously, users had to visit a laser scanning booth or a tailor to obtain measurements with the precision required to render a 3D image or a digital avatar. More and more brands are now deploying digital tools that measure the elements Perfitly needs to make garments digital (CAD models, grading logic, and tech packs) as part of their regular operations. (Sharma estimates that when the company started in 2016, 20-30% of brands had this data; now it’s around 50-60%.)

Meanwhile, social media and gaming have made consumers more comfortable with the technologies these companies use, as apps like Snapchat make augmented reality a regular part of Gen-Z’s daily life with try-ons and couture filters and luxury brands create virtual collections for popular games like Animal Crossing.

Industry interest widened with investments from mainstream retailers like Gap and Walmart at the end of 2021 – which acquired fit technology companies Drapr and Zeekit respectively.

“You’re starting to see social platforms, big retailers getting involved, not just leveraging a tool but buying tools, which shows a level of engagement,” Pressman said.

The same old challenges

The challenges associated with setting up virtual dressing rooms always sing the same tune: high costs and low adoption rates. Virtual garments are still difficult to render and fit is subjective. A lack of data around fit preferences for different materials and styles often means brands will have to strategize where they put technology first, such as initially only offering it for their most popular items or customers. the most loyal as a sort of test to gather data and improve results, Pressman said.

But to change habits and convince consumers to adopt the technology long-term, retailers will need to get creative and offer consumers something more than an experience discount, Thomas said.

Companies, she added, need to think about creating additional experiences that surround them — like a playful experience in the metaverse, or something that replicates the feeling of walking into a locker room. Conversations about today’s virtual dressing rooms are often framed by the opportunities and adjoining experiences they could help create – such as personalization and online group shopping, while acting as an on-ramp. low-stakes access to the metaverse, Pressman said. Both Cathcart and Sharma noted that, increasingly, customers are coming to them with a desire to create immersive experiences, seeing virtual dressing rooms as another way to engage consumers, rather than just to enhance margins.

“If you don’t get the right experience, or if it doesn’t lead to something better, it’s going to be frustrating,” Pressman said.

Retailers have gains to make if they implement virtual trials and can incentivize users to engage. New York-based denim brand 1822, for its part, saw conversion rates around three to four times higher than its regular website after implementing 3DLook’s latest plugin.

While such statistics are promising for the state of the fit-tech start-up and point to general retail temperatures, skepticism about consumer interest remains.

“If it didn’t take off during the pandemic when people really didn’t feel safe going into stores and touching things and other people, are we really going to see it take off?” said Thomas.

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