AR Technology in Retail: Use Cases and Benefits (2025)

Retail is no longer just about selling products—it’s about creating experiences. As shopping behaviors evolve, customers expect more than static product images and traditional storefronts. They want to interact, visualize, and engage with products before making a purchase. That’s where augmented reality (AR) is transforming retail.

From virtual try-ons to interactive product demos, AR is bridging the gap between digital and physical shopping. It’s helping customers make more confident buying decisions while enabling retailers to boost engagement, reduce returns, and drive sales. And with advancements in AR technology and increasing consumer adoption, retailers that embrace AR now are positioning themselves ahead of the competition.

Learn how leading retailers are using AR to enhance the integrated retail shopping experience—and how you can leverage it to meet rising customer expectations.

What is AR in retail?

Augmented reality is a technology that enhances, or augments, the real world by adding real-time digital content to real-life objects. In retail, businesses use AR to allow online shoppers to “place” products in their homes or an environment of their choosing. This creates an immersive shopping experience that contends with the in-person retail experience. 

AR uses AI and machine learning to function. When a user points a camera-equipped device at an object, AR software analyzes the video stream using depth-tracking and computer vision. It then recognizes the object and seamlessly overlays digital elements onto it. As the user moves their device, the AR display adjusts dynamically, creating an immersive and interactive experience.

For example, UK bag retailer and Shopify merchant Cambridge Satchel uses AR to promote their products. Shoppers can see a 3D image of one of the bags against whatever the shopper’s camera is looking at. That way they can choose which Cambridge Satchel bags will best match their wardrobe or aesthetic without seeing it in person. 

The global AR-in-retail market is expected to grow from $19.9 billion in 2024 to $64.6 billion by 2030.

Benefits of AR in retail 

Customer engagement and experiential retail 

As retailers shift toward an emphasis on in-person experiences, many brands are leveraging augmented reality to create immersive shopping experiences that drive engagement, increase customer education, and further curiosity among shoppers. 

In their first in-store augmented reality experience, Starbucks brought customers along on the journey of a coffee bean, showing an animated version of newly roasted beans dropping into a cask and providing more information about how a bean turns into the Starbucks coffee customers know and love. 

Sales and conversion lifts

Whether through in-store displays and activations, virtual try-on experiences, or virtual navigation, augmented reality can significantly impact both in-store and online conversion rates and make a meaningful difference in your bottom line. 

Gunner Kennels, for example, produces heavy-duty dog kennels to keep pets safe during travel or transportation. But shopping for the right dog kennel online can be challenging for customers who need to make sure their pet will easily and comfortably fit.

Gunner Kennels took advantage of Shopify’s AR tools to allow customers to place a 3D model of a kennel next to a photo of their dog to make sure they select the correct size. This led to a 40% increase in order conversion and a 5% reduction in return rate. 

Contactless experiences 

As ecommerce evolves and consumers become more comfortable shopping online, we will see a lift in contactless transactions.

In many ways, augmented reality can replace the need to physically interact with a product. Instead, users can save time, effort, and even money by virtually evaluating the photorealistic representations and viewing the product from different angles.

Accelerated by the pandemic, we have already begun to see innovative ways to use augmented reality to improve contactless transactions both in-store and online.

Common use cases of AR in retail

Virtual shopping

Augmented reality enables consumers to overlay digital clothing, images, and accessories directly onto their bodies in real time—otherwise known as virtual shopping. And with Shopify, store owners can upload 3D models and link them to products to provide customers with shoppable AR experiences. 

Polish online furniture maker Oakywood uses Shopify AR to allow shoppers to generate a 3D model of a custom piece of furniture, as well as virtually display it in their home. This technology has helped drive a 250% increase in sales of key products. 

Virtual navigation

AR navigation systems can guide shoppers through brick-and-mortar retail environments, while also providing additional information about physical products directly on a user’s smartphone.

Now, shoppers can easily navigate even the largest malls and department stores to find the items they desire.

In-store displays 

Augmented reality windows and digital in-store displays are great ways to engage prospective shoppers and drive brand awareness. People have a subconscious attraction to striking visuals. Window displays not only grab their attention, but help them envision how products will look on them or in their homes.

Plus, these displays solve the problem of being unable to measure the effectiveness of store displays. In addition to giving customers exciting new ways to interact with advertisements, AR displays can track and capture real-time analytic data. And unlike billboards or bus advertisements, which are static, AR displays are dynamic and can be optimized based on data over time. 

Virtual fitting rooms 

Similar to mobile AR try-on experiences, virtual fitting rooms allow shoppers to try on items without physically touching them. They also allow retailers to offer items that they may not currently have in stock, and then ship these products directly to shoppers’ doors. And it’s a market valued at $5.57 billion in 2024.

Shopify merchant and handbag brand Rebecca Minkoff was one of the first brands known to employ the technology in its fitting rooms. Now, they use Shopify AR tools and 3D modeling to help customers better connect to their online catalog.

Since the brand activated these new features, their customers are 27% more likely to place an order after viewing a product in 3D, and 65% more likely to place an order after interacting with a product in AR.

Employee training 

Augmented reality is also impacting retail employee training by making learning more interactive, efficient, and engaging. Instead of relying on manuals or videos, employees can use AR simulations to practice tasks like operating a POS system, stocking shelves, or handling customer interactions—without disrupting store operations.

AR-powered training makes the onboarding process more efficient and helps standardize knowledge across locations. By simulating real-world scenarios, employees gain hands-on experience and confidence before interacting with customers.

Sharable and trackable content

Not only are AR-powered filters, displays, and applications fun to interact with, but they also serve as powerful social media marketing tools. And while dedicated AR apps aren’t too popular with consumers, 85% of mobile AR users access the technology via social platforms.

Take filters on Snapchat, for example. Cosmetics brands can release shoppable AR filters on Snapchat, allowing users to swipe through and take photos with virtual makeup looks. These photos can then be shared with friends on Snapchat and other social media platforms. These filters are also an important tool for educating customers, driving revenue, and gaining important customer insights. 

Digital events

Virtual events are a great way to expand beyond your local market and engage online shoppers. Take Complex Networks and their annual in-person event called ComplexCon, for example. In 2020, the pandemic and subsequent shutdown forced Complex Networks to adapt.

With Shopify’s AR tools, they were able to completely digitize the entire event, creating “a first-of-its kind immersive digital shopping experience where attendees could explore, engage with brands, and have fun.”

The event was a success, and Complex Networks continues to engage their audience through digital events like this.

Shopping assistants

AR-powered virtual shopping assistants enhance the customer experience by offering real-time, tailored recommendations. Using AR glasses or mobile apps, shoppers can receive product suggestions based on their preferences, past purchases, or even live body scans for accurate size recommendations. This level of personalization with automated technology helps retailers improve customer satisfaction and reduce returns.

Interactive packaging

Brands are using AR to bring product packaging to life. By scanning a QR code or pointing a smartphone at a product, customers can access interactive content like how-to videos, ingredient details, or brand storytelling. This can boost engagement and help customers make informed purchasing decisions while adding a fun element of surprise and delight.