DESK PROJECT

REPORT

PGDM

Impact of Augmented Reality in the consumer buying

behaviour in Retail sector post COVID-19

April 2020 – May 2020

 AUTHOR OF REPORT
NAME: SAUVIK GHOSH
ROLL NO - 2019171
COURSE - PGDM

SECTOR
RETAIL SECTOR

DATE: 15.08.2020

The Report is submitted as a part of Desk Project in partial fulfilment

for the requirement of the Degree of Post Graduate Diploma in
Management (PGDM)

SUBMITTED TO
Dr. Venkatesh Naga
Professor – Human Resource
GOA INSTITUTE OF MANAGEMENT
 ACKNOWLEDGEMENT

I would like to thank my project mentor Dr. Venkatesh Naga for his
constant support and constructive criticism which led to the successful
completion of this project report. His comments were valuable and
quite insightful.
I would also like to thank each and everyone who took out time from
their busy schedule to complete the questionnaire and stating their
unbiased views.
I would like to thank my family and friends also who made sure I
devote my time for the research purpose even in this challenging
times.
 Executive Summary

Technology has transformed the likes of most of the industries present all over the world.
One such industry which has been disrupted in recent times is the retail industry. At one point
of times where two businesses were compared on the basis of quality and price, now they are
compared on the basis of customer reviews online and the search engine rankings and also
social media pages. Customers now have a wide variety of choices to choose from as they
have more information available to them than ever before, thanks to the ever increasing reach
of internet in recent times. The pressure is now on the retailers more than ever to provide a
memorable in store experience and a hassle-free online experience.

Another major disruption is caused by the ongoing global pandemic named COVID-19. It has
changed the way retail operations were carried out and has dismantled all the norms and
procedure which has been followed since beginning. It has also changed the way people use
to think and affected their daily lifestyle. Global consumer researches have shown that
consumers are radically changing their lives in response to the pandemic. Consumer are
presenting more awareness of environment, safety, cost while shopping which is why more
and more people are shifting themselves to the online mode of shopping as they consider it to
be safer than visiting a crowded place. This shift in the mode of shopping of consumers has
increased the importance of leveraging new technologies such as Augmented Reality by the
retailers. For providing seamless online experience and thus increased engaging with the
consumer, it is important for retailers to offer them what others are not and thus technology
play a key role here. It has been evident that if and when brands offer new technology such as
Augmented Reality, the image of the brands significantly improves and which can also be a
differentiating point for a brand.
 Profile of the Sector

Description of the Sector:

Retail sector is the sector that deals with the selling of consumer goods and services through
the help of various distribution channels with the aim to make profit. This sector does not
manufacture a product, but they purchase the products from the manufacturers in bulk
amount and then sell to consumer at a marked-up price. Thus, retail acts the vehicle or means
by which manufacturer reaches to the consumer.

The basic supply chain behind this process is depicted below-

MANUFACTURERS RETAILERS CONSUMERS

WHOLESALERS

Manufacturers: Manufacturers are the one who are responsible for the production of goods
which satisfy the needs of common people with the help of labour, machines, etc.

Wholesaler: Wholesaler represent the intermediary between the Manufacturers and Retailers
who purchase products from the manufacturers in bulk and sell to retailers at a lower price. A
wholesaler never sells directly to the end consumer.

Retailers: Retailers acts as the link between the consumers and the manufacturing company.
They sell small quantities to the end consumer as per their needs and requirements with the
aim of making profits.

Various types of Retail Outlets:

Department Stores- A department store provides a wide range of products under one roof
which helps consumers to fulfil their demands. Merchandise that are usually found in such
stores are – apparels, jewellery, cosmetics, footwear, electronic appliances, etc.

Discount Stores- Discount stores also have a great range of products available but at a larger
discounted price. The quality and efficiency of the products are limited and thus there is the
trade-off between price and quality. Merchandise offered are almost same as that of a
departmental store.

Supermarket- These are into the retailing of food products and household items. It is an
expanded form of small grocery stores where merchandise such as meats, vegetables,
medicines, fruits, etc are found.

Kirana stores- These are run by the individuals in a society catering to the needs and wants of
local people by setting up a small store. One wouldn’t find high end products in such kirana
stores. Merchandise offered are eggs, bread, bakery, cereals, etc.

Malls- Malls are places where several retail stores come together and operate independently.
Each store has their own merchandise but the platform is the same.

E tailers- With the advent of technology and penetration of internet into the households, the
mode of shopping is changing. Consumers now have the ease to shop while sitting at home.
Examples of such platform are flipkart, amazon, EBay, etc.

Size of the sector:

Indian Retail sector is one of the fastest growing retail sectors in the world. The Indian retail
sector has undergone a series of transformation with the advent of newer technologies and
penetrating internet into the rural households. It has experienced tremendous growth in the
past 10 years.

According to reports from Boston Consulting Group (BCG), Indian retail market is estimated
to reach $1.1-1.3 trillion by 2025, from $0.7 trillion in 2019. Thus growing at a CAGR of 9-
11%. This growth is driven by socio-demographic and economic factors such as the rise of
nuclear families, increasing incomes which leading to more spending and the rise of
technology. Whereas developed countries such as US and UK are expected to grow at a
CAGR of 3.6% and 4.5% respectively.

Retail industry is India’s largest industry which accounts for over 10% of the country’s GDP
and 8% of total employment. Major part of the Indian retail is the unorganized retail market
which contributes around 88% to the total Indian retail market and the rest accounts for
organized market which is currently valued at around $60 billion.
Business segment, range of products and services:

Indian retail industry can be broadly classified into 5 key business segments –

1. Fashion, fitness and personal care: Fashion is the considered to be one of the largest
sectors in retail. This segment consists of some key services and product ranges such
as beauty parlours, gyms, spas, etc. The rise in income levels of people has resulted in
growing spending in this segment. People are becoming more and more health
conscious and at the same time fashion oriented. As is the case with other sectors of
retail, most of the sales of personal care and fitness product happens through the small
and single retail outlet.
Some of the retailers in this segment are- VLCC, Avon Beauty, Apollo Health and
Life Style Limited.
2. Pharmaceuticals: In total, India has over 5 million retailers, out of which 16% are
chemists. Most of the retailers in this segment have started providing value added
services such as home delivery of medicines, order over phone calls, online sharing of
prescriptions, etc. This segment has also been benefited from the rise in the income
levels of the population which has resulted in increasing spending in medicines to
keep one healthy. Some of the major players in this segment are – Apollo Pharmacy,
VLCC, Dr. Batra Homeopathy etc.
3. Entertainment Retail: The concept of shopping of today’s millennials has evolved in
terms of the format and the buying behaviour. Retail entertainment is when shopping
is more than just buying what you see. Nowadays retailers are enhancing the shopping
experience by including the concept of clubbing, gaming parlour, movie theatres and
so on. The ambience and the surrounding have a positive impact on the minds of the
customers which helps generate more footfall to a particular retailer.
4. Food and Grocery: This sector is divided into Restaurants, food courts, coffee shops,
kirana stores, etc. Grocery being the largest sector in retail. Walmart, McDonalds,
Ahold are some of the major worldwide players in this segment. Food sales accounted
for 775 of the total sales, growing to 70.7 lakh crore from 35 lakh crores in 2005.
5. Consumer Electronics: It is the second fastest growing segment in the retail industry
after food and grocery. The recent developments in technology is the key growth
driver in this segment. NEXT, which is a unit next retail India limited is one of the
 market leaders in the consumer electronic segment. It has 385 outlets across 16 states,
most by any consumer electronics retailer. Range of products in this segment include
televisions, laptop, mobile, refrigerator, etc.

INTRODUCTION TO THE PROJECT-

PROBLEM STATEMENT/ GAPS IN KNOWLEDGE:

 Does Augmented Reality have any significant impact on the consumer shopping
behaviour particularly in the Retail sector and whether a global pandemic such as
COVID-19 significantly alter the observed behaviour or not?
 Are the consumers willing to rely more on e-commerce post COVID-19?
 And if it is the case, are they willing to accept Augmented Reality (AR) as a
technology?
 What are the benefits that the Brands could gain as a result of using AR technology in
practice?

OBJECTIVES OF THE STUDY:

1. To investigate the changes in shopping behaviour amongst three segments of Retail

industry, i.e. Fashion, Grocery and Consumer Electronics as a result of COVID-19.
2. To investigate how Augmented Reality (AR) as a technology enhance consumer
shopping experience.
3. To find out how brands can leverage the use of AR technology in providing better
services.

UTILITY OF THE STUDY:

This study would help retailers understand the impact the global pandemic had in the minds
of their customer, the result of which more and more people are willing to accept technology
to counter the fear of the crisis situation. It would help retailers especially the fashion
segment to understand how AR as a technology could be used as a sales and marketing
strategy to promote their Brands.
RESEARCH METHODOLOGY:

The basic approach used for this research method will be a quantitative online questionnaire
which will include several questions that will be based on Likert scale. The responses that are
collected contains demographic data also such as the gender of the respondent, the age group,
the educational qualification and so on. Thus, the questionnaire contains both metric and non-
metric data.

The source of data is of course primary data sources as the data are collected and processed
directly by the concerned person, which in this case is myself. And no data or information is
retrieved from existing sources or researches.

The method of data collection includes floating an online questionnaire through google doc
over the internet groups, social media groups and class groups. Due to the ongoing global
pandemic, on field collection of data was not possible and thus the questionnaire was not an
administered one. The sampling technique used for the online questionnaire is convenience
sampling method owing to the limited time available and the estimated or target sample size
was around 90-100, so more the response, the better the data can be analysed.

The data collected is analysed with the help of pie charts, bar graphs and finally some
statistical analysis is performed with the help of SPSS.
PRESENTATION AND ANALYSIS OF DATA:

Demographical analysis-

Gender

Male
Female
43%
57%

Inference: Of all the respondents, 60% of them are male and 40% of them are female. Thus,
there is a good level of distribution equally among men and women which will help us to
understand the shopping behaviour.

Age

12% 21-30
31-40
18% 40+

69%

Inference: As can be seen from the pie chart, most of the respondents were of the age group
21-30 (around 70%). Most of them are college going students or recent pass outs. The next
most populated age group is of the range 31-40. These are the people having well settled at
their jobs and have families of their own.

Other demographic factors show that most of the respondents are from West Bengal and there
are respondents from various part of the country. Most have graduate degree and some of
them have/are pursuing their post graduate degrees. And thus, the sample size has equal
proportion of students and full time or part time employed people.
Mode of shopping preferences (Pre COVID-19)

shopping mode-clothes
24%

76%

Offline Online

Inference: When asked what were the most preferred mode of shopping apparels without
considering the effects of COVID 19, these were the response. In the fashion retailing most
respondents preferred traditional mode of shopping, i.e. visiting to shops and malls for buying
apparels. More than 70% people chose offline as their preferred mode of buying clothes and
apparels etc. One main reason behind this could be the feel and touch of product (Apparels in
this case) is important in this case and a person unless is satisfied with the size of his/her shirt
and how he looks wearing it, he/she doesn’t make a purchase.

Shopping Mode- Groceries

20%

80%

Offline Online

Inference: Here also we can see the shopping mode tendency for groceries is on the same line
as that of the clothing/apparel segment, i.e. people are preferring more of offline shopping.
Almost 80% of the respondent would love to go to a supermarket for buying groceries
according to their knowledge and requirement.
 Shopping Mode- Electronics

31%

69%

Offline Online

Inference: In the case of consumer electronics segment of retail, there is a significant

difference in the buying habits. Most people (around 70%) in this segment are preferring
online mode i.e. ecommerce for purchasing necessaries such as mobile, TVs, etc. Various
options and a significant cheaper price owing to big discounts can be the attributing factor
behind this.

Shopping habits of consumer:

Shopping Habits
4%
10%

43%

43%

I usually research products online but buy the products in a traditional store
I usually research and buy product online
I research product in traditional store but buy products online
I research and buy products in store

The result of this response indicates the importance of a brand to have a multichannel
presence. A large proportion of people are essentially engaging in “Research Online,
Purchase Offline (ROPO)” behaviour, i.e., customers are looking for information regarding
products in online and later completing the purchase through offline stores. This behaviour is
mainly attributed to the fact that consumers are referring to the reviews and ratings of a
product online before making the purchase offline to mitigate the risk of buying any
expensive thing.

Factors affecting purchase decision

14%

35%

31%

20%

To be able to see, touch and try the product

To be able to trust the seller
To be able to shop at my own convenience
To be able to buy at the lowest price

When asked about the factors that affect the purchase decisions, these were the responses.
Here we can interpret that the most contributing factor is the ability to touch and feel the
product which is only possible in the case of offline shopping which is why consumers even
after researching the products online, goes on to traditional store to complete the purchase.
But we can clearly see that there is no clear majority in this case as people are also influenced
by the convenience they can have while shopping, which is why the online mode of shopping
is increasing because consumer can now order anything within the blink of an eye with them
sitting on a sofa.

POST COVID-19 PURCHASE INTENSION:

Even when COVID 19 will no longer be a part of the world, the effect it had into the minds
of the consumers will stay for a much longer period. Consumers will not come back to
normal buying habits until they feel it is safe for them to do so, both physically and
financially. A recent McKinsey report shows that there will be a reduction in the footfall in
places such as malls, supermarket, etc due to people wanting to stay away from large
gatherings and thus this will result to a positive externality for various online platforms as
more people are looking for alternatives for offline shopping.

Keeping this in mind, here in this project we have surveyed people about their opinion on the
preferred mode of shopping post COVID-19 in the three major segments of Retail industry
namely fashion, groceries and consumer electronics.
The following were the questions asked to them which was based on Likert scale and they
asked to rate it between 1 to 5 where 1- strongly disagree and 5-strongly agree.

Q1. Post COVID-19, you will be willing to go to the markets for buying clothes that you can
get online.

Q2. Post COVID-19, you will be willing to visit supermarkets for buying groceries which
you can purchase online.

Q3. Post COVID-19, you would rather go to an electronic shop for buying gadgets than
purchasing it online

A statistical analysis was carried out to study the effect of COVID-19 on each of the three
segment and whether COVID-19 has similar impact on each of the three segments.

Thus, here we are testing the hypothesis-

Ho : There is equal impact of COVID-19 on each segment, i.e., the means are equal.

Ha: The means are unequal and the impact is not same in each segment

So, first of all before performing any statistical method, we first check the reliability of the
data or the internal consistency of the construct.

Thus, to measure this we check the value of the Cronbach Alpha:

Table1: Reliability Statistics table

Thus, from the above analysis drawn from SPSS, as can be seen from Table 1 that the
Cronbach Alpha value is coming out to be 0.659.

The ideal Cronbach Alpha value should be –

For an exploratory research – 0.5 and above

For an established research – 0.7 and above

Thus, our alpha value is quite significant and we can infer that the data that we collected is
very much reliable.

Next, we will be performing the One-way ANOVA test as there are three segments into
which we have divided the Retail industry and we need to check between the 3 groups
simultaneously.

Here the dependent variable is the three segments i.e., fashion, groceries and electronics
which is non-metric in nature.

The independent variable here is the level of willingness to visit offline stores which is
measured on a scale of 1 to 5.

The confidence interval that has been chosen is 95%.

 Table2: One Way ANOVA table

We can see from the above table that the significance value is coming out to be 0.001 which
is less than 0.05. Thus, we can reject the null hypothesis and can infer that in different
segment there is different impact of COVID-19. In some segment, the shopping habits of
people might change owing to the safety concerns and people may shift from one mode to
other mode of shopping. But that doesn’t essentially means that it can be generalized. It was
observed in the survey that respondents are still pretty much okay with the idea of buying
groceries from the supermarket irrespective of safety concerns whereas it was seen that for
fashion retailing people are a little hesitating for going out to malls and departmental stores
for buying apparels of their choice. They rather would prefer to sit in their homes and order
online.

This is where technologies such as Augmented Reality becomes very vital for brands and big
stores to implement.

The first stage in any decision-making process is the problem recognition. So, in order to
identify the problems a consumer face while shopping online for apparels, the following
question was asked and the response that was followed-

Q. When shopping online I find it difficult to grasp what a product is actually like due to only
being able to view a 2-D image.
 Difficulty in grasping 2D image

2% Strongly disagree
16%
Disagree
Neutral
Agree
Strongly agree
55% 27%

Inference: Out of all the respondents, close to 60% of them feel that it is really difficult for
them to grasp the idea or the feature of the product just by looking into their mobile screen as
they are restricted to visualize only the 2D images. This suggests that the decision making
process of consumers is hindered when they are shopping in front of their mobile screen
rather than being in a physical store. This highlights the importance of AR technology in
terms of providing product simulations so that consumers can better realise a certain product
before making an informed purchase.

Thus, in response to the above faced issue of being able to view only 2D image, the idea of
using AR technology to produce 3D product simulations was explored and respondents were
asked about their opinion. The response that followed-

Q. I feel that 3-D image would help my decision making when shopping online and from my
mobile.

Acceptance of 3D product
simulations
6%
12%

24%

57%

Strongly disagree Disagree Neutral

Agree Strongly agree
Interpretation: There is a correlation between respondents who feel they have difficulties in
grasping 2D images with the respondents feeling that 3D images would aid their decision-
making abilities. Thus, consumers feel that they can make informed decision about purchase
and have better shopping experience if they have significant amount of pre purchase
information regarding the product.

To investigate whether technologies such as AR can be useful in providing better information

regrading product visualization and provide consumers with in store experience ‘on the go’,
respondents were asked whether they would like to virtually try clothes via their mobile
camera.

Q. While buying clothes online, I would like to try them on virtually via webcam / phone
camera before purchasing.

Online Virtual Fitting Room

10% 12%

16%

41%

20%

Strongly disagree Disagree Neutral

Agree Strongly agree

Inference: There is no clear majority in this case. The figures are marginally close to each
other. While 51% of the respondents feel that they can give it a shot at trying virtual fitting
rooms trough their mobile and this indicates AR has the ability to solve problems for
consumers regarding the issue of visualization of products and thus can significantly help
during pre purchase stage.

It is also important to note here that 49% of the respondents are unsure or disagree with the
ideation of online VFRs. The reason may vary from person to person. Some may feel that its
unsafe to do all these over mobile phones considering the privacy concerns and all the cyber
crimes happening around. Some consumers might not be tech savvy enough to get along with
this concept.
There is also an option for consumers to try the concept of using virtual fitting rooms which
is present in store in form of static kiosks. Customers can try clothes to see if its fit them or
not and also try various colours without actually having to remove their clothes. The
respondents were then asked to rathe their preference for an in store VFR and then a
comparison was drawn between the online VFRs and an in store VFR.

online vs in-store vfr

Online Virtual Fitting Room In Store VFRs
30

25

20

15

10

0
Strongly D i sagr ee Neu t r al Agr ee S t r o n gl y agr ee
d i sagr ee

This comparison suggests that people are way more comfortable in using the in store VFRs
than the online one. This indicates AR does not or cannot replace or eradicate the presence of
Offline stores completely and the experience it provides. Consumers still value and are more
comfortable with in store experiences despite the fact that they have full access to internet
and technology.

Retailers not only can try the concept of VFRs but AR provide a wide option to increase the
level of engagement of their customers and when the customers are engaged, the sales will
follow. Thus, it can help to create an experience and an interactive platform for customers.

Retailers and Brands might investigate the fact that whether implementing AR in their stores
would actually provide a positive impact in the building of the brand and what might be the
attitude of customers towards the brand. The following survey questions were asked to
explore this fact-

Q. My attitude towards a brand would become more positive if they offer an AR shopping
experience
 AR and brand perception
4%
14% 6%

24%

51%

Strongly disagree Disagree Neutral

Agree Strongly agree

Inference: The above table shows how respondents may perceive a brand if it implements AR
in some way or other. Almost half the respondents feel that implementing AR will have a
positive image of the brand in the minds of consumer. The consumers thus feel value add to
the shopping experiences and as a result of which he/she become loyal to the brand. Thus
brands can gain customer loyalty in exchange of interactive shopping experiences.

CONCLUSION:

The aim of the desk project was to investigate the impact of Augmented Reality as a
technology in the consumer buying behaviour post COVID-19 in the Retail sector and assess
how brands can leverage AR to improve shopping experiences and build a better image for
themselves.

The project was segmented into three basic parts. First, we look into the shopping trends and
the mode of it pre and post the global pandemic. We saw a general tendency to shift to the
online mode of shopping for the time being owing to the importance of social distancing and
safety measures. But we saw that the effects are not equally felt in all the three segments of
the industry. People still felt that online grocery is a distant thing and it will take time for
people to get adjusted to the new platform of e commerce for buying fruits, vegetables and
daily household chores.

Next, we look how AR influence consumer behaviour in a retail atmosphere. We analysed

two aspects of consumer behaviour – the decision-making process and the familiarity with
technology. The findings suggest that a 3D product simulation would actually help customer
during the pre-purchase stage and help them gather significant knowledge about the product.
Thus, AR does have an effect onto the minds of consumer and brands can certainly invest
into new such technologies provided-

 Consumers are made aware of the recent technologies

 AR and other technologies can easily be accessed
 They are simple to use

Lastly, we investigated how implementation of AR improves the image of a brand or a

particular retailer. A large part of the sample believed that their attitude towards a brand will
change for a good if they can provide a more interactive shopping experience to them.
Although brands must invest on newer technologies but they should also take care of the
channel through which they want to proceed as has been seen in the analysis part of this
project, in store VFRs and generally more preferred by consumer rather than online owing to
risk, privacy, etc. AR can be integrated across various channels but at the end the main aim
should be to enhance the experience.
References:

1. Marketing Research An Applied Orientation 6th edition, Book by Naresh Malhotra

2. Buy.ology- Truth and Lies about why we buy, book by Martin Lindstorm
3. The realities of Retailing in COVID-19 world, a KPMG report
4. Journal on Managing omni-customer brand experience via Augmented Reality: A
qualitative investigation in Italian retailing system, written by Maria Teresa, Debora
Tortora
5. Report on Augmented Reality as a sales and marketing strategy, written by Megan
Johnson, Cardiff Metropolitan University