In 2025, Canadian retailers leveraging augmented reality (AR) tools like virtual try-ons and in-store apps report conversion rate increases of up to 250%, according to CanadianSME. AR fills the gap between digital convenience and tactile confidence since mobile purchasing accounts for 40% of Canada’s $74 billion e-commerce market. AR is being used by companies like Sephora, the industry leader in cosmetics and furniture giant IKEA, to reduce return rates, customize customer experiences, and prepare for the future. Learn how augmented reality is changing the retail scene in Canada, along with practical advice for companies looking to maintain their competitiveness.
Virtual Try-Ons: The Revolution in Online Buying
Canadians’ online shopping habits are being entirely transformed by virtual try-ons, especially when it comes to home décor, cosmetics, and fashion. By allowing users to test makeup hues in real time, Sephora’s Virtual Artist has increased conversions by 11.4% and decreased returns by 35%. IKEA Place reduces return rates by 30% by enabling over 4.9 million consumers to see furniture in their homes through augmented reality. Conversion rates for Canadian shops utilizing Shopify’s AR features are 94% higher than those of product pages without AR.
Virtual try-ons’ impact is evident:
- Confidence-Driven Purchases: According to Google, 66% of Canadian consumers favour augmented reality regarding product visualization.
- Diminished Returns: Companies like Gunner Kennels (3D pet cage sizing) and Warby Parker (virtual eyeglass try-ons) report 5–25% fewer returns.
- Higher Engagement: Deeper customer ties are created through interactive shopping experiences, which promote repeat business.
In-Store AR Apps: Enhancing Physical Retail
Brick-and-mortar retailers are combining digital and physical experiences with augmented reality. Tested in Canadian retailers, Lowe’s Navigation One increases in-store efficiency by directing customers to products via the quickest path. Toys “R” Us Canada and Snapchat collaborated to launch AR portals, which animated merchandise in-store and increased engagement by 38% and conversion rates by 22%.
Another emerging trend, especially in Canadian retail clothing, is smart mirrors. Installed in changing rooms, these augmented reality mirrors increase upsell opportunities by suggesting sizes and related items. Additionally, retailers are using AR to increase local success:
Femme Fatale Media: When Emily Lyons’ Toronto-based business incorporates augmented reality (AR) into client campaigns, post-AR engagement for beauty brands increases by 65%.
7-Eleven Canada: When scanned, AR-powered shelf labels display nutritional information and promotions, allowing for faster decision-making.
Why Augmented Reality Works: Key Benefits for Canadian Retailers
For Canadian shops, augmented reality offers several benefits.
- Increased Conversion Rates: According to Shopify, AR users convert at 2.5 times the rate of traditional shoppers.
- A Higher Level of Engagement: According to ARtillery Intelligence, 71% of consumers favour brands that use augmented reality capabilities.
- Cost Savings: Sephora has saved millions of dollars annually by using virtual try-ons to reduce the wastage of makeup samples.
- Data Insights: AR apps can improve marketing and inventory tactics by gathering data on user interactions in real time.
Businesses that engage in AR today will have a competitive advantage, as Statista projects that retail adoption will propel Canada’s AR software market to reach $308.6 million in 2025.
Overcoming Obstacles in Implementation
Adoption of AR has challenges despite its advantages:
Costs: The usual initial setup costs between $15,000 and $50,000. Solution: Up to $15,000 in technology upgrades are available under Canada’s CDAP grants.
Integration of Data: Data silos are a problem for 60% of SMEs. Solution: AR-compatible data collection is streamlined by platforms such as Ownr.
Training: Only 22% of retail employees in Canada are AR-literate. Solution: AR upskilling is provided via initiatives like the Academy for Women Entrepreneurs.
Pro Tip: Before expanding, test AR on high-return goods categories like clothing.
The Future of AR in Canadian Retail
By 2026, anticipate:
AR Glasses: Real-time product information and hands-free navigation will be made possible by the reasonably priced wearables from Apple and Meta.
Hyper-Personalization: Through Shopify and other platforms, AI-powered AR will customize promotions for specific customers.
Sustainability: AR will reduce waste by matching inventories with eco-trends, such as virtual samples replacing actual prototypes.
AR is now necessary for Canadian shops; it is no longer an option. In-store applications and virtual try-ons are generating previously unheard-of levels of engagement and revenue. Businesses may take advantage of AR’s 250% conversion potential and prosper in the competitive landscape in 2025 by utilizing funding, emphasizing data quality, and beginning small.
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Disclaimer: This article is based on publicly available information intended only for informational purposes. CanadianSME Small Business Magazine does not endorse or guarantee any products or services mentioned. Readers are advised to conduct their research and due diligence before making business decisions.
