Bridging the digital and physical worlds : The deployment of augmented reality in a retail setting – a case study on IKEA

Abstract: Developments in digital marketing are putting pressure on companies to keep up in the rapidly changing market environment. To do so, companies must take proactive steps in identifying new strategies to optimize their customers’ experiences in a digital era of increasing customer demands for online solutions. Among the most promising technological developments is the growth of Augmented Reality (AR) applications. While the future of augmented reality is relatively unknown, its unique attributes of bridging the digital and physical world have gotten investors excited. Yet, the knowledge of how to utilize AR’s unique attributes in marketing strategies is still limited, and the discussion on how to get the restless new generation to accept this emerging technology is accelerating. Within the retail industry, IKEA is considered a pioneer in deploying augmented reality in their customer experience. This project is a case study on IKEA’s implementation of augmented reality, a source of inspiration for future deployment strategies. The research data consists of interviews with respondents from both IKEA and IKEA’s innovation lab SPACE10, representing the industry practitioners, and two focus groups representing the low- and high-involvements customer perspectives. Supported by both theoretical and case study findings, this study develops a conceptual framework for AR deployment within the retail industry. The framework highlights the main elements to consider for an effective deployment of AR within a retail context. Firstly, companies should identify which customer values the AR program aims to provide, evaluate whether or not the AR technology is more effective than traditional methods for the intended value creation and thereafter design the program objectives accordingly. Secondly, the deployment stage consists of three entangled dimensions that are intertwined with a customer feedback loop. The three dimensions represent AR deployment success factors, and they are: (1) User experience (2) Utilizing unique attributes and (3) Strategy coherence.