Step into the future of retail by going phygital! Blending the best of in-store and online shopping, this approach is about creating unforgettable customer experiences. From virtual try-ons to cashier-free checkouts, discover how phygital technology is reshaping retail and delighting customers in ways never imagined before.
Online shopping may be stronger than ever, but there’s no denying shoppers are returning to physical stores with gusto. According to the EY Future Consumer Index (FCI), 32% of consumers still crave the personal service that only in-store shopping can provide. What’s more, 57% of shoppers want to see, touch and feel items before they buy them, and 68% seek expert advice on high-value purchases to ensure they're making the most informed choices.
Even the most tech-savvy demographic group ever, Gen Z, hasn’t cast away in-store shopping in favor of eCommerce. While social media has a huge influence on this generation, nearly 52% of Gen Z shoppers are likely to use physical stores to purchase new brands or products, followed by websites (46%), mobile apps (38.5%) and social media (24.3%), per eMarketer.
The renaissance of shopping in-store — whether for trying out items or picking up products ordered online — provides fertile ground for “phygital” experiences.
Phygital is the blend of physical and digital experiences in retail, creating a seamless interaction between the two worlds. The idea behind phygital is to combine the best of both — physical touchpoints (like stores) with digital technologies (like online shopping platforms, AR and mobile apps) — to enhance the customer experience. In other words, phygital bridges the gap between in-store and online experiences, allowing consumers to interact with brands in a more dynamic and flexible way.
For example, you might go to a store to try on a product (physical), use a QR code to check online availability or product information (digital), and then make a purchase online for home delivery (phygital).
What are the differences between phygital, omnichannel and unified commerce?
With so many buzzwords in commerce today, how can you distinguish between closely related terms like phygital, omnichannel and unified commerce? While the lines between them can sometimes blur, it’s important to understand the key differences that set each approach apart. Here's what you need to know:Benefits of phygital retail for shoppers and businesses
Phygital retail offers a wealth of advantages for both shoppers and businesses by integrating the best of physical and digital commerce.
Enhanced shopping experience: Phygital retail allows customers to interact with products physically — touching, feeling and trying them on — while leveraging digital tools for convenience. Digital technology streamlines processes such as checkout, often enabling faster, line-free purchases and integrating features like mobile payment or self-checkout.
Personalized recommendations: Through data-driven insights, phygital retail enables personalized product recommendations tailored to individual customer preferences. Shoppers receive offers and suggestions that align with their tastes, enhancing their connection with the brand and creating a more engaging shopping experience.
Real-time product availability: Phygital retail provides real-time information on product availability, allowing customers to check stock levels both online and in nearby stores. This reduces the frustration of visiting a store only to find that items are out of stock, empowering customers to make informed decisions about purchases and improving convenience.
Increased customer engagement and loyalty: By offering personalized, interactive and seamless shopping experiences, businesses can increase customer engagement. When customers feel valued and enjoy unique, phygital interactions, they're more likely to return for future purchases and become loyal brand advocates, contributing to long-term customer retention and word-of-mouth promotion.
Data-driven insights: Businesses benefit from the wealth of customer data generated through phygital retail. Analyzing this data helps retailers gain insights into customer behavior, preferences and pain points. These insights allow businesses to make informed decisions regarding product offerings, marketing strategies and inventory management, ultimately boosting operational efficiency and profitability.
Competitive advantage: Embracing phygital retail gives businesses an edge by offering innovative shopping experiences that appeal to tech-savvy and experience-driven consumers. The ability to blend the physical and digital seamlessly distinguishes businesses from traditional competitors, attracting a wider audience and fostering customer loyalty in an increasingly competitive market.
The technologies and trends boosting the future of phygital commerce
The future of phygital will likely see a rise in AI, AR/VR, mobile integration and smarter stores — and much more.
AR and VR are expected to play a significant role in enhancing phygital experiences. AR allows customers to "try before they buy" digitally while in-store, and VR could create immersive shopping experiences, enabling customers to explore virtual showrooms or stores.
Through the combination of physical and digital data, retailers will be able to offer hyper-personalized experiences. This could mean personal shoppers assisted by AI, custom product recommendations delivered in-store via digital touchpoints or even fully personalized store layouts.
Stores are likely to evolve with IoT (Internet of Things) devices like smart shelves, which can detect inventory levels and customer interaction in real-time. Smart mirrors that allow virtual try-ons and cashier-less checkouts using biometric or mobile payments will also become more common.
Mobile devices will act as a key phygital touchpoint, linking the physical and digital shopping experience. Apps will enhance in-store experiences with personalized offers, location-based notifications, and seamless checkout options.
For instance, “store mode” in mobile apps enhances the in-store shopping experience by providing customers with tailored tools and information when they enter a physical store. When activated, the app may offer features such as real-time inventory checks, aisle navigation, personalized promotions, and faster checkout options like mobile payment or self-checkout. It can also notify customers of exclusive in-store deals or allow them to scan items for additional product details.
Implementing phygital commerce: Requirements
To successfully implement phygital retail, companies must carefully manage several key requirements, including:
Integrate physical and digital systems, ensuring that in-store touchpoints, such as kiosks and smart devices, are seamlessly connected with a unified commerce platform. This approach provides a centralized system that manages sales, inventory and customer data across all channels, allowing for a consistent experience. After all, it requires robust infrastructure to support technologies like AR/VR and IoT devices, which must function smoothly across both physical and digital environments, ensuring real-time synchronization and seamless customer journeys.
Real-time data synchronization is essential to track inventory across channels accurately, preventing issues like out-of-stock items or incorrect delivery information that could frustrate customers.
Intuitive and non-intrusive tools ensure faster adoption. Not all shoppers are accustomed to using digital technologies in physical spaces, so the design and implementation should prioritize simplicity and value.
Adequate employee training is also crucial. Staff must be able to guide customers in using phygital tools and understand how these technologies enhance the shopping experience.
Investment in advanced technologies, such as AR displays or smart mirrors, are critical for phygital to take off. Due to the sizeable financial investment, consider the ROI associated with these technologies. A recommendation is to first try out such immersive experiences in a few stores, measuring customer uptake and conversion rate.
Implement strong cybersecurity measures to protect the data collected from both digital and physical interactions, safeguarding customer privacy and trust.
Real-world examples of phygital success
Luxury menswear retailer Harry Rosen managed to replicate its renowned one-on-one experiences with advisors inside physical stores digitally. Advisors create personalized, visually driven wish lists that clients can either purchase in-store or remotely, which has proved efficient and time-saving for customers while seamlessly connecting shopping and retailers.
Pret A Manger's Pret Perks coffee subscription allows customers to easily enroll and manage their subscriptions through the mobile app, receiving personalized offers and recommendations based on their preferences and purchase history. The program's rewards, such as free daily coffees and exclusive access to new menu items, can be effortlessly redeemed at any participating physical store, bridging the gap between the digital and physical realms.
At the forefront of creating captivating phygital shopping experiences is Ulta Beauty — whether customers are at home, on the move or in-store. Their innovative initiatives, such as the Virtual Beauty Advisor and GLAMLab, utilize cutting-edge AR and AI technologies. The Virtual Beauty Advisor offers personalized product recommendations, while GLAMLab enables customers to try on virtual makeup, using machine learning algorithms to detect facial features and apply a 3D makeup look that moves in sync with their expressions.
Embracing the phygital future
As customers seek integrated and personalized experiences, retailers must seize the opportunities presented by the digital future and embark on a journey that transcends boundaries and elevates customer engagement to new heights. With a unified commerce approach to your technology, blending the best of both physical and digital worlds just got a lot easier.
Dive deeper into omnichannel, phygital and unified commerce by reading The Omnichannel Playbook: Leveraging Composable Commerce for Unified Experiences.
Manuela Marques Tchoe is a Content Writer at commercetools. She was a Content and Product Marketing Director at conversational commerce provider tyntec. She has written content in partnership with Facebook, Rakuten Viber and other social media platforms.
Diya Bag is a Senior Content Writer at commercetools. Previously, she has worked as a Copywriter in advertising for a wide range of brands, as well as an Editorial Manager in publishing for magazines and both fiction and nonfiction books.