Virtual Reality and Augmented Reality in Retail Market Size, Trends and Growth Analysis by 2027

The global market for virtual reality (VR) and augmented reality (AR) in retail is projected to expand significantly, increasing from approximately US$ 3,147.58 million in 2020 to around US$ 17,864.86 million by 2028. This growth represents a remarkable compound annual growth rate (CAGR) of 24.8% from 2021 to 2028.

Brands are increasingly leveraging VR and AR technologies to enhance their marketing strategies. These technologies create immersive and realistic environments that can engage consumers in unique ways. Depending on the device used, virtual reality marketing can be either visual or multi-sensory. For instance, a complete VR headset offers a fully immersive experience, while a simple Instagram filter overlays digital objects onto the real-world camera view. This latter approach is known as augmented reality marketing, where virtual images are superimposed onto the physical environment. AR marketing is particularly popular among businesses due to its practicality and cost-effectiveness compared to developing a full VR headset experience. Consumers can easily access AR through their smartphones or desktop applications.

One of the pioneers in AR marketing is Sephora, which introduced its Virtual Artist app, allowing users to virtually try on makeup. Similarly, Gucci has integrated AR into its app to promote its new Ace sneaker line, enabling users to see how different styles would look on their feet from various angles, thanks to advanced motion tracking technology. Instagram has also collaborated with Spark AR to enable users to create personalized AR filters, which brands utilize to showcase logos or other branding elements. For example, Coca-Cola Poland developed a filter that places its iconic polar bear mascot in the viewer's environment. The widespread adoption of AR and VR technologies for marketing purposes is anticipated to significantly drive market growth.

The virtual reality and augmented reality market in retail is categorized based on type, application, and geographical region. In terms of type, the market is divided into AR and VR segments, with AR holding a larger share in 2020. When considering applications, the market is split into online and offline retail, with online retail dominating the market share in 2020. Geographically, the market is segmented into North America, Europe, Asia Pacific (APAC), the Middle East & Africa (MEA), and South America (SAM), with North America holding a significant portion of the global market in 2020.

The COVID-19 pandemic has had a profound impact on various industries, including retail, which in turn affects regional economic growth. The surge in COVID-19 cases in the US led to widespread lockdowns, prompting businesses to brace for economic challenges. Consequently, technological investments saw a decline in 2020. However, the retail sector had already begun adopting VR and AR technologies prior to the pandemic.

According to IBM's 2020 US Retail Index, the pandemic accelerated the transition to digital shopping by approximately five years. Virtual experiences, such as "try-before-you-buy" options, became increasingly popular, allowing consumers to preview furniture and home goods from brands like IKEA and Home Depot, as well as digitally try on luxury fashion items from brands like Louis Vuitton and Gucci. Ulta's GLAMlab, a virtual try-on beauty tool launched four years ago, saw a surge in usage during the pandemic. Additionally, when Kendra Scott's physical stores were closed, the company introduced an AR application that enabled customers to virtually try on various earring styles from home. This increase in AR adoption by consumers and the heightened investment in technology by retailers during the pandemic have positively influenced market growth in the region.

The overall size of the virtual reality and augmented reality market in retail has been determined through a combination of primary and secondary research methods. The research process began with extensive secondary research utilizing both internal and external sources to gather qualitative and quantitative data related to the market. This approach also aimed to provide an overview and forecast for the VR and AR retail market across all segments. Furthermore, primary interviews were conducted with industry participants and experts to validate the data and gain deeper analytical insights. Participants included industry professionals such as VPs, business development managers, market intelligence managers, and national sales managers, as well as external consultants like valuation experts, research analysts, and key opinion leaders specializing in the VR and AR retail market.

Key players in the virtual reality and augmented reality retail market include Epson America, Inc., Marxent, Google LLC, Infosys Ltd, Intel Corporation, Microsoft Corporation, PTC Inc., Qualcomm Technologies, Inc., Retail VR, and Samsung Electronics Co., Ltd.

Virtual Reality and Augmented Reality in Retail Market Size, Trends and Growth Analysis by 2027

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