The Effect of In-Store Augmented Reality on Customers’ Patronage Intention: An Abstract

Abstract

The integration of digital capabilities into the physical retail environment, as well as an increased focus on creating an experiential edge, are increasingly becoming differentiators in brick-and-mortar retail (Hagberg et al., 2017). One technology, that has the potential to transform the retail experience is augmented reality (AR) (Watson et al., 2018). While research on AR in online retail already gained traction, research discussing the tangible impact of AR in physical retail remains sparse. This paper therefore aims to add to the paucity of research on AR in physical retail and investigate whether in-store AR technologies can motivate patronage intentions and incentivize customers to return to the store. Due to its multidimensional structure and the ability to map utilitarian as well as hedonic aspects of the retail experience, the Experiential Value Scale (EVS) by Mathwick et al. (2001) is leveraged throughout this paper, to investigate the extent in which in-store AR is able to create experiential value and ultimately influence patronage intentions. In addition, the moderating influence of consumer innovativeness was examined, since an understanding of customers and their characteristics is relevant to best leverage in-store AR. Since the EVS has not yet been adapted to the context of retail technologies, an ethics dimension has been added to cover all value dimensions that may be relevant for the customers’ value assessment. The adapted hierarchical structure of experiential value was validated using partial least square path modeling. Seemingly unrelated regression with bootstrapping was performed to test for direct and indirect effects. The results show that in-store AR has a positive impact on the value dimensions of utilitarian nature as well as on the dimensions of a hedonic nature, which in turn positively impacts patronage intentions. Furthermore, a negative effect of in-store AR on the ethical value dimension could be demonstrated. However, it was shown that the higher the consumer innovativeness, the more the negative relationship between AR and ethics is mitigated. This also leads to the former negative effect of ethics on patronage intention being turned into a positive one. This paper strives to provide a guide on how retailers can best leverage in-store AR in order to address the digital customer. The results reveal that ethical considerations in particular are highly relevant in the customer’s value assessment and retailers should focus on counteracting privacy concerns. For innovators in particular, retailers should increase the hedonic facets of in-store AR, such as playfulness or enjoyment.