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Phygital Retail: A Blessing or a Curse? And Can It Work for You?

Updated: Jun 20, 2022

From smart mirrors to in-store tablets, a phygital retail model could bring the wow factor back into some brick-and-mortar locations.

Is it always positive, though, or does it come with a few challenges? And most importantly: is a phygital strategy the right investment for your brand?

Let’s find out.

What does phygital mean in retail?

A combination of ‘physical’ and ‘digital’, phigital retail is an omni-channel strategy that consists of implementing e-commerce or AR and VR trends inside a store to create a more interactive and alluring customer experience.

The 3 I’s of phygital retail

The key elements of this strategy are:

  • Interaction with technology as well as with a brand and its products—in new ways

  • Immersion, since the customers become an integral part of this in-store experience

  • Immediacy, as they choose how their order gets fulfilled based on their needs, and they can also receive the right notifications or messages at the right time

Phygital retail examples

This might sound complicated, but I promise: you’ve actually tried at least one of these phygital shop strategies yourself, either in your stores or as a consumer.

Some of the most popular phygital retail examples are:

  • BOPIS (buy online, pick up in-store) or click and collect as it's otherwise known: practical and time-saving for customers while reducing your shipping costs. It can also be used as an upselling opportunity once you have the customer in your store

  • Endless aisles: buy in-store—usually through some tablets—and get everything shipped to your home. This is especially handy with bulky items and can help you increase in-store sales despite not having every product in stock

  • Cashier-free shopping like with the Amazon Go app that lets customers walk out of their stores without using tills or self-checkouts

  • Integration with apps and QR codes to offer more flexibility and autonomy to customers looking for information on specific products

  • Push-notifications to local customers who’ve been interacting with your in-store technology

  • AI, AR, and VR: this is the most relevant and intriguing phygital retail example, in my opinion. This technology can be used in a variety of ways to create a tailored experience and immerse your customers digitally while helping them discover your products and brand in new engaging ways

Here are some phygital retail examples of brands that have been leading this change, especially when it comes to augmented or virtual reality:

  • Sephora: their in-store tablets allow customers to access their account and add a product to their wish-list or buy it through the app, and they first get to try them on virtually thanks to their AR technology

  • Chanel: their AR smart mirrors give more information on products and let people try them on digitally

  • Lush: many of their stores now have some clear shelves with unpackaged products, and customers can learn more about their ingredients, benefits, and what they’d look like in practice by using the #LushLabs app

  • Nike: the footwear giant has been tailoring its phygital store experience to different locations. For example, time-poor New Yorkers can book to try on a specific product, which will be waiting for them in a self-service locker or fitting room

What are the benefits of phygital retail?

A phygital store can potentially breathe fresh life into a struggling industry, bringing exciting benefits to both brands and consumers.

1. Phygital retail can improve customer experience

These implementations offer more flexibility to your customers, from different ways to interact with your brand to choosing how to buy your products.

Not only can phygital retail turn shopping into a more playful and exciting experience: it gives them more information about your products, too. When you think that 81% of shoppers research them online before buying, that’s also a big plus!

I mean, how many times have you seen some introverted customers googling something on their phone instead of approaching a perhaps distracted sales assistant?

Overall, phygital retail—when done right, I’d like to specify—can streamline the buyer’s journey.

2. You can create a more personalised experience through the use of data

Apps, QR codes, in-store tablets: phygital stores offer many more touch points and opportunities to collect your customers’ data.

As well as using it to understand how your target audience interacts with your brand and products, you can make the most of it to further implement and tailor your phygital retail experience.

After all, personalisation drives a 10-15% increase in revenue!

For example, you could send some personalised recommendations to your customers based on what products they interacted with, some location-related push notifications once an item is back in stock, and even ask for reviews or send them custom discounts.

3. Phygital stores can increase brand awareness, trust, and loyalty

Think about it: you’re offering your customers fun new ways to get to know your brand and products, giving them more options to shop with you, and even personalising their digital interactions…

Of course, this will result in higher customer satisfaction and retention!

4. You might even get more user-generated content… for free

Picture those colourful, Instagrammable Lush videos. Or some customers trying on clothes digitally in front of a smart mirror.

With these phygital concepts being still—fairly—new, many consumers will want to share them on their social media platforms.

That’s basically free marketing if you encourage them to tag you or use your hashtags.

What are the limitations of phygital retail?

Now, I know what you’re thinking: phygital stores are the solution to all the problems that this industry has been facing, right?

Not exactly, unfortunately. Or, better: not necessarily.

It really depends on your specific situation, what phygital strategies are implemented, and how.

1. Retail as an industry has been struggling for years

This industry has been surviving rather than thriving since well before the pandemic due to an increase in e-commerce (30% more than the previous year in 2021, in Europe alone), rising costs, and a high-street decline in many countries given unsustainable rent demands.

Some brands have closed several physical locations, and some others have moved to an online-only model.

So, if your target audience is already starting to pop into your stores less and less, is it worth investing thousands of pounds into phygital technology?

2. It can’t compete with the perks of e-commerce (and shouldn’t try to!)

Not every brand has been incorporating phygital retail wisely.

Many still try and bring an e-commerce model into their store, but… what’s the point when the main benefit of online shopping is doing it from the comfort of your home or on the go?

So, if your idea of physical retail is simply to add a tablet to browse your catalogue, I personally don’t see how it could actually add to your customer experience.

After all, retail’s advantage over digital models has always been… human interaction!

Remember that people buy from people: a phygital model should never stray away from human connection and excellent customer service.

3. Not everyone is tech-savvy

Whether certain phygital retail strategies can or cannot work for you will also depend on your specific audience.

Sure, many young people love smart mirrors, but an older customer who can just about use smartphones is unlikely to feel the same. If anything, they might even feel alienated and put off!

This is even worse if your sales assistants aren’t trained to help them properly. In many cases, they struggle with this in-store technology themselves because they haven’t been taught how to use it.

4. It risks being an all-sizzle-and-no-steak situation

If phygital retail solutions are adopted just for the sake of being trendy and without offering the correct staff training, then how can they help a struggling industry?

Chucking some tablets and smart mirrors into your stores without research and a strategy behind them isn’t going to magically bring you more money!

How to make phygital retail work for you: 5 essential tips

When done right and if relevant to your products and audience, phygital retail can be a convenient and engaging experience that will reward both you and your customers.

How do you set yourself up for success, though?

1. Be smart with your smart items

First of all, don’t ever make the mistake of implementing some flashy phygital retail solutions just because they work for a brand with a completely different audience or industry.

Focus on what can complement your in-store experience!

But that’s not all: you must leave no decision to chance in order to make it a smooth addition.

For example, should you add a set number of in-store tablets or some QR codes that let your customers browse on their own device?

Or let’s say that you’re introducing some smart mirrors or screens. Plan their positioning carefully, especially if you’re selling intimates, or else your customers might feel uneasy if they have to browse them or worse, try them on digitally in front of everyone.

2. Training your team is still essential

If you’re just expecting to dump a few techy gadgets into your stores and let consumers do the rest, well… you’re in for some disappointment.

You must train and coach your staff thoroughly, both when it comes to understanding all their features and the best way to help customers interact with them.

Remember: phygital shopping and technology should smoothen the buyer’s journey, not make it more difficult.

3. Ensure your staff is always ready

Don’t forget that one of the three I’s of phygital retail is ‘immediacy’.

If you’re implementing some click-and-collect options or allowing customers to book something via an app, you must make sure that they find it waiting for them as soon as they walk into your store.

Not be left by the door as your shopfloor staff run to the stockroom to get it.

4. Don’t miss out on human interaction and empowering your staff

Over 63% of buyer’s journeys begin online, so you must give your customers a good reason to try and return to your physical locations.

If you stop at smart mirrors and tablets, are you really doing that?

I don’t think so.

Keep in mind that retail’s advantage over e-commerce is still human interaction. So, don’t you dare replace it with technology!

Staff training and outstanding customer service are still paramount. They should simply include helping customers with this new technology, but the latter isn’t there to substitute them.

5. Use your socials wisely

With the high street already struggling, are you really expecting your target audience to bump into these new techy features on their own?

Now, that’s a little too optimistic.

You must tell them. Even better: show them what you’ve been implementing in your stores! And do it in a way that triggers some #FOMO and makes them want to try your AR or new features themselves.

The best way to do so is obviously through your social media platforms, and especially video-based content.

Implementing phygital retail in your stores

As you’ve seen, phygital shopping is far from being a one-size-fits-all solution, but it can be a game-changer for many struggling retailers that are starting to become a little outdated.

Can it work for you? And, if so, what type of strategies should you focus on?

No point in spending thousands of pounds or euros on some techy solutions that don’t actually complement and add to your in-store experience!

With over twenty years in this industry, I’d love to help you find the right decision for your specific stores.

Discover how my retail consulting services will identify and fill the gaps in your current strategy, or book a complimentary call to ask me any questions you might have.

Whether the right next step is to focus on some team leadership training, implementing some phygital retail solutions, or something else entirely, we’ll find out together!

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