PurposeTo develop compelling augmented reality (AR) experiences, this paper aims to examine AR value to physical fashion retail, defines the most effective form (e.g. app vs magic mirror) and assesses AR’s impact on consumer behaviour.Design/methodology/approachThis study comprises two phases. Phase one conducted three co-design workshops with 15 participants (aged 18–34) to evaluate current shopping modes and discover design opportunities. Phase two designed two AR prototypes (AR Branded App and Magic Mirror) and evaluated the prototypes through experience prototype experiments with 42 participants.FindingsParticipants have a positive attitude towards AR shopping adoption, improving consumer satisfaction and boosting purchase intention. AR technology can be the value in enjoyment to make the shopping experience more fun. However, no participants thought entertainment would trigger their intention to use AR. Therefore, designing useful AR apps that provide substantial functional benefits with enjoyment-oriented elements will encourage consumers to engage in high-street physical retail. In this way, consumers can interact with products and receive more information. AR can help luxury brands tell a story from a hedonic perspective, enabling consumers to engage with the story while maintaining human interaction to ensure an elevated level of service quality.Originality/valueThis study devises six design requirements to guide innovators and retailers in creating AR retail environments that satisfy their customer’s desires.