The retail landscape has undergone a significant transformation in recent years and one trend that’s gaining traction is the phygital retail experience.
As shoppers increasingly demand a seamless interaction with brands across all touchpoints, phygital retail offers a way to bridge the gap between digital and physical spaces. This approach not only refines the shopping experience but also has the potential to drive sales, with 43% of shoppers indicating they’re likely to spend more with retailers that offer meaningful in-store experiences.
As e-commerce continues to grow, accounting for 24% of global retail sales by 2026, creating an effective phygital strategy will be important for retailers to win and retain customers in this new retail landscape.
What is phygital retail?
Phygital retail is a term that combines the words “physical” and “digital.” It refers to a retail experience that merges the best of both online and offline worlds to create a unique, integrated and seamless shopping experience.
This approach recognizes that today’s consumers want to move smoothly between physical and digital touchpoints. Phygital retail aims to bridge the gap between the two worlds so that customers can enjoy fluid, coherent shopping experiences within an omnichannel retail environment.
How does phygital retail work?
Phygital retail thrives on the integration of multiple touchpoints to create an omnichannel ecosystem where each platform complements the others.
In short, phygital retail works by integrating digital technologies such as augmented reality (AR), virtual reality (VR), in-store digital kiosks, mobile apps, QR codes and the Internet of Things (IoT) into physical stores to optimize the shopping experience.
Benefits of phygital retail
There are several factors that make phygital retail a perfect way to achieve the key elements of a successful shopping experience for all types of retail customers.
Consistent omnichannel shopping
In the core of phygital retail is the idea of creating seamlessness. This means retailers aim to give shoppers a unified and integrated journey across all the different touchpoints they interact with the brand, without any friction or disconnect.
High level of personalization
Post-pandemic, 71% of consumers expect companies to deliver personalized interactions and 76% get frustrated when this doesn’t happen. Personalization is a driving force in modern retail and phygital strategies take personalized experiences to new heights by leveraging customer data, artificial intelligence and machine learning algorithms to deliver tailored recommendations, offers, content and interactions to each individual shopper.
Seamless convenience
Retailers can successfully integrate digital elements into their physical stores and physical elements into their digital stores to combine the advantages of both physical and online shopping.
Live video shopping allows customers to interact with a live host or ask questions, see products in action and get as much of a physical experience as possible while shopping online. It’s convenient for avoiding crowds and line-ups during peak seasons and still includes that all-important element of customer engagement.
Enriched customer experience
Some customers want distinctive in-store experiences that cannot be replicated online while also enjoying the flexibility to shop, pay and fulfill orders from any location. Brands can create unforgettable, immersive in-store phygital experiences using technology, lighting, music, visual merchandising and more, while allowing consumers to finalize purchases online.
Others want the convenience and information-rich experience of online shopping while still being able to physically interact with products. Digital kiosks or mobile apps can provide in-depth product info, real customer feedback and personalized recommendations – all right there in the store! This empowers shoppers to make smarter choices with confidence.
Real-time availability updates
One common shopping frustration, especially during busy seasons, is the potential unavailability of popular items. Phygital retail alleviates this issue by offering real-time information on product availability. Customers can easily verify whether a product is in stock at their local store or ready for immediate online delivery, minimizing the likelihood of disappointment from finding items sold out during store visits.
In addition, as AI solutions find their way into the retail landscape, adjustable in-store product displays using digital signage make it possible to update important stock and promotional information almost instantaneously across multiple store locations.
Data-driven insights
The better you understand your customers, the better you can serve their needs. Phygital retail provides data-driven insights that enable businesses to understand customer behavior, preferences, pain points and shopping habits.
This data can be used to tailor marketing strategies, improve customer service and create targeted promotions. Informed decision-making is key to success in the retail industry, combined with effective marketing campaigns and optimized inventory management.
Loyalty
A positive customer experience is proven to yield higher customer-satisfaction rates and boost sales-conversion rates. By creating a phygital retail environment that successfully responds to consumer demand for an engaging, personalized omnichannel shopping experience, brands can dramatically increase individual customer loyalty and reap the many benefits of repeat purchasing.
When to implement phygital retail
Suppose you own both a physical retail store and an online shop, making 25 in-person sales and 200 online sales monthly. It might seem like your brick-and-mortar store isn’t performing well, but a portion of your online sales might actually come from customers who initially visited your physical store and later made their purchase online.
By developing an omnichannel shopping experience, you can maintain engagement with these customers across both platforms, thereby enhancing the potential for repeat business. Phygital retail works in every situation where consumers interact with your brand in both physical store locations and online.
How to implement phygital retail
By merging physical and digital storefronts, retailers can provide a holistic shopping experience that combines the best components of ecommerce and brick-and-mortar business models to boost sales revenue.
Phygital retail can be used on a grand scale, but many businesses can integrate elements of the trend with accessible technology like Electronic Shelf Labels to drive efficient use of data and effective in-store communication.
Here are 5 simple ways to begin implementing phygital retail:
- Offer flexible fulfillment options: Allow customers to buy online and pick up in-store (BOPIS) or use curbside pickup, reducing shipping costs and increasing sales.
- Streamline checkout: Implement self-checkout or no-checkout options, like Amazon Go’s “just walk out” experience, to digitize the checkout process and make things more convenient for customers.
- Implement endless aisles: Offer buy-in-store, ship-to-home options to increase in-store sales and create a seamless customer experience, even when products are out of stock.
- Use local push notifications: Communicate with customers through mobile notifications to alert them to new products, special offers and post-purchase follow-ups, building relationships and boosting engagement.
- Host pop-up stores: Add a physical presence to online businesses with short-term pop-up shops, allowing customers to engage with products in person and testing the waters for a physical location.
Challenges of implementing phygital retail
Some common challenges of adopting a phygital approach include:
- Implementing digital technologies
- Ensuring data privacy and security
- Overcoming the complexities of maintaining inventories across channels.
Retailers need to choose and invest in technology that supports their current business model and ecommerce tech stack and prioritize data security by implementing robust security measures and complying with data protection regulations.
As with any new strategy, start small, test and then scale.
Examples of phygital retail
Several well-known businesses have already embraced the phygital trend, including Harry Rosen. They have successfully created digital versions of their in-person services, combined the traditional in-store experience with the simplicity and convenience of online shopping and used digital technologies to elevate the physical shopping experience.
Here are three industries that are successfully using a phygital approach for retail success in 2024:
- Pharmacies: Some pharmacies have introduced virtual consultations with pharmacists to allow customers to assess their needs at home and proceed to in-store pick-up or delivery at their convenience.
- Liquor Stores: Many liquor stores have digital kiosks that allow customers to find information about their accounts digitally. Customers have the option to interact with digital channels while still visiting the physical location. If they have a concern, an actual human is close to assist if needed.
- Clothing: Luxury brands are embracing the phygital in creative ways. Guggi 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.
JRTech is a trusted provider of phygital retail solutions
While some sources, like the New York Times, claim that phygital and omnichannel retail are basically the same thing, there is no doubt that the trend – whatever you want to call it – is here to stay.
Phygital retail has the potential to offer retailers improved operational efficiency and higher profitability, but to make phygital integration a success, retailers need to know which digital technology to implement.
JRTech has a proven track record in providing high-performing digital tools to retailers in various industries.
Contact us today to learn how our digital signage and cutting-edge Electronic Shelf Label technology can help your business embrace the future of phygital retail.
