Whether it’s large retailers adding digital technologies to their physical locations or digital-first brands venturing into brick-and-mortar, combining physical and digital elements in retail is what we call phygital retail.
And it’s not just a buzzword.
In this article, we’ll take a closer look at what phygital retail is, the benefits of it, and examples of retailers excelling at this multi-channel sales and marketing strategy.
What is phygital retail?
According to GWI, over half of consumers in North America research a product online before buying it. And according to this 2021 state of consumer behavior report, many people still choose to shop in person. In fact, nearly half of consumers said, if given the choice, they prefer to shop in person rather than online. What does this mean for retail businesses?
Merging your physical and digital storefront is more important than ever and phygital retail is a way to accomplish this. Combining the best components of ecommerce and brick-and-mortar business models to improve the customer experience and boost sales revenue is one of the advantages of phygital retail.
For example, you may have a retail store and an online shop and you make 25 sales per month in person and 200 online sales in the same period. You may think your brick and mortar store isn’t succeeding, but a percentage of your online sales could in fact be coming from customers who first visited your store and then completed their purchase online. And by creating an omnichannel shopping experience you can continue engaging with those customers both online and offline to grow repeat sales.
Having a physical store lets you provide experiences you can’t accomplish online, and having an online store gives customers the flexibility to choose how they shop, pay, and fulfill their orders.
3 elements of phygital retail
Streamlining online and offline touchpoints to create a phygital experience involves combining the three I’s—immersion, immediacy, and interaction. Let’s take a look at these concepts:
- Immersion involves making the customer part of the experience.
- Immediacy means shoppers get the right message at the right time and they can choose the way their order is fulfilled based on how quickly they want it.
- Interaction allows consumers to touch, feel, and engage with your products.
Successful phygital retail experiences are convenient, fast, and engaging.
9 phygital retail strategies
Like omnichannel retail, phygital retail gives consumers the choice to discover and buy products through their preferred shopping channel. Whether it’s online, in-store, via social media, or at a limited-time pop-up shop, streamlining all these approaches is part of creating a phygital retail strategy.
Let’s look at a few strategies here:
1. Let customers choose how they buy
Buy online, pickup in-store (BOPIS), sometimes referred to as click and collect, lets customers shop via your ecommerce website and then pick up their order in-store or at a designated pickup point. It reduces shipping costs for you and your customers and can also lead to increased sales if people purchase additional items while they’re collecting their order from your retail shop.
Curbside pickup is another order fulfilment option similar to BOPIS. The order is placed online and collected in person, but the customer doesn’t have to get out of their car. Upon arrival at your retail store, they notify you via text, call, or email and you or your sales staff bring their order out to the curb. This phygital retail strategy is extremely convenient and helps boost customer satisfaction.
2. Provide self-checkout or no checkout
I realize Amazon Go’s “just walk out” checkout experience is probably not on the agenda for your local retail business, but it’s an interesting concept and may be achievable for retailers of all sizes in the future. Customers walk into the store, pick up their items, and then walk out. Digital technology tracks the customer and their purchase and the payment is automatically processed through the Amazon Go app moments after they leave the store.
In the meantime, self-checkout is a great way to digitize the in-store checkout process so customers can pay at their convenience. You can do this by placing self-checkout kiosks around your store to reduce the checkout-counter line.
3. Try AR and VR applications
Augmented reality (AR) and virtual reality (VR) technologies blur the lines between digital and physical. Retailers are using AR to let customers try on clothes digitally while they’re in-store, and VR is a great way to digitally immerse customers into an experience where they can discover your brand and products.
4. Use endless aisles to keep up with supply and demand
Buy in-store and ship to home, also commonly referred to as endless aisles, is an order fulfillment option that lets customers shop and buy products in-store and have the order shipped to their home or wherever they prefer.
The advantages of endless aisles include increasing in-store sales even if you don’t have the products in stock, and creating a seamless customer experience. You can make this a self-service option with ordering kiosks or assist customers with their orders.
5. Send local push notifications
Building relationships before, during, and after the sale is important to the success of your retail business. Local push notifications help you do this by communicating with prospective and existing online and in-store customers through mobile notifications. This strategy can be used to alert people within a certain distance when new products arrive in-store or to follow up with them post-purchase to solicit reviews and boost customer engagement and retention.
6. Use social media to create a digital storefront
Instagram, Facebook, TikTok, and other social media networks make it possible to add a digital presence to your physical retail business. You can even use the ecommerce features available on Facebook and Instagram to implement a social commerce strategy and sell directly through social media.
Social media is a great place to advertise customer loyalty programs, share special offers, and run ads. And engaging with shoppers via social media is a way to connect digitally and provide a cohesive customer experience across all channels.
For example, one way to combine the physical and digital experience is to run a limited time offer encouraging customers to comment on an Instagram post to win 10% off their next in-store purchase. You can make this deal available to the first five followers that comment on the post.
7. Do pop-up stores
If your business is primarily online, doing short-term pop-up shops is a low cost and low risk way to add a physical presence where customers can engage with you and your products in person.
Displaying an iPad at your pop-up shop so shoppers can peruse your collection, read customer reviews, and look up additional product details online while they get to touch and try on the merchandise in person is a great example of phygital retail.
Pop-up stores are also a great way to test the waters to see if you’re ready to open up a physical location to supplement your ecommerce store.
8. Create a Google Business Profile listing
Creating a Google Business Profile (formerly known as Google My Business) listing is another way to complement your physical storefront with a digital presence. It also lets you engage with customers, collect reviews, and promote your retail business online.
Keeping your GMB listing up to date with images, your location, and special offers is a local SEO strategy you can use to attract customers who are searching locally for your products. Making it easier for customers to find you online also helps increase in-store foot traffic.
9. Integrate customer reviews
Customer reviews can help turn people who are browsing into paying customers, so encouraging people to leave customer reviews is crucial. And making sure in-store shoppers can also see online reviews is another great phygital retail strategy.
You can do this by displaying online reviews in-store next to the related product(s) so shoppers can save time looking up reviews online and make buying choices faster. You can do this with signage or by strategically placing iPads around your store so customers can pull up product reviews that are relevant to the merchandise they’re considering.
Benefits of phygital retail
Developing a phygital retail strategy has many benefits for both you and your customers. Here, we’ll review a few of the most common advantages:
Enhance the customer experience
Streamlining the in-store and online shopping experience also simplifies the buyer’s journey, making it more convenient for customers to interact with your business across various channels and at any time.
With phygital retail, customers can choose their preferred shopping, payment, and order fulfillment methods. More flexibility leads to a better customer experience, more sales, and increased brand loyalty – you can boost loyalty even further by building an omnichannel loyalty program.
Build brand awareness and trust
Connecting with customers online and in-person lets them engage with your business at various touch points, both digitally and face-to-face. By giving shoppers the option to visit your retail store, they can engage with you personally and interact with your products before buying them. This helps boost brand awareness and trust in your business.
Offer personalized recommendations and increase sales
Personalized service and product recommendations are one of the notable benefits of phygital retail—and it’s made possible by using commerce solutions like Shopify POS that integrate effortlessly with your online store and sync both shoppers’ in-store and online purchase histories to their customer profiles.
This gives store associates a holistic view of what a shopper likes, enabling them to recommend the right products, create a stronger connection, and ultimately convert more interactions into sales.
McKinsey reports that personalization drives up to 15% more revenue growth and improves marketing-spend efficiency by up to 30%.
Personalized interactions give your customers a better shopping experience, can help you get more returns on your ad spend, and increase the revenue your brand generates. Lastly, personalized shopping experiences lead to retaining more customers long-term, increasing your customer lifetime value (CLTV).
Boost brand loyalty
Increasing brand awareness, enhancing the customer experience, and personalized marketing strategies will naturally boost brand loyalty. Customers who feel seen and understood are more likely to make repeat purchases. Also, if people have more flexibility to choose how they shop and can get immediate gratification they’ll be more likely to stay loyal to your brand.
When you use the same platform to manage both your online and physical stores, one of the benefits is unified inventory levels and accurate reporting, which helps prevent the dreaded stockout.
With Shopify, you can see how much of a product or variant you have in stock at each of your store locations and in your warehouse. This functionality helps merchants proactively identify inventory they’re running low on and order more before inventory levels reach zero.
Examples of phygital retail
Whether your retail business started online or offline, merging your physical and digital storefronts is a sales and marketing tactic that’s here to stay.
Here are a few examples of retailers trying and succeeding with phygital retail:
Allbirds’ app for customizable experiences
Sustainable shoe brand Allbirds introduced the Allbirds app in September 2020. With this phygital retail strategy, customers can download the iOS app and build their own customizable experiences. App users can also try on shoes virtually, choose where to apply carbon offsets from purchases, and receive notifications about app-exclusive products.
Chanel’s AR smart mirrors in fitting rooms
Luxury brand Chanel collaborated with FarFetch to install AR smart mirrors in its flagship stores’ fitting rooms. Shoppers use an app to choose from a range of merchandise and then schedule an appointment to try on. When the customer arrives, the selected pieces are brought to them and they can use a high-tech mirror to zoom in on the product details. This creates a seamless buying journey that marries boutique and personal shopping with a high-tech experience.
Gucci’s interactive displays
For a brand that’s been around since the 1920s, Gucci does a great job of keeping up with changes in consumer behavior and adapting its digital strategy to attract a younger audience.
The brand 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.
Lush’s digital concept stores
Lush is a cosmetics brand known for its cruelty-free products, bath bombs, and retail stores packed with merchandise on wooden product displays. Its longtime customers have also enjoyed product testing at various sinks throughout the store. But the brand is stepping into phygital retail.
Product testing sinks have been replaced with clear shelving creating a colorful bath bomb showroom experience. Now customers can use the #LushLabs app to hold up the Lush Lens to bath bombs. They see an immersive video on their smartphone screen demonstrating how it’s used, plus it populates a list of ingredients and product benefits. Also, this digital strategy eliminates the need for product packaging, making it an environmentally friendly alternative in the cosmetics industry.
Lush is using this digital experience to create an online community where customers provide feedback on its products and store design. The advantage is Lush can test new products before stocking them in more locations, and involving customers in the product development process leads to higher engagement and brand loyalty.
Warby Parker’s virtual try-on feature
Digitally native glasses brand Warby Parker tested the click and mortar business model in 2013 by opening its first retail location. Now the brand creates a phygital retail experience by helping shoppers try on glasses virtually before they visit a store. Customers can also use its virtual try-on feature to buy their glasses directly online.
Its app goes beyond just overlaying a pair of glasses on your face. Using augmented reality and face-mapping tech, glasses are rendered in a live 3D preview on your face, giving you a realistic picture of how you’ll look wearing the glasses.
Rebecca Minkoff’s touch screens
In 2014, designer Rebecca Minkoff opened two stores featuring oversized screens where shoppers could browse products or request specific sizes to try on. When a fitting room was available, the customer would receive a text message. Inside the fitting room is a mirror that doubles as a touch screen so customers can ask for more items or assistance.
Radio frequency identification technology (RFID) is used on the product tags to track the items customers try on and to keep an accurate view of inventory in real-time. At the same time, sales people are equipped with an iPad to manage customer requests and mobile checkout.
Nike’s personalized experiences
Over 140 million NikePlus members use one account to access all of Nike’s personalized services, online and in-store. That’s a lot of data Nike can use to create outstanding customer experiences. So, in 2018, the brand experimented with phygital retail by using customer information to create a personalized experience for local shoppers in New York and Los Angeles.
In its live store in Los Angeles, merchandise changes every two weeks to adapt to local trends, and shoppers have the option to personalize products. This personalization tactic lets Nike make its customers feel special and is a perfect strategy to attract and keep local customers.
In New York City, the brand’s speed store is perfect for busy New Yorkers. Customers can use the NikePlus app’s retail feature to choose products including size and color before arriving at the store. Then an associate prepares their order and leaves it in a self-service locker, or if they want to try something on, it’s already waiting in the fitting room. This phygital retail strategy is a fast and convenient option for local Nike customers.
Getting started with phygital retail
No matter the size of your business, taking small steps to create a phygital retail experience is something you can start today.
A solid first step into phygital retail is to use the same platform to manage both your online and physical stores. This can lead to more opportunities to personalize, create a cohesive brand experience for shoppers, foster customer loyalty long term, and boost engagement in-store and online.