The Role of AR and VR in Future Brand Experiences

Industry and Competitive Context

Augmented reality (AR) and virtual reality (VR) reached brand marketing through two different routes. AR overlays digital objects onto the physical world through a smartphone camera, so it needs no new hardware purchase. VR and mixed-reality headsets require a dedicated device. The commercial evidence for each has diverged sharply.

On the headset side, the largest platform investor is Meta. Its Reality Labs segment covers virtual and augmented reality consumer hardware, software and content. Meta's full-year 2025 results show Reality Labs revenue of about $2.21 billion against an operating loss of about $19.19 billion. That compares with revenue of about $2.15 billion and a loss of about $17.73 billion in 2024. Earlier disclosures show operating losses of about $10.2 billion in 2021 and $13.7 billion in 2022. Meta stated that it expects 2026 Reality Labs operating losses to remain similar to 2025 levels.

Apple entered the category on February 2, 2024, when Vision Pro went on sale in the United States starting at $3,499. Contemporary coverage from CNN described the extended reality market as having plateaued with little mainstream consumer adoption at the time of launch. CNN also noted limited apps at launch and a battery life of roughly two and a half hours on the external pack.

The two routes therefore sit in different positions. Headset-based immersive experiences depend on a hardware installed base that, on the public record, remains small relative to the investment behind it. Smartphone AR uses hardware consumers already own. This asymmetry is the central strategic tension for any brand planning immersive experiences, and it explains why the most fully documented brand AR case is a smartphone application.

Competitively, AR was already being used in retail before the case brand launched its app. Wayfair had offered an AR application built on Google's Tango platform since 2016. Apple's introduction of the ARKit developer framework with iOS 11 in 2017 enlarged the potential audience for AR applications by making the capability available on a wide range of existing iPhones and iPads.

Brand Situation Prior to the Campaign

IKEA is a home furnishings retailer, and its operating model rests on large-format furniture sold through stores and, increasingly, digital channels. Public reporting identifies a structural communication problem in this model. A TechCrunch report on the 2017 launch quoted an IKEA executive saying that most of the images in the IKEA catalog are not real photographs. They are computer-generated renderings enhanced with lighting and shadow. IKEA had therefore built its own 3D asset library well before the AR application existed.

IKEA also had a documented history with AR and related technology. Public reporting states that IKEA was among the first large retail clients of Metaio, an AR company that Apple acquired in 2015. IKEA's catalog had AR features available as early as 2014. TechCrunch further described IKEA as an early adopter of VR, wireless charging, smart lighting and solar panels. The application was reported to have been built in about seven weeks. That is a public claim about the development timeline, not a verified account of internal process, and this case does not build on it further.

No verified public information is available on IKEA's internal product return rates, purchase-confidence research or customer-survey data before 2017.

Strategic Objective

IKEA did not publish a numeric target for IKEA Place. The stated objectives are documented in the company's own announcement and executive statements. The announcement described the application as a way for people to confidently experience, experiment and share how design transforms a space such as a home, office, school or studio. Michael Valdsgaard, Leader of Digital Transformation at Inter IKEA Systems, described it as the first AR application to help people make buying decisions. The launch materials also said the application would play a role in launching new product lines.

Read together, these statements point to three objectives: reduce the uncertainty around whether a large item fits a room, extend IKEA's presence into a new digital channel, and use the app as a route to introducing new products. Interpretively, the emphasis on decision-making rather than entertainment distinguishes this initiative from many brand AR activations built around novelty.

No verified public information is available on quantified targets for downloads, conversion, sales uplift or return reduction.

Campaign Architecture and Execution

IKEA Place was announced on September 12, 2017, as a free app built on Apple's ARKit for devices running iOS 11. At launch it offered more than 2,000 products, with the first release concentrating on larger living-room furniture: sofas, armchairs, footstools, coffee tables and top-selling floor-standing storage. IKEA stated that products were rendered in 3D and true to scale, and that the app scaled items to the room with 98 percent accuracy. Users could capture a scene and share it as an image or video, and purchases were made through the local IKEA website. Retail Dive later reported that the app redirected users to IKEA's separate store app to complete purchases.

The architecture is worth interpreting. The launch range was chosen from the categories where fit and scale carry the most risk, which reflects prioritisation rather than a broad catalog dump. The sharing function turned individual product visualisation into potentially social content. Because checkout sat outside the app, Place functioned as a consideration-stage tool rather than a transaction environment.

The application then evolved in documented steps. In March 2018 IKEA released Place on Android through Google's ARCore, and the catalog had grown to more than 3,200 products. The release added visual search powered by Grokstyle, which let users photograph furniture and find similar IKEA items. IKEA cited the reach of over 100 million Android devices as the rationale for the release. In September 2019 a major update added multi-item placement, room sets and a personalised feed, along with AI-assisted furnishing recommendations. In 2020, Reuters reported that IKEA's chief digital officer, Barbara Martin Coppola, described a new app that combined store, online and AR experiences and would allow direct purchase. In 2022 IKEA introduced IKEA Kreativ, which uses AI and AR to let users remove existing furniture from a scanned room and place new items, alongside 3D showrooms. Reporting at the time said Place would remain available alongside the updated IKEA app.

Strategically, this sequence shows a brand treating AR as a capability to be extended and integrated over several years, moving from single-item placement toward whole-room design and toward the core shopping app. No verified public information is available on the current operating status of the standalone IKEA Place application.

Positioning and Consumer Insight

IKEA's public framing rests on a specific customer problem: uncertainty about how furniture will look and fit at home. Valdsgaard described the app as giving customers the opportunity to "try before you buy" for the first time in IKEA's history. This is a documented company positioning, and it links AR directly to a longstanding friction in furniture retail.

The insight is a functional one, and that shapes the brand role of AR. The technology is presented as a decision aid that supports IKEA's broader vision of helping people love their homes, not as a spectacle. This differs from brand activations that use immersive technology mainly to signal innovation. It also means IKEA's AR is judged against practical accuracy. The 98 percent figure is IKEA's own claim, and the case has no independent verification of it.

No verified public information is available on consumer research that IKEA used to develop this positioning.

Media and Channel Strategy

The primary channels were Apple's App Store at launch and Google Play from March 2018, supported by launch press coverage. Apple's iOS 11 event featured IKEA as a launch partner for ARKit, as reported by 9to5Mac. Interpretively, the Apple relationship gave IKEA distribution and credibility that a standalone brand launch might not have achieved, while tying early reach to the iOS installed base.

No verified public information is available on paid media spend, media mix, influencer activity or advertising creative for IKEA Place.

Business and Brand Outcomes

The documented outcomes are limited to product and feature milestones: the launch with 2,000-plus items, the expansion to 3,200-plus items and to Android, the 2019 feature update, and the 2022 introduction of Kreativ. The public record does not contain IKEA-disclosed results on commercial performance.

No verified public information is available on IKEA Place download totals, active users, conversion rates, average order value, return-rate changes or attributable revenue.

The absence of disclosed outcomes is itself analytically relevant. A brand that continues to invest in and rebuild an AR capability over several years is behaving as though the initiative has strategic value, but that behaviour is not evidence of measured return, and the case does not treat it as such.

A second reference point comes from the virtual-world side of the spectrum. Nike launched Nikeland, a branded experience inside the Roblox platform, in November 2021 and acquired the digital collectibles studio RTFKT in December 2021. On Nike's March 2022 earnings call, CEO John Donahoe said the world had drawn 6.7 million visitors from 224 countries. Nikeland is a persistent 3D world accessible without a headset, so it sits at the boundary of the AR/VR category and is included here for contrast. Nike disclosed visits but, in the sources reviewed, not revenue attributable to Nikeland. No verified public information is available on Nikeland-specific sales or profitability.

Strategic Implications

First, the evidence separates reach from economics. Meta's segment disclosures show that building headset-based immersive platforms has required very large sustained losses, while Apple's entry at a $3,499 price point was met by commentary about limited mainstream adoption. Smartphone AR, by contrast, gave IKEA access to devices customers already owned. For brand strategists, the documented lesson is that the delivery device determines the feasible audience.

Second, IKEA's case suggests that AR is best positioned around a concrete purchase barrier. The company framed Place around fit and confidence rather than novelty, and the first product range targeted large, hard-to-judge items. This is an interpretation of the documented launch scope, and it is consistent with IKEA's own description of the app as a buying-decision tool.

Third, immersive capability appears to compound through iteration. The move from single-item placement to room sets, visual search, AI recommendations and object removal shows the brand building on a 3D asset library and on platform advances such as ARKit, ARCore and, for room scanning, Apple's LiDAR-based tools. The lasting asset was the underlying capability, not any single app release.

Fourth, measurement remains a gap. Neither IKEA nor Nike has published outcome metrics that would let an outside analyst calculate a return on immersive investment. Managers evaluating similar initiatives should note that public evidence supports claims about launch, scale and continued development, but not claims about proven sales impact.

Finally, the brand role of AR and VR should be judged by the job assigned to them. The record shows that AR has been deployed as a practical retail tool, while headset VR remains, on Meta's own segment reporting, a heavily funded platform bet with modest revenue. Any forward-looking claim about the future of brand experiences should be treated as outside what the public record establishes.

Discussion Questions

IKEA framed Place as a decision aid, while Nikeland was framed as a place for community and virtual products. How should a brand's chosen job-to-be-done for immersive technology shape its investment case and success criteria?

Meta's Reality Labs has reported annual operating losses in the tens of billions of dollars, while smartphone AR requires no new consumer hardware. What are the strategic trade-offs for a brand choosing between building on a headset platform and building on smartphone AR?

IKEA's public materials cite technical accuracy but no commercial outcomes. What metrics would you want disclosed to evaluate the return on an AR retail tool, and what are the risks of proceeding without them?

IKEA moved from a standalone app toward integration with its main shopping experience, and later introduced Kreativ. What does this evolution suggest about the difference between launching an AR campaign and building an AR capability?

IKEA's launch depended on Apple's ARKit and later Google's ARCore. Evaluate the strategic risks and benefits of a brand relying on platform owners for the technology that carries its customer experience.