Supporting Small Businesses and Local Economies Through Virtual
Reality Shopping and Artificial Intelligence: A Position Paper
Rub
´
en Grande
a
, Santiago S
´
anchez-Sobrino
b
, David Vallejo
c
, Jos
´
e Jes
´
us Castro-Schez
d
and Javier A. Albusac
e
School of Computer Science, Department of Technologies and Information Systems, University of Castilla-La Mancha,
Paseo de la Universidad 4, 13071 Ciudad Real, Spain
Keywords:
Virtual Reality, Artificial Intelligence, e-Commerce, Recommender Systems, Sustainability.
Abstract:
The rise of e-commerce and online sales has had a detrimental effect on small businesses that lacked an online
presence in recent years, with negative consequences for local services and economies. Despite attempts to
digitize businesses, large corporations continue to hold a privileged position that allows them to capture the
majority of sales. Small businesses may regain a competitive edge against large platforms by anticipating
and adapting to the next phases of commercial evolution, which are likely to be heavily reliant on Virtual
Reality shopping and Artificial Intelligence. In this article, we propose a platform that combines these two
technologies and enables local businesses to join forces and overcome physical barriers, thereby providing
a virtual world of unrestricted retail spaces. The system also proposes retail collection points and develops
attractive leisure plans around these points through the outcomes of a recommender system, thereby promoting
city activity and bolstering local economies.
1 INTRODUCTION
Small businesses have been declining in recent years
due to the increase in online shopping. The popu-
larity and increasing access to the Internet and mo-
bile devices (By 2020, 59% of the world’s population
owned a mobile phone) have driven the growth of e-
commerce, leading to a decrease in demand for prod-
ucts and services in physical stores, particularly in the
small enterprise sector (Saha, 2015).
In addition to this fact, the COVID-19 pandemic
consolidated the digitization process and increased
online purchases due to the restrictions and safety
measures implemented to prevent the spread of the
virus (Paraschiv et al., 2022). This allowed many peo-
ple to conduct basic transactions and run processes
from their homes, contributing to the digitization of
society.
However, this trend has had a negative impact on
a significant part of small businesses, as many stores
a
https://orcid.org/0000-0002-0583-6865
b
https://orcid.org/0000-0001-6620-1719
c
https://orcid.org/0000-0002-6001-7192
d
https://orcid.org/0000-0002-0201-7653
e
https://orcid.org/0000-0003-1889-3065
and local businesses have had to close due to lack
of customers and income. This has caused a loss of
jobs and economic opportunities in the communities
where these businesses were located, and has con-
tributed to the disappearance of the local identity and
character of some areas. While the amount of online
purchases in 2020 increased by 41%, the attendance
of shopping centers decreased between a 20% and
45%, depending on the country, in comparison with
the same period in 2019 (Paraschiv et al., 2022). In
addition, retailers with online presence, such as Ama-
zon or the Alibaba Group, registered an increment
in unique visitors, revenue and many other indica-
tors compared to before pandemic (Dumanska et al.,
2021).
All the signs are that the pandemic’s effect on con-
sumption is liable to persist, such as the sales volume
in e-commerce growing ve times faster that offline
retail sales in U.S. or over 65% of the people between
Baby Boomers and Generation Z shopping mainly on-
line since the pandemic breakout (Kim, 2022). More-
over, elderly people, who were the majority of small
enterprises’ customer base, use more frequently In-
ternet to find information about goods and services
and shopping/buying them, according to recent stud-
ies (Rybaczewska and Sparks, 2022).
312
Grande, R., Sánchez-Sobrino, S., Vallejo, D., Castro-Schez, J. and Albusac, J.
Supporting Small Businesses and Local Economies Through Virtual Reality Shopping and Artificial Intelligence: A Position Paper.
DOI: 10.5220/0011964600003467
In Proceedings of the 25th International Conference on Enterprise Information Systems (ICEIS 2023) - Volume 2, pages 312-319
ISBN: 978-989-758-648-4; ISSN: 2184-4992
Copyright
c
2023 by SCITEPRESS – Science and Technology Publications, Lda. Under CC license (CC BY-NC-ND 4.0)
Despite these challenges, small businesses remain
an important part of the economy and society in many
places around the world (Ayandibu and Houghton,
2017). Many people still value and appreciate the
added value that local businesses bring, such as per-
sonalized service, product quality, and community
involvement. By recognizing and appreciating the
added value that local businesses bring, residents of
small cities can support these businesses and help en-
sure their continued success. This, in turn, can help to
maintain a vibrant and thriving local economy, as well
as a strong sense of community. Therefore, it is im-
portant to find ways to support and strengthen small
businesses to ensure their survival and contribute to
balanced economic and social development.
In these circumstances, public national and inter-
national organisms are supporting the digitization of
small enterprises with funding initiatives. These are
oriented towards the creation of their online shops.
The motivation behind this approach lies in increas-
ing the competitive capacity of small businesses,
whose economic and human resources are very lim-
ited. However, the leading organizations in the sector
have already explored how to enhance the shopping
experience of its customers to promote new ways for
online shopping. In this context, technologies such as
Virtual Reality (VR), Augmented Reality (AR) and
Artificial Intelligence (AI), like recommendation sys-
tems, play an important role. Applications like Ama-
zon’s VR kiosks or IKEAs Place AR are examples of
the application of some of these technologies. This
means that, despite the investment in digitizing small
businesses, they might be soon be unable to compete
when large corporations make further progress. In
this light, it may be sensible for the digitization ef-
forts of small retailers to be directed towards a state
of evolution that is rapidly approaching in the coming
years.
Thus, we find it essential to identify solutions that
permit small shops to band together, overcome the
physical limitations of their small spaces, and offer
competitive prices, thereby concurrently stimulating
the activity of the city. VR and AI-based solutions can
meet these requirements. The true potential of using
VR is to improve online shopping customer’s experi-
ence, bringing it closer to a physical store experience,
while solving limitations of space and how much time
it is available (Xi and Hamari, 2021). AI will allow
us to improve business efficiency by increasing online
sales as well as boosting local businesses in a cooper-
ative way.
The aforementioned challenges represent the main
motivation to elaborate our proposal. In order to im-
prove local economies and increase their competitive
capacity, we propose an AI and VR-based platform
where small businesses unite to present themselves
to buyers. This increase in competitiveness is partly
driven by the use of disruptive technologies, the abil-
ity to offer lower prices, and the elimination of phys-
ical space limitations. The platform, in addition to
offering the ability to examine and evaluate products
in a way similar to in-person shopping through VR,
also includes the possibility of picking up purchased
products at local pick-up points. Additionally, asso-
ciated with the pick-ups, the platform will automati-
cally make recommendations for visiting local shops
where users can see the products that have caught
their interest and leisure plans based on various fac-
tors such as user profile, purchased product, and the
time of pick-up, among others. These plans represent
an additional attraction for the buyer that could lead
to purchasing products from local businesses and en-
joying services, thereby strengthening the city’s econ-
omy.
The platform aims to be an innovative e-
commerce solution that allows small businesses (less
than 10 employees) with limited resources to develop
their commercial activities online, relying on VR and
AI, while also promoting the city’s economic life.
The proposal would allow small businesses to com-
pete with the big giants of e-commerce. Keep in mind
that more than 9 out of 10 (93.5%) enterprises in the
European Union are micro enterprises
1
.
The remainder of the paper is structured as fol-
lows. In Section 2, related works regarding VR shop-
ping proposals and prototypes are presented. In Sec-
tion 3, the proposed platform and the underlying ar-
chitecture are discussed. Challenges regarding the de-
velopment of this platform are shown in Section 4,
meanwhile the conclusions and future work are pre-
sented in Section 5.
2 RELATED WORK
2.1 Virtual Reality Shopping
In (Speicher et al., 2017) a prototype of Virtual Real-
ity Online Shopping Environment was developed and
evaluated by the authors in terms of influence of user
input (head pointing and speech) and output (desktop
and Head Mounted Display (HMD)) on task perfor-
mance and user’s preference and behavior. After car-
rying a survey where participants identified positive
and negative aspects of online shopping, the authors
1
https://ec.europa.eu/eurostat/statistics-explained/
index.php?title=Structural business statistics overview
Supporting Small Businesses and Local Economies Through Virtual Reality Shopping and Artificial Intelligence: A Position Paper
313
developed a prototype for desktop and smartphone
VR cases, where user input was limited to voice and
head pointing. Following the analysis of a case study
carried, design guidelines for virtual reality shopping
environments are proposed.
Later on, the same authors developed another VR
shop prototype using the Apartment metaphor (Spe-
icher et al., 2018) in order to study different selection
and manipulation techniques of products (grab and
beam) and different types of shopping carts (basket
and sphere). The authors carried a study with a proto-
type they developed. They concluded that immersion
and user experience were the most important aspects
for volunteers, as well as they introduce suggestions
to reduce motion sickness and types of products suit-
able for VR shops.
In (Veneruso et al., 2020) a VR application that
runs on Oculus Rift device is developed with the
aim to create a Virtual Dressing Room (VDR) based
on VR rather than on Augmented Reality (AR). The
main idea behind such application is to represent how
clothes fits in an avatar made by the customer based
on body shape and size of the clothes selected.
In (Shravani et al., 2021) a VR online shopping
platform named VR Supermarket is presented. Such
system consists on a VR application developed in
Unity and deployed in the HTC Vive VR System,
and a dynamic recommendation system based on pur-
chase history hosted in a web server. While the VR
application handles the user input through controllers
and headset, it also interacts with the web server, that
is supported by an SQL database to make recommen-
dations. At the same time, the VR application re-
quires a NoSQL database for supporting data storage
and retrieval of products, supplementary information
or user information, among others.
The virtual environment that we aim to develop
is expected to change dynamically the products pre-
sented based on the recommendations made. How-
ever, the user will be allowed to visit the available
stores at any time.
2.2 Recommendation Systems
Recommendation systems have played a significant
role in the success of e-commerce systems by pro-
viding personalized product and content suggestions
to customers based on their past behavior and prefer-
ences. These systems use various algorithms, such as
collaborative filtering, content-based filtering, hybrid
algorithms, and matrix factorization (Hussien et al.,
2021), to analyze customer data and generate recom-
mendations that are tailored to each individual user.
Collaborative filtering algorithms, for example, use
data on customer preferences and past behavior to
make recommendations based on similar users, while
content-based filtering algorithms use data on the
characteristics of individual products to make recom-
mendations based on customer preferences (Hwangbo
et al., 2018). Hybrid algorithms, on the other hand,
combine different types of algorithms to provide more
accurate and personalized recommendations.
Other kind of algorithms are Graph-based algo-
rithms, which use data on the relationships between
different products and customers to make recom-
mendations (Shaikh et al., 2017), Context-aware al-
gorithms, which use data on the context in which
recommendations are made (e.g. location, time,
device) to provide more relevant recommendations,
and Learning-to-rank algorithms, which use machine
learning techniques to learn the relative importance
of different factors in making recommendations (e.g.
customer preferences, product characteristics, past
behavior) (Karmaker Santu et al., 2017).
This has helped e-commerce businesses to im-
prove customer engagement and increase sales by
providing relevant and personalized recommenda-
tions to customers. In addition, recommendation sys-
tems can help to reduce the need for customers to
search for products, thereby making the shopping ex-
perience more convenient and efficient.
In the context of VR shopping, recommendation
systems can play a similarly important role by pro-
viding personalized product suggestions and recom-
mendations to customers as they navigate virtual re-
tail spaces (Shravani et al., 2021). By analyzing cus-
tomer data and generating tailored recommendations,
VR shopping platforms can improve the customer
experience and drive business growth by providing
customers with relevant and personalized suggestions
(Huang et al., 2022). Furthermore, recommendation
systems can help VR shopping platforms to overcome
the physical limitations of traditional retail spaces by
providing customers with a virtual environment that
is tailored to their individual preferences and interests
(Elboudali et al., 2020).
These solutions are aimed to make recommenda-
tions of products in order to increase sales. How-
ever, our recommender system have to deal with these
recommendations and the generation of leisure plans
based on the user’s profile, the date and time of col-
lection and the collection point.
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3 SMART VR-shopping
PLATFORM TO SUPPORT
SMALL BUSINESSES AND
LOCAL ECONOMIES
In our proposal, we consider the perspectives of both
the buyer and the seller in the context of a platform for
facilitating economic transactions. From the perspec-
tive of the buyer (see Figure 1), the platform aims to
provide high-quality services and customization ac-
cording to individual preferences and needs. Mean-
while, from the perspective of the seller and nearby
businesses, the platform seeks to enhance sales and
support the growth of local economies by generating
plans that include limited time sales and leisure activ-
ities (see Figure 2).
The architecture consists of three distinct layers.
The first layer acts as an input interface between the
user and the system, either through virtual worlds or
through the web (if the user prefers). This layer is
responsible for capturing the user’s interactions with
the digital ecosystem.
The middle layer, responsible for automatic rea-
soning, is further divided into three sub-modules: (a)
a module that progressively defines the user’s profile
and preferences, (b) a recommendation module that
aims to offer the user the best alternatives based on the
information profiled by the previous module, and (c)
a module responsible for generating leisure/cultural
plans associated with the product collection points.
Finally, the top layer is responsible for display-
ing the information generated for the user, including
changes in the virtual environment based on previous
interactions, recommendations, and plans generated,
as well as mechanisms for formalizing purchases.
The following subsections describe in more detail
each of the three main layers of the proposed archi-
tecture.
3.1 Input Interface Layer: Interaction
Between the User and the Virtual
World
Companies that compete in the retail sector are us-
ing AR and VR to create more immersive experiences
for its customers. In literature, many theories that
were applied to online and traditional shopping en-
vironments have been applied to VR shopping envi-
ronments, as well as case studies. It has been stated
that the interactivity of VR allows customers to un-
derstand better how to use a product and the fit of
it, making customers feeling more reliable with their
purchase decisions (Xi and Hamari, 2021). In addi-
tion, brands could enhance purchase behavior, satis-
faction and brand loyalty thanks to the involvement
that VR technologies provide.
Regarding devices and technologies used, HMDs
are the most prominent devices in VR shopping stud-
ies. These provides a great range of input devices
and tracking technologies such as VR controllers,
head, hands and eye tracking, among others (Xi and
Hamari, 2021). It is interesting to note that currently
there are challenges being addressed to provide a high
immersive experience that could simulate the inspec-
tion of a product in a physical store. For instance,
an accurate hand tracking to manipulate products pre-
cisely is needed, as well as the responses of objects
to such manipulations. We believe that interaction
with virtual hands provide more immersion and better
feedback to the customer than those made with con-
trollers.
In order to build a customized experience for the
consumer, the virtual environment should be able to
adapt the products showed according to the user’s
preferences. Online shopping portals have made a
large progress in this field with the aim to increas-
ing the consuming intention of its visitors. In a VR
shopping environment, the interactions performed in
this that the devices allow us to register play a critical
role to achieve it. Some variables that could be used
to build a robust user profile are: time that an object
is being watched (eye tracking) (Pfeiffer et al., 2020),
time that an object is being inspected (hand tracking),
number of times that a product is inspected or added
to its wish-list, or the parameters changed to a given
product such as color or size.
3.2 AI-Based Reasoning Layer
The products exhibited in the virtual environment will
be supplied by the underlying AI layer, which takes
the user profile as input in order to determine what
products are the best to be recommended to such user.
The first time a new customer uses the system, it does
not hold any information regarding its preferences.
Therefore, the system will have a set of generic pro-
files that contains common shopping preferences of a
large number of consumers (Radu and Maican, 2015).
These profiles will allow the system make the first rec-
ommendations before having knowledge of the user.
Later, the interactions that the user makes with the
products presented in the portal, will trigger the AI-
based recommendation system to update user’s pro-
file. Hence, the next time that the consumer gets into
the VR environment, the changes in such profile will
be reflected in the products showed to him/her, if the
changes were significant enough.
Supporting Small Businesses and Local Economies Through Virtual Reality Shopping and Artificial Intelligence: A Position Paper
315
INPUT
VR & WEB
User Input Interface
Hand Tracking
User location
in virtual
environment
Eye Tracking
Exploration of
virtual objects
VR Information Collector
Web Information
Collector
Activity monitoring
Mouse Keyboard
ACTIVITY
LOG
AI-Based
Reasoning
Layer
User Profile &
Preferences
User profile
configurator
Preference
setter
Processing and
Storage
User Profile &
Taxonomy
VR
Environment
(companies,
products,
collection places)
Recommender
Customizer
based on user
profile
Product
Recommender
Processing and
Storage
Planner
Offer
customizer
Plan/offer
generator
around
product pick-
up points
Processing and
Storage
OUTPUT
Presentation of VR
information
Recommendations
Plans and
offers
Proposal tailored to the user
Secure purchasing
management
Figure 1: General architecture of an AI-based VR-shopping platform.
Additionally, this knowledge can also be used to
encourage the buyer to visit physical stores where
these products are located when they go to pick up
a purchase at a pick-up point
Every time a customer wants to purchase a prod-
uct, the portal will show the different buying options
they can select (see Figure 4). These options include
the price of the product itself and a generated plan that
includes offers and activities from businesses that are
near the product’s collection point. Based on the col-
lection point, the user’s profile, and the pick-up time,
the plan will include different offers and activities, en-
hancing the economic activity of the businesses in-
cluded in the plan. Under this approach, we expect
local economies to be strengthened.
One of the key aspects of ensuring the proper and
long-term operation of the proposed platform is the
association of small businesses in the area. The mem-
bers of this association will be the companies pub-
lishing their products in the VR environment and the
businesses that will be considered for generating the
plans. In this context, it is important that the platform
promotes the plans in a fair way, distributing sales and
potential benefits evenly.
This strategy begins by displaying the buy options
in a ranking-like style. The variables to be considered
are the user’s preferences, their geographical location,
the geographical location of the collection point, and
the sales and benefits recorded historically in the sys-
tem. Therefore, the system will prioritize an option
that is convenient for the consumer but also better dis-
tributes the benefits among the businesses in the asso-
ciation.
Once a purchase is made, the system will adjust
the weights given to the different businesses, modify-
ing the order in which future buy options and plans
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Figure 2: Elaboration of plan after sale. It includes offers and activities around the product collection point.
will be suggested. For example, a store that has had
many recent sales should be shown in a lower position
for future potential purchases, even though its offer
may be the best for the potential customer.
3.3 Output Layer
As mentioned earlier, the output layer is responsible
for presenting all changes in the virtual world and the
generated information (recommendations and plans)
to the user.
Therefore, we developed a prototype using the
Unity game engine for the Oculus Quest 2 VR headset
as a first approach for this layer. The main idea is to
represent a shopping center with various stores, each
one focused on products based on their nature, such as
clothes, lifestyle products, toys, etc. Hence, the user
will be able to select a store of their preference to visit
and interact with the objects there.
Additionally, when the user opens the application,
the first room they will see contains products sug-
gested based on the outcomes of the recommenda-
tion system, after the system creates the user’s profile
based on their preferences.
To simulate a shopping experience closer to a
physical store, the user will use their hands to inter-
act with the virtual environment (see Figure 3). Once
the customer shows an intention to buy a product, it
will click a panel with a shopping cart icon. After
that, the buying options will be shown, indicating the
Figure 3: A sample of product interaction with hands in a
VR store.
collection point and the points of interest with which
the plan will be elaborated (see Figure 4).
In order to recreate a physical store as much accu-
rate as possible, factors such as lighting, shadows and
product size, among others, must be considered. Fig-
ure 5 shows some shelves with clothes. These prod-
ucts should look lifelike so that the user wants to in-
teract with it. Digital assets like textures and materi-
als should be used wisely to make the user feel that
he/she is inside a real shopping center or store.
Supporting Small Businesses and Local Economies Through Virtual Reality Shopping and Artificial Intelligence: A Position Paper
317
Figure 4: Prototype of panel with buying options for a cer-
tain product.
Figure 5: Shelves with clothes in one of the virtual stores.
4 DISCUSSION AND
CHALLENGES
The implementation of the proposed virtual reality
(VR) platform could bring significant benefits to so-
ciety, small businesses, and local economies. By pro-
viding a convenient and customized VR platform for
facilitating economic transactions, the platform has
the potential to promote economic growth and sup-
port the development of local economies.
For small businesses, the VR platform offers a
valuable opportunity to expand their customer base
and increase sales. By providing easy access to a wide
range of potential customers through immersive VR
experiences, the platform can help small businesses
to grow and thrive in a competitive market. Fur-
thermore, the platform’s ability to customize VR ser-
vices and offers according to individual preferences
and needs can help small businesses to better meet
the needs of their customers and build long-term rela-
tionships.
For local economies, the VR platform has the po-
tential to support economic development by promot-
ing local commerce and fostering strong connections
between businesses and consumers. By facilitating
economic transactions and supporting the growth of
small businesses through the use of VR technology,
the platform can help to create jobs, stimulate eco-
nomic activity, and strengthen the local economy.
In addition to the benefits discussed in the previ-
ous paragraphs, the proposed VR platform also has
the potential to support eco-friendly solutions. By in-
cluding pickup points as part of the platform, the need
for packages to be shipped long distances can be re-
duced, which can help to reduce emissions from trans-
portation. Additionally, the use of pickup points can
reduce the amount of packaging and materials used
for shipping, which can help to reduce waste and min-
imize the environmental impact of the platform.
Despite the possible benefits of the platform, we
have identified challenges that will be faced during
the development of the project. First, the underlying
recommendation system algorithm must be defined to
distribute potential sales and benefits evenly. The ex-
isting approaches and algorithms to build recommen-
dation systems will be inspected to have a consistent
background to define such algorithm. Such algorithm
also involves the plan generator, which also should
be fair. Moreover, we must explore the different VR
devices and its services in order to find the one that
provides the best hand and eye tracking, among oth-
ers.
Another challenge regarding available VR head-
sets is its hardware limitations. The 3D models to be
used like products and assets to build the stores must
have quality enough to look realistic. However, they
should be optimized to avoid overheating the headset,
since it could make the user sick.
5 CONCLUSIONS AND FUTURE
WORK
In this article, we have discussed the need for small
businesses to digitize in order to improve their com-
petitiveness and prevent their disappearance in the
face of online retail giants. We have argued that re-
sources and aid for digitization should be directed to-
wards achieving a future state in which virtual real-
ity (VR) and artificial intelligence (AI) will play a
prominent role in the commercial landscape. Based
on this idea, we have proposed a VR platform that al-
lows small businesses to offer their products in an at-
tractive and immersive way from the comfort of their
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own homes. The platform also allows retailers to
join forces to offer more competitive prices and in-
corporates pickup points to support local economies.
In addition to the economic benefits of the pro-
posal, we have also highlighted its potential to sup-
port eco-friendly solutions by reducing the need for
long-distance shipping and packaging waste. Overall,
the VR platform offers a comprehensive solution for
promoting the growth of small businesses and local
economies in a sustainable, digitally-advanced future.
The working lines on which we will strive include
the precise scanning and integration of real products,
including accessibility options to interact in the vir-
tual space, modeling of user profiles through interac-
tions with products or the dynamic generation of vir-
tual exhibitors.
ACKNOWLEDGEMENTS
This work has been founded by the Span-
ish Ministry of Science and Innovation
MICIN/AEI/10.13039/501100000033, and the
European Union (NextGenerationEU/PRTR), under
the Research Project: Design and development of
a platform based on VR-Shopping and AI for the
digitalization and strengthening of local businesses
and economies, TED2021-131082B-I00.
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