Phygital (pronounced Fidge-it-al) is the answer.
‘Answer to what?’- You might ask.
(Link to audio: How to pronounce the word phygital)
Well, let’s take a few steps back, and then we will get into it!
Retailing, as we would have imagined in the past, is dead! Est prorsus mortuum!
The tipping point was reached well before the mega pandemic Covid-19. Burdened by changing consumer habits, the maturity of e-commerce, outdated operating models, retailers had their task cut out.
To put things into perspective, the global retail sales’ E-commerce share has steadily increased from 12% in 2018 and to a projected increase to 18 % in 2021. In the US, online retail has grown 300 % between 2000 and 2018, while department store sales have dropped by half.
Look all around you- shuttered malls, Going-out-of-business signs greets us in virtually every city center and suburbs. This is the perfect storm for the retail industry, and it has been brewing for a long time now.
Forward-thinking retailers are re-assessing their Omni-channel strategies and embarking on a digital innovation journey focused on customer-centricity.
Who or What will usher in a Retail version 2.0?
— The answer to that question might very well be -“Phygital.”
But what does it even mean? — “Phygital” is a geeky reimagination of the word Physical and Digital. This Omni channel, customer-centric approach strives to provide the hyper-connected customer with a personalized, sentient, frictionless experience- whether it is in a physical or digital storefront.
Shoppers do not mind coming to a store for the ‘touch-n-feel’ effect and experiencing a ‘human’ moment. Retailers cannot expect a shopper to just walk down to a store and buy their stuff and go back- when the same could be achieved by the click of a button from e-commerce websites. Phygital marries the best of the physical and digital world with features like Social connect, Digital Wardrobes, Gamification, Virtual Reality and Augmented Reality, Touch Screens, IoT, RFID, NFC, etc.
And we already see varying degrees of Phygital experiences in retail stores. Let us look at a few examples-
| Amazon Go – is pioneering of the Phygital movement—they have a new shopping approach with no traditional checkout kiosks. Shoppers just scan a code while they enter, pick up their products and then leave! The in-store shopping technology equipped with AI and sensors takes care of the rest. All in all, a great synergy between digital and physical retailing. |
| Starbucks Starbucks offers shoppers with personalized offers, product recommendations, and ease who shop at their physical stores through its app. A win-win for both! |
| Chanel in SoHo, NYC, branded itself as an “atelier de beauté” or beauty workshop where the focus is on personalized service rather than just selling. |
| Walmart has been really successful in implementing a Phygital strategy in its stores and online. Their e-commerce sales picked up more than 35-40% last year. And it is partly due to more than 700 Store pick locations where online shoppers could walk down and pick up their products. Walmart saves money on shipping to individual locations. It has a Halo effect on online shoppers who make the trip to their nearby stores, hopefully making in-store purchases while they are there. |
| MAC Cosmetics and others in the Cosmetics and Apparel sectors have installed virtual try-on mirrors. It provides convenience while shoppers are at the store or in their home (via webcams or image uploads). |
Phygital is here to stay while it goes through its own phases of growth. In my opinion, the core is laid up for forward looking retailers and marketers to partner up and embrace it.
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