Let's get phygital: The omnichannel revolution that blends in-store & online shopping

Step into the future of retail by going phygital! Blending the best of both worlds, this innovative approach seamlessly merges the physical and digital realms to create an unforgettable shopping experience. From virtual try-ons to cashier-free checkouts, discover how phygital technology is reshaping the omnichannel landscape in retail and delighting customers in ways never imagined before.

In a world dominated by screen time, the concept of "phygital" is revolutionizing the tech and retail industries. Phygital retail seamlessly blends physical and digital realms, creating a unique and immersive shopping experience with the help of technologies like virtual reality (VR), augmented reality (AR) and artificial intelligence (AI). As in-store shoppers remain connected to their phones, the further rise of online shopping is inevitable. However, the idea of phygital retail bridges this gap, offering a more engaging in-store experience and catering to the evolving needs of modern customers.

Retailers are facing a pivotal moment as they navigate the changing landscape of consumer behavior and preferences. The rise of eCommerce has been undeniable, with online sales steadily increasing year after year, and projected to account for 24% of global retail sales by 2026. However, brick-and-mortar stores are far from obsolete, as 76% of customers still crave in-store experiences and engagement.

The solution to this retail conundrum lies in the concept of "phygital" — a fusion of physical and digital retail strategies to create a cohesive customer journey.

The phygital approach recognizes that customers move seamlessly between physical and digital touchpoints when shopping. It aims to bridge the gap between the two worlds, ensuring that customers receive consistent experiences regardless of the channel they choose. By embracing the phygital revolution, retailers can secure their place in the rapidly evolving retail landscape and cater to the diverse needs of their customers.

At the heart of phygital retail lies the concept of seamlessness. Retailers strive to provide customers with a consistent and integrated experience across various touchpoints, be it in-store, online or on mobile apps. This cohesion ensures that customers can effortlessly transition between channels without encountering friction or disconnect. After all, almost a third (32%) of customers are willing to leave a brand after just one bad experience

Moreover, personalization is a driving force in modern retail, and phygital strategies take it to new heights. By leveraging customer data, artificial intelligence and machine learning algorithms, retailers can deliver tailored recommendations, offers and content to each individual shopper, creating a sense of exclusivity and fostering brand loyalty. Accordingly, 71% of consumers expect companies to deliver personalized interactions and 76% get frustrated when this doesn’t happen.

Phygital retail thrives on the integration of multiple touchpoints, creating an omnichannel ecosystem where each platform complements the others. Whether customers start their shopping journey online and then visit a physical store or vice versa, the transition is seamless, offering a holistic shopping experience.

Phygital retail brings a bounty of benefits to customers, enhancing their overall shopping experience and transforming how they interact with brands. 

Enhanced shopping experience: The beauty of phygital retail lies in its ability to seamlessly blend the tactile experience of traditional in-store shopping with the convenience and speed of online shopping. Customers can physically interact with products, feel their texture and try them on, providing a level of engagement that online shopping alone cannot replicate. Simultaneously, the efficiency of digital technology ensures a smoother and quicker checkout process, eliminating the need to stand in long queues.

Personalized recommendations: As mentioned above, data-driven personalization is one of the cornerstones of phygital retail. Armed with customer data, retailers can offer personalized product recommendations and tailored offers that align with each customer's unique tastes and preferences. This level of personalization not only enhances the shopping experience but also fosters a sense of connection between the customer and the brand.

Real-time availability: One of the frustrations of shopping, particularly during peak seasons, is the risk of popular items being out of stock. Phygital retail addresses this concern by providing real-time product availability information. Customers can effortlessly check if a desired product is in stock at their local store or available for immediate delivery when shopping online. This real-time availability feature empowers customers to make more informed purchasing decisions, reducing the chances of disappointment due to sold-out items when visiting a store.

Phygital retail is not only great for customers,but also offers a multitude of advantages for businesses.

Increased customer engagement & loyalty: Phygital retail excels at capturing and maintaining customer attention. By providing personalized recommendations, interactive experiences and seamless omnichannel interactions, businesses can significantly boost customer engagement. Engaged customers are more likely to spend more time with a brand, return for future purchases and become brand advocates, spreading positive word-of-mouth and driving organic growth.

Data-driven insights: Data is the lifeblood of phygital retail, and businesses can harness its power to gain valuable insights into customer behavior, preferences and pain points. By analyzing customer data, retailers can understand their target audience better, identify trends and anticipate customer needs. These data-driven insights pave the way for informed decision-making, effective marketing campaigns and optimized inventory management, leading to improved operational efficiency and higher profitability.

Competitive advantages: By embracing phygital retail strategies, businesses gain a competitive edge by offering unique and personalized experiences that resonate with modern consumers. As customer expectations evolve, phygital retail sets businesses apart from traditional retailers, attracting tech-savvy customers seeking innovative and engaging shopping experiences. This competitive advantage helps businesses differentiate themselves in a crowded market, driving growth and customer loyalty.

With the rise of phygital retail has come the emergence of innovative channels that are reshaping the way consumers interact with brands. One such channel is self-checkout, which addresses the growing demand for contactless transactions and shorter waiting times. Retailers implement self-checkout options through in-store Point of Sale (POS) devices and mobile apps, empowering customers to scan and pay for items independently. This seamless and efficient process not only reduces interaction with store staff but also enhances the overall shopping experience by allowing customers to complete transactions at their own pace.

Buy Online, Pick Up In-Store (BOPIS) has emerged as a game-changer for retailers seeking to bridge the gap between digital and physical shopping experiences. BOPIS allows customers to browse and purchase products online, then collect their orders in-store at a time that suits them. This convenient option combines the ease of online shopping with the immediacy of in-store pickups, offering customers the best of both worlds. Not only does BOPIS reduce delivery times and shipping costs for customers, but it also drives foot traffic to physical stores, providing opportunities for additional sales and enhancing the in-store shopping experience. 

In-store mobile apps have become a powerful tool for both retailers and customers alike. Customers use these apps to access discounts, compare prices, read product reviews and search for specific items. These apps provide customers with valuable information that aids in making informed purchase decisions while inside the store. For retailers, in-store mobile apps offer an opportunity to engage with customers on a more personal level, delivering personalized offers and recommendations. Additionally, these apps allow retailers to gather valuable data on customer behavior and preferences, facilitating more targeted marketing efforts.

Creating immersive experiences is another key aspect of phygital retail. Brands leverage interactive displays, virtual try-ons using AR and VR, smart mirrors and interactive touchscreens to elevate customer interactions. AR and VR technologies enable customers to virtually try on clothing, accessories and makeup, providing a real-time visualization without the need for physical try-ons. Interactive displays and smart mirrors offer additional product information and style suggestions, making the shopping journey more engaging and personalized.

Finally, the adoption of digital wallets, such as Apple Pay, Google Pay and Paypal, is gaining momentum as consumers seek secure and contactless payment options. With the increasing prevalence of mobile devices, customers can complete transactions using smartphones or wearable devices, eliminating the need for physical wallets and credit cards. Digital wallets streamline the payment process, contributing to a frictionless checkout experience and aligning with the growing trend of contactless payments.

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 to be efficient and time-saving for customers while connecting shopping and retailers seamlessly.

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. 

From traditional brick-and-mortar stores to eCommerce brands, phygital is reshaping the retail landscape and offering a compelling vision of the future. As customers seek integrated and personalized experiences, retailers must seize the opportunities that the phygital future presents and embark on a journey that transcends boundaries and elevates customer engagement to new heights.

In a world where consumer behavior continues to evolve, phygital technology presents a powerful way for retailers to thrive in the retail outlook of tomorrow. By blending the best of both physical and digital worlds, retailers can create a shopping experience that caters to the diverse needs of modern customers, enhancing customer satisfaction and loyalty while staying competitive in the market. The phygital revolution is underway, and it's time for retailers to embrace the future and unlock the full potential of this innovative approach.

Discover why omnichannel commerce is so essential and how to implement phygital technologies by reading The Omnichannel Playbook: Leveraging Composable Commerce for Omnichannel Experiences.

¹ McKinsey ² Klarna ³ Statista ⁴ Invesp