Future of Retail

A Guide to Phygital Retail

In our fast-paced digital era, the retail landscape is constantly evolving to meet the changing needs and expectations of consumers. One of the emerging and most prominent phenomena is phygital retail.

In our fast-paced digital era, the retail landscape is constantly evolving to meet the changing needs and expectations of consumers. One of the emerging and most prominent phenomena is phygital retail, the coming together of physical (brick-and-mortar stores) and digital (eCommerce) shopping experiences. This article breaks down what phygital retail is, lists the key elements of the phygital experience, and explains why retailers must adopt this innovative and flexible approach.

What does Phygital mean?

The term phygital refers to the fusion of physical and digital elements in the retail environment, to create engaging and frictionless shopping experiences for consumers. The implementation leverages technology, data analytics, and multi-channel integration to bridge the gap between online and offline retail spaces. Phygital retail is influenced by the rise of eCommerce shopping culture, which has become more mainstream with the onset of the global Covid-19 pandemic. It is also the result of emerging technologies that enable eCommerce-type experiences in physical stores.

Here are a few examples of phygital retail experiences: A brick-and-mortar retail store offering omnichannel shopping experiences such as buy online, pick up in-store (BOPIS), and in-store personalized marketing and promotion via the retailer’s app. Omnichannel shopping, which enables shoppers to interact with a retailer through various channels, such as physical stores, eCommerce websites, mobile apps, and social media platforms, is an expression of the phygital experience. The goal is to provide shoppers with flexibility, access to information, and personalized interactions, ultimately resulting in a frictionless shopping experience.

Why is phygital retail important for retail businesses?

  • Adaptation to changing consumer behavior: Consumer behavior has shifted towards digital interactions and online shopping. Phygital retail allows retailers to adapt to this changing landscape by providing a seamless blend of physical and digital experiences. By embracing phygital strategies, retailers can meet customers where they are and cater to their preferences, strengthening customer relationships and loyalty.
  • Maintaining a competitive edge: In today’s highly competitive retail landscape, retailers must provide shoppers with superior shopping experiences to stay ahead. With the rise of eCommerce and changing consumer expectations, simply offering good products at competitive price points is no longer enough. Retailers must focus on creating memorable and personalized experiences that delight customers at every touchpoint.
  • Seamless omnichannel integration: Shoppers’ increasing demand for phygital experiences is pushing retailers to invest in creating seamless integrations between their physical and digital channels. Customers can transition effortlessly between online and offline touchpoints, such as browsing products online and then trying them in-store, or making a purchase in-store and having it shipped to their doorstep. Such convenience and flexibility accommodate customers’ preferences and increase their engagement with the brand.
  • Data-driven insights power better decisions and more efficient operations: Certain technologies leveraged to achieve phygital retail, such as in-store computer vision applications for store maintenance, shrink prevention, and cashierless checkout, allow retailers to collect and analyze valuable anonymized customer data. By leveraging data analytics, retailers can gain insights into customer preferences and purchase patterns. This information enables retailers to better meet customer needs, optimize their product offerings, and deliver added value via product recommendations and targeted promotions, ultimately driving sales and customer satisfaction.

Examples of phygital retail: What a phygital store may look like

Explore this example of a phygital grocery store that seamlessly blends the convenience of online shopping with the tactile experience of a physical store. As customers enter the store, they’ll notice a dynamic and tech-infused environment. The store features interactive digital displays throughout the aisles, showcasing real-time product information, pricing, nutritional details, and personalized recipe recommendations. Shoppers can engage with these displays, accessing digital shopping lists and adding items directly to their virtual carts.

This phygital store embraces the power of mobile technology. Customers can download the store’s app to access personalized promotions, their shopping history, and a digital pantry. As customers navigate the store, the app’s indoor navigation feature guides them to their desired products and sends notifications about nearby discounts or promotions.

When shoppers are ready to check out, they have the choice of using a traditional manned cash register or leveraging the store’s built-in frictionless checkout capability and simply using their apps or tapping their cards at the exit and walking out, their payment automatically being processed in the cloud.

The future of phygital grocery is here.

Key Benefits of Phygital Retail

  1. Enhanced customer experience: Phygital retail provides a more immersive and interactive shopping experience for customers. It integrates the advantages and culture of in-store shopping (immediacy, the ability to have a tactile experience with the product) with digital technologies like in-store displays, touchscreens, and augmented reality (AR), enabling customers to engage with products in innovative ways.
  2. Increased convenience: Phygital retail combines the convenience of online shopping with the tangible experience of physical stores. Customers can research products online, check availability, and make informed decisions before visiting a physical store. Additionally, features like frictionless checkout, mobile payments, and in-store navigation apps streamline the shopping process, saving time and reducing friction points.
  3. Improved inventory management: Digital integration in physical stores enables real-time inventory visibility. Retailers can track inventory levels accurately across channels, reducing the risk of out-of-stock situations. This visibility helps optimize stock levels, improve supply chain efficiency, and avoid missed sales opportunities.
  4. Enhanced brand engagement and loyalty: Phygital retail provides opportunities for retailers to engage customers and build brand loyalty. Interactive digital displays, gamification elements, and virtual try-on experiences create memorable brand interactions. Social media integration and user-generated content encourage customers to share their experiences, increasing brand reach and awareness.
  5. Efficient targeted marketing: Phygital retail allows retailers to deliver targeted marketing messages based on customer data and behavior. Using technologies like beacons and geolocation, retailers can send personalized offers and promotions to customers’ mobile devices while they are in-store. This targeted marketing approach improves the relevance of communication and increases the chances of conversion.

Overall, Phygital retail offers a harmonious blend of physical and digital experiences, combining convenience, personalization, and engagement. By leveraging the benefits of both online and offline shopping, retailers can create a competitive edge and meet the evolving expectations of modern consumers.

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