Embracing Phygital Retail: Redefining Convenience & Customer Experience

Embracing Phygital Retail

There's a common narrative in the retail world that pits brick-and-mortar stores against ecommerce giants. But the reality is, the future of retail isn't an either-or choice between in-store and online shopping. It's about blending the best of both experiences to create something new and exciting.
By merging the two — AKA, embracing "phygital" — retailers can create an entirely new standard for customer engagement. With the help of technology, retailers are finding new ways to personalize the shopping experience, anticipate customer needs, and create unforgettable moments. 

In this blog, we'll dig deeper into the power of phygital and explore what it means for retailers who want to stay ahead of the curve and deliver exceptional customer experiences.

Phygital Retail: Blurring the Lines Between Physical & Digital 

The term phygital may sound like something out of a science fiction novel, but in reality, it represents a growing trend in the world of retail. As consumers become more discerning and demand more than just a transactional shopping experience, retailers are turning to technology to bridge the gap between physical and digital. The result? A new kind of shopping experience that blends the convenience and accessibility of online shopping with the personal touch and tactile experience of in-store shopping.
At the heart of this trend is the experience economy: the idea that today's consumers are willing to pay a premium for experiences that are memorable, immersive, and shareable. Whether it's a pop-up shop that doubles as an art installation or a flagship store that feels like a museum, retailers are leveraging the power of experiential marketing, or "retailtainment," to draw in customers and create a lasting impression.
But the rise of phygital retail isn't just about creating a cool Instagram moment. It's also a response to the rising costs of digital marketing. With ad prices skyrocketing and social media platforms saturated with content, retailers are struggling to find ways to make an impact without breaking the bank. By creating phygital experiences that are highly shareable and buzz-worthy, brands can tap into the power of word-of-mouth marketing and use it to drive sales and engagement.

So, what does a phygital retail experience look like? Let's look at a few real-world examples:

  • Amazon Go: Amazon Go is the epitome of phygital. Fueled by advanced technology such as computer vision, sensors, and machine learning, Amazon Go stores allow customers to use their smartphones to enter the store and select the items they want. No lines, no registers, no cashiers — the items are automatically charged to their Amazon account for a hassle-free checkout. Even better? Amazon Go stores offer an immersive shopping experience through a mix of digital displays and physical products. These displays showcase product information, customer reviews, and promotions, so they can feel confident in their purchasing decisions.

  • IKEA Place: Through the magic of augmented reality (AR), IKEA's "IKEA Place" app allows customers to visualize how a certain piece of furniture would look in their home, all from the comfort of their own couch. With this app, customers have the freedom to experiment with different options and styles until they find the one that matches their unique vision — much like having an interior designer right at their fingertips. By removing the uncertainty and guesswork from the furniture buying process, customers can find pieces that truly resonate with them instead of being overwhelmed by endless choices in a display room.

  • Nike Live: With a focus on appealing to local NikePlus members, Nike Live concept stores harness customer data to create tailor-made shopping experiences. By collecting data from the NikePlus app, they can curate their inventory in a way that reflects local customer preferences and purchasing history. Beyond the products, Nike Live stores also take into account everything from customers' favorite colors to their preferred music genre to ensure that every moment in the store feels like it was made just for them. 

From Fragmented to Frictionless Shopping

Customers are no longer following a predictable path from awareness to consideration to purchase. Instead, they're jumping back and forth between online and offline channels, seeking information, reviews, and experiences in between to make more informed purchasing decisions. 
But one thing is clear: even with the rise of ecommerce, brick-and mortar stores aren't going anywhere. Studies show that 81% of Gen Z prefers to shop in stores, 73% like to discover new products in store, and collectively they view in-store shopping as a way to disconnect from the digital world. The only difference? They expect a seamless and equally memorable transition from in-store to online.
That's why phygital is a win-win for retailers: it enriches the customer experience and offers ways to learn about your customers on a granular level. Customers can interact with products through augmented reality, virtual assistants, and interactive displays. They can learn more about a product by scanning a QR code, or even have a virtual makeover using facial recognition technology. The possibilities are endless.
By incorporating such technologies, retailers can create an immersive environment that keeps customers engaged and interested, extending the window of opportunity to create a long-lasting impression and make sales. And just as importantly, it provides retailers with an incredible opportunity to collect valuable data. Through tracking the interactions and behavior of customers in-store, retailers can gain insights into how they engage with the products, what they’re looking for, where they spend the most time, and how they ultimately decide to purchase.
This data can be used to create even more personalized and targeted experiences that cater to individual customers' needs and preferences. Innovative retail software platforms connect the dots between your data with real-time reporting and dashboards, so you can better manage inventory and optimize pricing. Plus, unifying in-store and online data helps retailers provide more personalized and effective support via live chat, like specific product recommendations based on purchasing history or providing status updates on current orders.

Perfecting Your Phygital Strategy

Implementing phygital retail doesn't have to be expensive or complicated. Simple strategies include displaying QR codes on products that link to online product descriptions and reviews, offering mobile app promotions, offering free Wi-Fi in-store, and offering virtual product tours online. 
Larger investments in phygital technology can include in-store virtual reality experiences, facial recognition technology, and augmented reality apps. The key is having a clear vision of what you want to achieve and how the technology aligns with those goals.
To find the right phygital strategy, follow these steps:

  1. Analyze customer behavior to understand how they interact with both physical and digital channels
  2. Define business objectives and determine how the phygital strategy can help achieve them
  3. Identify the technology required to implement the phygital strategy, such as point-of-sale systems or augmented reality
  4. Test and refine the phygital strategy with a small group of customers and gather feedback
  5. Measure success with key performance indicators (KPIs) like sales metrics or customer engagement metrics
  6. Adapt the phygital strategy to changing customer needs to continually improve the customer experience.

Let's Get Phygital

To stand out in today's market, it's not enough to rely on traditional brick-and-mortar or digital strategies alone. 
By seamlessly merging the physical and digital worlds through phygital processes, you can create an experience that connects with your customers on a deeper level. And when paired with ThirdChannel's live chat platform and reporting and dashboard software, you'll have a crystal-clear understanding of customer behavior and preferences, allowing you to make real-time, informed decisions about pricing, inventory management, and customer service.
Don't let your competition leave you in the dust. The future of retail is phygital, and ThirdChannel is here to help you maximize it. Schedule a demo with us today.

Published by Troy Jones, Account Executive June 20, 2023
Troy Jones, Account Executive