Virtual Reality Isn’t Just Fun and Games: Smart Companies Use VR to Drive Revenue and Profit

Think virtual reality is only for gaming and, um, “adult entertainment”? Think again.

Groundbreaking technologies – and groundbreaking companies – often seem to come out of nowhere. We often have no sense of what the next big thing will be until the next big thing is already upon us.

So I thought I’d go behind the scenes at several companies building the technologies – and industries – of tomorrow and see how that works: not just the science, not just the technology, but the process, the decisions, the goals, the iterations… not just the nuts and bolts challenges of creating tomorrow but also the leadership and management challenges.

To find those companies I collaborated with and got support from Intel Capital, the global investment organization of Intel Corporation. They made finding the right companies easy: figuring Intel is much better at predicting than me at predicting what will be next, I simply chose five technology startups Intel Capital recently invested in.

This time I talked with Mark Hardy, the CEO of InContext Solutions, a New Jersey-based company that develops scalable, cloud-based virtual reality (VR) solutions that provide important insights for retailers and products manufacturers. They help brands visualize new concepts and more efficiently and profitably understand shopper behavior.

Oh yeah: in their offices they also have the coolest head-mounted VR device you can imagine.

I have to admit that when I think of virtual reality I think of people playing first-person shooter video games.

Maybe so, but VR will fundamentally change the way businesses conduct themselves, and their processes.

In our case, that’s retail. We make it possible for companies to simulate retail environments and shopping experiences. That lets them be much faster in terms of time to decision, and both labor and capital expenditure costs. We’re disrupting old, antiquated, physical or email processes that don’t necessarily work and are organized in a way that doesn’t allow people to understand how their products and stores come to life.

Tell me how that works in practice.

Let’s talk about the problem first.

Our clients are retailers and manufacturers. If you’re a manufacturer, you’re thinking about products, packaging, signage…. and you’re responsible for working with the retailer to design the assortment and category within their stores.

If you’re a retailer, you want to know what the total shopping experience will be: layout, adjacency of category, signage, look, feel, overall promotions….

To do that, you might build a mockup. If you’re a retailer, you might have a warehouse with a full store set up inside. Even some manufacturers do that. They reconfigure a warehouse to look like a Walgreens, or a Dollar Store, or a Wal-Mart… they build it out physically and bring in real inventory. Then they might get some local people from the area come in and shop it… and to some degree that works, but if you’re a Wal-Mart in Bentonville that testing doesn’t necessarily represent consumer tastes and behaviors in California or Virginia Beach.

Manufacturers often go through the same processes in their own mock stores. Or they might conduct surveys, but intent doesn’t correlate with behavior.

The next step is to try out what they’ve learned in a few stores, or even just roll it out everywhere. Then they have to let it play out for six months or so to gauge results, and in the meantime their concept is available for every competitor to see.

And when it’s over, they’re still not sure exactly what happened. They know whether products sold or not, but they don’t necessarily know why.

Lots of ideas look great on paper, but when you put them into practice, the result just doesn’t feel the way you intended it to feel.

That’s happened to me with manufacturing equipment layouts. What we drew always looked good but never worked quite as well in real life.

That’s where we come in. We provide web-based SaaS software to retailers and manufacturers. They pick the retail environment they want to work in, and then they can hop right into the store.

The stores are like Lego blocks: they can work on a category, move products around… or go up to macro level and blow everything up.

The difference in virtual is that I can jump into the store and feel the flow, see how it looks, see how the signage works, see how product layouts work, and determine if the consumer can see my strategy.

For the last number of years virtual has just been used for visualization. You could look at something in virtual and think, “Wow, that looks pretty.” We’re doing simulations on PCs that allow people to collaborate. I can send you an email, you can import all our concepts, and we can jump in and see what it feels like.

We go beyond visualization and allow it to drive decisions with real data. I can take a picture of what I’m looking at, create a heat map of visual gaze patterns… I can see what gets noticed, and what does not.

As a retailer what I think works may not actually work with real customers, though. The proof is in the customer pudding.

That’s why we let shoppers try it out virtually, too.

We take actual customers into a virtual store that is customized for their height and let them navigate the store. And we give them a mission: stock up on cereal, buy cleaning supplies, etc., and we track their behavior. Then we dynamically ask them why they did certain things.

Then we marry behaviors and responses and create a scorecard, which lets us do in days what takes an average of 17 months under the traditional process. Plus, we can isolate variables, see which concept will drive sales, see which concept will provide the customer with a better shopping experience and make your store the store of choice… 

I had no idea what you do even existed, yet you’re not a startup. 

We launched in 2013, and some of our clients are among the top 50 companies in the world.

We’ve also been adopted quickly by big companies because we make it easier for them to roll new concepts out to stores. 

When stores are told how to merchandise something, one or two vehicles are common: either an email or booklet. In our world, we send videos, photos, virtual walkthroughs… so now the stores can actually see what they need to do and execute properly.

For example, we have a customer with 3,500 convenience stores. They’re primarily staffed with people for whom English is not their first language. In the past they sent emails to their staff, and compliance was understandably low. Now they do it visually, providing photos, videos, etc., and their staff can see exactly what they’re expected to do. And that helps people whose first language is English, too.

Describing how something should look is fine, but showing how it should look is a lot more effective. And because the execution is so much better, that makes assessing the results a lot more accurate.

How did you decide to focus on the retail and product manufacturing markets?

When we looked for the right opportunity, we focused on consumer products because that’s our legacy. And keep in mind we can expand into any vertical. We’re doing quick-serve food chain restaurants; we can expand into any market that involves a mass consumer experience.

Shopping has changed and is going to change even more dramatically. That means retailers and product manufactures need to be able to change rapidly, too. They need to be able to change at the same speed as consumers are changing.

Our goal is to help them do that at the pace of change as it occurs today, not yesterday.

Speaking of change: where do you see retail going in the next five or ten years?

In the next 5 years we’ll see retail experiences change more than they have in the last 100 years.

But stores won’t disappear. There are actually more stores now than there were in 2000.

We all like to shop. Shopping is a social experience that we use to discover products, meet friends, relieve anxiety and stress… and what we expect as a shopping experience will change dramatically.

What if you went to a showroom that only had one car: you check it out, play around with it, decide how you want to customize it… and then your car gets delivered in days or weeks. That’s basically what Tesla does now.

Other companies are redoing their entire store experience. Apple has plans in the works. So does Starbucks. Starbucks is localizing the experience, and Apple is creating communal spaces that are like a Starbucks for technology: have a meeting at an Apple store, and while you’re there pick something up.

A bigger percentage of retail and shopping malls will be dedicated to non-selling space. And more stores will start carrying less inventory. A clothing store will measure you and let you feel fabrics… and then you’ll use that information to place your order online.

What about the future of VR where B2B and B2C is concerned?

The B2B possibilities are huge, not just in terms of simulation but in terms of collaboration and working together more efficiently.

And as devices proliferate, the next step in B2C is virtual commerce. Say I want you to check out some golf clubs with me. We could be in different countries and still be able to look at each other with our headsets and virtually be in the store, picking up clubs and swinging them and talking to each other… and then we can buy.

But we’ll still have brick-and-mortar stores. Approximately 70% of shopping carts are abandoned because people test online and go to an actual store to make the purchase.

The technology coming our way will definitely change the shopping experience; it will take e-commerce to the v-commerce level.