Phygital Retail: The Brick-and-Mortar Makeover For The Future

Have you ever used your phone to make a payment? Scanned a QR code at a restaurant? Self-checked out through a kiosk? Bought products through your Alexa app?

Nikole Wintermeier | Oct 11, 2021

phygital-retail

Have you ever used your phone to make a payment? Scanned a QR code at a restaurant? Self-checked out through a kiosk? Bought products through your Alexa app?

Most consumers are already participating in the ‘phygital’ future, whether they know it or not. Phygital combines the physical environment with aspects of the digital. With the drastic shift in shopping behavior after the pandemic, retail customers are calling for the brands they shop with to innovate – especially in-stores. 

 

What is phygital retail?

 

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​​Lush’s app and digital store

Enter: Phygital, brick-and-mortar’s comeback cry of the century. And so far, brands are witnessing this trend work wonders to bring back the customer’s awe factor offline. Phygital combines any aspect of the physical and digital world to describe a retail experience or marketing strategy.

Coupled with the rise of digital innovation, personalization, and the desire for more immersive experiences in brick-and-mortar, phygital is evolving against the perfect retail landscape. 

That’s because, with the pandemic in the periphery, many consumers are ready to spend time and money in brick-and-mortar locations again. In fact, Google predicts that by 2024, 78% of purchases will be made in stores. 

Customers still want the physical experience of shopping. Yet brands can’t go back to the same in-store template as before the pandemic. Today, shoppers have different desires, standards, and behaviors, expecting transformational experiences at every curb of the attention economy. 

 

Shoppers fancy phygital 

 

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B+Tube’s pop-up allows customers to discover their skincare routine and post videos on TikTok

 

Despite the effect of the pandemic – including store closures, people forced to shop online, and social distancing – 62% of Baby Boomers and 58% of Gen Zers still prefer buying from a physical store. 

Google started seeing searches for “near me” in the later months of 2020, which means shoppers were patiently awaiting the end of the coronavirus to go back to making offline purchases. And Google quickly capitalized, opening their first-ever physical retail store in September 2021

 

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Burberry includes scannable QR codes which connect to digital screens.

According to LVMH’s CFO, online shopping doesn’t come close to the brick-and-mortar experience. In fact, 66% of shoppers miss the ability to try on products online, and 64% miss the overall tactile experience of shopping in-stores (MarketingTech). It’s that look-touch-and-feel that, psychologically and socially, just doesn’t seem to cut it online. 

However, over 63% of shopping journeys still start in eCommerce. For brick-and-mortar to succeed today, physical shopping needs to be reimagined through a digital lens.

The rise of phygital promises to create meaningful and lasting relationships with shoppers across multiple touchpoints, while optimizing brands for the future of brick-and-mortar. 



Digital disruption is the new normal 

 

For this to happen, brands have been adopting digital innovation to disrupt traditional shopping expectations, looking instead at the customer through a singular, omnichannel experience.

You pick an item? It’s customized to your needs with the Internet of Things (IoT). 

You go to try it on? Enter the world of virtual reality (VR) fitting rooms. 

You want to buy it? Pay with your phone and have it sent straight to your door. 

These are experiences that are being spearheaded by pop-up shops, flagship stores, and showrooms. Some examples include IKEA’s app ‘Place’, which lets customers visualize where their furniture will fit and look in their houses leveraging Augmented Reality (AR) tech.  

 

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ARCHITECT: Place App, IKEA 

Chanel also capitalizes on AR in-stores (with augmented dressing rooms and interactive mirrors) personalizing the product experience. This approach also encourages brands to go omnichannel: another trend that comes across as ‘buzzwordy’ but is unfolding as a necessity for retail’s survival. 

Phygital enables brands to collect data at multiple touchpoints and optimize the experience on whatever channel the individual customer will shop on. 

 

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Store locators online are another easy phygital win (especially with the push to drive post-pandemic customers back in-stores). 

 

It’s not enough to have just a solid eCommerce foundation anymore. Even for the former pure player Glossier (who started out strong as a digital native, turning into a $400 million business in four years), eCommerce is simply not enough. Glossier hardly needed the extra revenue from opening up a store, yet still decided to go forth into the physical world. 

Glossier’s brick-and-mortar locations are multisensory, leveraging experiential marketing in a way that does phygital justice. It’s this kind of continued disruption that cements Glossier as one of the best cult beauty brands in the market. 

 

Let’s get phygital 

 

phygital-retail

UNIQLO interactive booth.

 

It’s not only big brands or legacy retailers leading the phygital trend. Backcountry, a digital-first outdoor apparel and equipment retailer, is expanding into brick-and-mortar this year. And their new two physical stores promise to be quite the experience (with community hubs, film screenings, how-to discussions, and the option to browse products both in-store and online). 

Supermarket giant Walmart has recently turned four of its brick-and-mortar locations into phygital laboratories, merging merchandising with digital tools. Trends like click-and-collect, curbside pickup, and in-store reviews which seem like the norm, are all ways phygital is slowly becoming mainstream. 


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IKEA’s click-and-collect

The effect of coronavirus on retail has forced brands to incorporate aspects of the digital to streamline and enhance the customer experience, keeping up with personalization demands for the future. With 71% of businesses surviving COVID-19 because of digitization, retail is no exception in the race for innovation. 

The rise and success of phygital proves that consumers will always love shopping in-stores. Brands that provide exceptional and experiential experiences are ones that are already gaining a competitive edge. 

Crobox's Retail Unboxed series covers current and upcoming trends in the market, to help brands keep their finger on the pulse of the fashion industry. 

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