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Understanding Phygital retail

by Madelein
Understanding Phygital retail

Whether it’s large retailers adding digital technologies to their physical locations or digital-first brands venturing into brick and mortar, combining physical and digital elements in retail is what we call Phygital retail.

And it is much more than just a buzzword. This omnichannel sales strategy helps retailers to create a completely connected physical and digital storefront, and it’s here to stay. Let’s take a closer look at what Phygital retail is, the benefits of it, and examples of retailers excelling at this multi-channel sales and marketing strategy.

What is Phygital retail?

According to GWI, over half of consumers in North America research a product online before buying it. And according to this 2021 state of consumer behaviour report, many people still choose to shop in person. In fact, nearly half of consumers said, if given the choice, they prefer to shop in person rather than online. What does this mean for retail businesses?

Merging the physical and digital storefront is more important than ever, and Phygital retail is a way to accomplish this. Combining the best components of e-commerce and brick-and-mortar business models to improve the customer experience and boost sales revenue is one of the advantages of Phygital retail.

For example, a person may have both a retail store and an online shop, and it makes 25 sales per month in person and 200 online sales in the same period. One could think that the brick-and-mortar store isn’t succeeding, but a percentage of its online sales could in fact be coming from customers who first visited the store and then completed their purchases online. And by creating an omnichannel shopping experience, one can continue engaging with those customers both online and offline to grow repeat sales.

While a physical store enables the experiences that can’t be accomplished online, having an online store gives customers the flexibility to choose how they shop, pay and fulfil their orders.

The three key elements of Phygital retail

Streamlining online and offline touchpoints to create a Phygital experience involves combining the three i’s – Immersion, Immediacy and Interaction. Let’s take a look at these concepts:

“Successful Phygital retail experiences are convenient, fast and engaging.”

Nine Phygital retail strategies

Like omnichannel retail, Phygital retail gives consumers the choice to discover and buy products through their preferred shopping channel. Whether it’s online, in-store, via social media or at a limited-time pop-up shop, streamlining all these approaches is part of creating a Phygital retail strategy. These strategies include:

1. Let customers choose how they buy
Buy online, pickup in-store (BOPIS), sometimes referred to as click and collect, lets customers shop via an e-commerce website and then pick up their order in-store or at a designated pickup point. It reduces shipping costs for the shop and its customers, and can also lead to increased sales if people purchase additional items while they’re collecting their order from the retail shop.

Curb-side pickup is another order fulfilment option similar to BOPIS. The order is placed online and collected in person, but the customers don’t have to get out of their cars. Upon arrival at the retail store, they notify you via text, call or email, and your sales staff bring their order out to the curb. This Phygital retail strategy is extremely convenient and helps boost customer satisfaction.

2. Provide self-checkout or no checkout
Amazon Go’s “just walk out” checkout experience is probably not on the agenda for a local retail business, but it’s an interesting concept and may be achievable for retailers of all sizes in the future. Customers walk into the store, pick up their items and then walk out. Digital technology tracks the customers and their purchases, and the payments are automatically processed through the Amazon Go app moments after they leave the store. Locally, Checkers is said to be trialling the concept with mixed reception.

In the meantime, self-checkout is a great way to digitise the in-store checkout process, so customers can pay at their convenience. One can do this by placing self-checkout kiosks around the store to reduce the checkout-counter line.

3. Try AR and VR applications
Augmented reality (AR) and virtual reality (VR) technologies blur the lines between digital and physical. Retailers are using AR to let customers try on clothes digitally while they’re in-store, and VR is a great way to digitally immerse customers into an experience where they can discover your brand and products.

4. Use endless aisles to keep up with supply and demand
Buy in-store and ship to home, also commonly referred to as endless aisles, is an order fulfilment option that lets customers shop and buy products in-store and have the order shipped to their home or wherever they prefer.

The advantages of endless aisles include increasing in-store sales, even if you don’t have the products in stock, and creating a seamless customer experience. You can make this a self-service option with ordering kiosks or assist customers with their orders.

With Shopify’s endless aisle technology, you’ll never miss an opportunity to close a sale in-store again.

5. Send local push notifications
Building relationships before, during and after the sale is important for the success of your retail business. Local push notifications help you to do this by communicating with prospective and existing online and in-store customers through mobile notifications. This strategy can be used to alert people within a certain distance when new products arrive in-store, or to follow up with them post-purchase to solicit reviews and boost customer engagement and retention.

6. Use social media to create a digital storefront
Instagram, Facebook, Tik-Tok and other social media networks make it possible to add a digital presence to your physical retail business. You can even use the e-commerce features available on Facebook and Instagram to implement a social commerce strategy and sell directly through social media.

Social media is a great place to advertise customer loyalty programmes, share special offers and run ads. And engaging with shoppers via social media is a way to connect digitally and provide a cohesive customer experience across all channels.

For example, one way to combine the physical and digital experience is to run a limited time offer encouraging customers to comment on an Instagram post to win 10% off their next in-store purchase. You can make this deal available to the first five followers who comment on the post.

7. Do pop-up stores
If your business is primarily online, doing short-term pop-up shops is a low-cost and low-risk way to add a physical presence where customers can engage with you and your products in person.

Displaying an iPad at your pop-up shop so that shoppers can peruse your collection, read customer reviews and look up additional product details online while they get to touch and try on the merchandise in person, is a great example of Phygital retail.

Pop-up stores are also a great way to test the waters to see if you are ready to open up a physical location to supplement your e-commerce store.

8. Create a Google My Business listing
Creating a Google My Business (GMB) listing is another way to complement your physical storefront with a digital presence. It also lets you engage with customers, collect reviews and promote your retail business online.

Keeping your GMB listing up to date with images, your location and special offers is a local search engine optimisation (SEO) strategy that you can use to attract customers who are searching locally for your products. Making it easier for customers to find you online also helps to increase in-store foot traffic.

9. Integrate customer reviews
Customer reviews can help to turn people who are browsing into paying customers, so encouraging people to leave customer reviews is crucial. And making sure in-store shoppers can also see online reviews is another great Phygital retail strategy.

You can do this by displaying online reviews in-store next to the related product(s), so shoppers can save time looking up reviews online and make buying choices faster. You can do this with signage or by strategically placing iPads around your store, so customers can pull up product reviews that are relevant to the merchandise they’re considering.

Benefits of Phygital retail:
• Enhances the customer experience.
• Builds brand awareness and trust.
• Offers personalised recommendations and increases sales.
• Boosts brand loyalty.
• Prevents stockouts.

Examples of Phygital retail

Whether your retail business started online or offline, merging your physical and digital storefronts is a sales and marketing tactic that’s here to stay.

Allbirds’ app for customisable experiences
Sustainable shoe brand Allbirds introduced the Allbirds app in September 2020. With this Phygital retail strategy, customers can download the iOS app and build their own customisable experiences. App users can also try on shoes virtually, choose where to apply carbon offsets from purchases and receive notifications about app-exclusive products.

Chanel’s AR smart mirrors in fitting rooms
Luxury brand Chanel collaborated with FarFetch to install AR smart mirrors in its flagship stores’ fitting rooms. Shoppers use an app to choose from a range of merchandise and then schedule an appointment to try it on. When the customers arrive, the selected pieces are brought to them and they can use a high-tech mirror to zoom in on the product details. This creates a seamless buying journey that marries boutique and personal shopping with a high-tech experience.

Gucci’s interactive displays
For a brand that’s been around since the 1920s, Gucci does a great job of keeping up with changes in consumer behaviour and adapting its digital strategy to attract a younger audience. The brand uses innovative social media campaigns to catch millennials’ attention and was one of the first to design interactive in-store displays that let customers search through, rewind and pause content with hand gestures.

Lush’s digital concept stores
Lush is a cosmetic brand known for its cruelty-free products, bath bombs and retail stores packed with merchandise on wooden product displays. Product testing sinks have been replaced with clear shelving, creating a colourful bath-bomb showroom experience.

Now customers can use the #LushLabs app to hold up the Lush Lens to bath bombs. They see an immersive video on their smartphone screen demonstrating how it’s used, plus it populates a list of ingredients and product benefits. Also, this digital strategy eliminates the need for product packaging, making it an environmentally friendly alternative in the cosmetics industry.

Lush is using this digital experience to create an online community where customers provide feedback on its products and store design. The advantage is that Lush can test new products before stocking them in more locations, and involving customers in the product development process leads to higher engagement and brand loyalty.

Warby Parker’s virtual try-on feature
Digitally native glasses brand Warby Parker tested the click-and-mortar business model in 2013 by opening its first retail location. Now the brand creates a Phygital retail experience by helping shoppers to try on glasses virtually before they visit a store. Customers can also use its virtual try-on feature to buy their glasses directly online. Its app goes beyond just overlaying a pair of glasses on your face. Using augmented reality and face-mapping technology, glasses are rendered in a live 3D preview on your face, giving you a realistic picture of how you’ll look wearing the glasses.

Rebecca Minkoff’s touch screens
In 2014, designer Rebecca Minkoff opened two stores featuring oversized screens where shoppers can browse products or request specific sizes to try on. When a fitting room is available, the customer will receive a text message. Inside the fitting room is a mirror that doubles as a touch screen, so customers can ask for more items or assistance.

Radio frequency identification technology (RFID) is used on the product tags to track the items customers try on and to keep an accurate view of inventory in real-time. At the same time, salespeople are equipped with an iPad to manage customer requests and mobile checkout.

Nike’s personalised experiences
Over 140 million NikePlus members use one account to access all of Nike’s personalised services, online and in-store. That’s a lot of data that Nike can use to create outstanding customer experiences. In its live store in Los Angeles, merchandise changes every two weeks to adapt to local trends, and shoppers have the option to personalise products. This personalisation tactic lets Nike make its customers feel special and is a perfect strategy to attract and keep local customers.

In New York City, the brand’s speed store is perfect for busy New Yorkers. Customers can use the NikePlus app’s retail feature to choose products, including size and colour, before arriving at the store. Then an associate prepares their order and leaves it in a self-service locker, or if they want to try something on, it’s already waiting in the fitting room. This Phygital retail strategy is a fast and convenient option for local Nike customers.

Final thoughts

A solid first step into Phygital retail is to use the same platform to manage both your online and physical stores. This can lead to more opportunities to personalise and create a cohesive brand experience for shoppers, foster customer loyalty over the long term, and boost engagement in-store and online.

Acknowledgement and thanks go to Shopify for the information in this article.

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