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Purpose Few studies have examined technology-enhanced atmospheres for strengthening customer experience and brand engagement in physical store settings. This study builds on the social presence theory to test for the first time the moderating effects of virtual social presence on customer responses, through AR adoption in-store. Our study aims to understand the impact of technology-enhanced in-store atmospherics (TEISAs) with emphasis on AR elements and virtual social presence on customer experience and engagement behaviours (CEBs) in luxury settings. Design/methodology/approach Hypotheses are developed and a survey using 566 responses were collected using Qualtrics. T-tests, two-way ANOVA and structural equation modelling were used for analysis of CEBs. Moreover, using PLS-SEM, we test whether virtual social presence moderates this relationship in a cross-country context; Britain and China, two of the largest economies for luxury growth. Findings The findings demonstrate that TEISAs have a positive impact on emotion and perceived value, with virtual social presence moderating this relationship. The cross-cultural comparison results show that the impact of TEISAs on emotion and perceived value is stronger for British than for Chinese millennials. Originality/value Our model is the first to incorporate technology into various store atmospherics, to employ virtual social presence as a new moderator, and to provide empirical evidence on the effects of AR on customer experience and CEBs in the real-time luxury retail environment. This study is also the first to consider virtual social presence on social media as a moderating variable.
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