Get the Best of Both Worlds: How to Introduce Phygital Retail to Your Business

September 07, 2021 by Derek Jones

Does your business have a phygital presence? Our guest writer explains how to successfully maintain a phygital approach in this blog!

It’s not a secret that multi-channel retail businesses provide more value than single-channel retail businesses. The purchase rate when using three or more channels is 287% higher when compared to using a single channel. With the increase of online shopping after the surge of COVID-19, it is helpful to know how to introduce phygital retail into your business!

There is high potential in the combination of physical and digital stores. Let’s take Amazon, a well-known e-commerce company, for example. They started to introduce physical stores in 2015, and they got $16.2 billion in 2020 just from net sales in their physical stores.

Yes, the introduction of phygital retail to your business takes time, money, hard work, consistency, and adaptation. Still, 65% of US customers state they would be more likely to buy from you online if you provide a positive experience in a physical store. This just further proves that if you combine physical and online retail, your business can gain more customer loyalty in the long run.

In this post, we will explain what phygital retail is, the reasons you should introduce it into your business, and some of the ways to do so!

What Is Phygital Retail?

As the term “phygital” suggests, it is a combination of physical and digital that indicates a blend of physical storefronts and digital technology in the retail world. Phygital retail combines the best of both worlds — the convenience of e-commerce combined with the tactile experience of browsing through products in a brick-and-mortar store.

Ultimately, phygital retail provides a seamless experience across multiple channels, with the end goal being to provide a personalized and tailored experience to your customers.

To simplify a bit, we can divide phygital retail into three components (three I’s): immersion, immediacy, and interaction. The three I’s of phygital retail paint the following picture:

  • Immersion - the customer becomes a part of the experience.
  • Immediacy - your customers can choose how you fulfill their orders.
  • Interaction - customers can touch and feel your products in the physical store.

Why Should You Introduce Phygital Retail To Your Business?

Even after the COVID-19 pandemic hit most of the world, there is still a sizable market for physical retail. One study shows that 46% of US consumers still prefer to shop in person rather than online. The primary reason for this is that people enjoy seeing and feeling the products more, along with the immediate satisfaction of buying at a physical location.

For example, imagine yourself as a customer who wants to buy a tent. You order it online through the e-commerce channel and find out that the tent is too small for you at your doorstep. In a physical store, you would be able to try it out on your own and make a better, more calculated buying decision.

The same study concludes that 40% of US citizens have cut back on their visits to physical stores due to the pandemic. That’s why it’s inherently important to combine physical retail with online retail to succeed in a world where online presence means more than ever before. Phygital retail lets you connect with your customers online and face-to-face, with various touchpoints to help provide higher brand awareness and trust.

Phygital retail is the way forward - it provides a framework for better customer service. As you streamline the shopping experience in your physical and digital stores, your customers will value the convenience you provide to their buying journey. Just chew through the fact that 96% of customers may abandon your physical store if you provide unsatisfactory customer service just once. Hence, the necessity of customer service in phygital retail is unquestionable.

Now that you know more about phygital retail, let’s go through the actionable tips on how to introduce phygital retail into your business!

7 Tips On How To Introduce Phygital Retail In Your Business

It is no secret that digital transformation in retail is paving the way for the future. Still, that doesn’t mean that physical retail lost its relevance, even in times of increased social distancing when we spend more time online. The proper combination of physical retail and e-commerce with new technologies is the way to gain competitive edge and drive more revenue to your retail business.

Below are some tips on how you can introduce phygital retail into your business too!

Tip #1: Test the Market Before You Introduce Physical Retail Into Your Business!

Once you determine there is demand for a physical store of your e-commerce business, don’t be afraid to test things out!

One cost-effective way to do so is to set up a temporary physical store (known as a “pop-up shop”). That kind of physical store requires minimal financial investment, and you can basically do a trial store opening. Doing so can bring you a sizable chunk of insight into how the physical store resounds with your customers.

Testing out your market in such a way can eliminate risk and provides important feedback on how you can improve your future, permanent physical store!

Tip #2: Allow Different Ways of Purchasing Products For Your Customers

It’s not a secret that if you provide more ways for your customers to purchase your products, the more satisfied they will be as a result. So, make sure to include some of the most popular phygital retail purchasing methods into your business:

  • Click and collect - Customers shop at your e-commerce store and pick up their orders in your physical shop. The main benefit of click and collect is that it reduces shipping costs for both your business and your customers.
  • Curbside pickup - Your customers place orders online and collect them in person. The difference to the click and collect method is that the customer contacts you via text message, email, call, or an app, and your staff brings the order to them. This has the benefit of extra convenience that can further increase customer satisfaction.
  • Endless aisle - Customers buy products in your physical store and have these orders shipped to their home or any desired address. The main benefit of this method is that it can increase physical store sales, even if you don’t have specific items in stock.

Tip #3: Utilize Artificial Reality and Virtual Reality Apps

Artificial reality and virtual reality apps are seeing a surge in the consumer market, some of the adopters being IKEA and the fashion industry. For instance, you can try on makeup or clothes with the help of an AR app, or visualize your home with a specific piece of furniture.

These types of apps have a bright future ahead for a considerable number of industries. 

Tip #4: Provide A Smart Checkout System

Long queuing is an everlasting issue for many physical stores. This statement rings true, as 63% of consumers agree they wouldn’t return to a physical store after a long waiting experience.

Amazon Go is an interesting concept that might see more adopters in the future, as there are only 29 such stores at the moment. The idea is simple on paper — the customer walks into the store, picks up the desired items, and walks out of the store. However, what backs these stores up are digital technologies that track each individual customer and their purchases, with the payment being processed in the Amazon Go app.

For those with lower budgets, you can introduce smart payment systems like mobile contactless terminals, QR payment solutions, or self-checkout systems to fight long queues.

Tip #5: Don’t Forget About Social Media Platforms!

Social media has tremendous potential for phygital retail, as 90% of social media users reach out to retailers first.

Some social media platforms like Facebook and Instagram even have e-commerce features that let you sell your products directly through these platforms. Besides selling products, you can build your audience, advertise products, and share loyalty programs and exclusive deals via social media.

For instance, you can run a limited offer that provides a 10 percent discount on the next purchase for the first ten followers who comment on that post. The charm of social media for phygital retail is that you can always experiment and check results in real-time!

Tip #6: Track Demand And Schedule Your Retail Staff Accordingly!

When you introduce phygital retail in your business, you don’t need to focus solely on digital technologies that revolve around customer satisfaction. You will require staff for your physical and digital stores, so having technology that helps retail teams save time and money is essential.

Such technology can help you foresee demand trends over time, and schedule staff to avoid overstaffing and overtime. Ultimately, you can minimize costs and maximize profit when you predict how much staff you need available on a specific day.

Tip #7: Make Use Of Customer Reviews

Before making a purchase decision, 91% of consumers read at least one review. Hence, customer reviews have the power to convert sightseers to actual customers. Therefore, it’s important to be proactive and encourage your customers to leave reviews, either in person or via push notifications.

When it comes to phygital retail integration, you can display online customer reviews next to the related product in your physical store. That way, your customers will save time they would otherwise spend searching for reviews online. This makes for an involving and immediate experience, with a high potential to result in higher customer satisfaction levels!

Customer Experience Is Key For Phygital Retail Success!

When you introduce phygital retail into your business, remember that customer experience is one of the most critical factors. In the US alone, $1,6 trillion is lost each year due to poor customer service.

Thankfully there are tons of things you can do to improve your customer service. Make sure to leverage technology to enhance specific physical retail processes. Listen to your customers and empathize with them, and train your staff to do the same.

Keep in mind that having a successful phygital retail business requires time and dedication. Even if this doesn’t work as you visualized it, here are some quotes that every retail worker needs to hear for additional motivation!

Author bio: Derek Jones spearheads key initiatives at Deputy, a global workforce management platform for employee scheduling, timesheets and communication.  With a focus on retail, Derek helps business owners and workforce leaders simplify employment law compliance, keep labor cost in line and build award-winning workplaces. Derek has over 16 years’ experience in delivering data-driven sales and marketing strategies to SaaS companies like MarketSource and Griswold Home Care.

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