The last time I bought a jacket from a chain of fashion stores, the experience started on a coat rack and a visit to the fitting room and ended on a mobile device, to be able to access information on sizes and thus close the sale.
It was an experience similar to the one others go through when they go to the movies and enter with a simple QR code or pay using their smartphone to quickly complete the purchase. What all those stores are offering, and what those consumers are experiencing, is a phygital experience.
Phygital is the next great terrain to conquer in the retail strategy and what will allow physical stores to respond to the needs of consumers and their current demand. It is the result of the fusion between the store, the sales space that we all know, the digital universe and all the potential that technology offers.
It involves bringing the digital experience to the physical world, adding all the benefits of both environments at the point of sale. And the numbers have spoken: companies that are already adopting this strategy are achieving very good results. For example, the analyzes that have focused on the perception and results of Amazon Go demonstrate this.
The data that handle some estimates on how many sales these stores generate allow us to conclude that, between 2018 and 2020, their income multiplied by 22. Another example is the Casino supermarkets, the French chain that began to experiment with the cashierless model in Europe and that closed 2020 by charging 61% of purchases with automatic systems or with the mobile app. That allowed them to allocate that staff to improve the store experience.
The benefits of the phygital experience
The benefits of the phygital experience are obvious. The first has an impact on the shopping experience , which has become one of the basic elements in the relationship between consumers and companies. Buyers always have high expectations and rely on how companies satisfy them to make future consumer decisions. For example, it is a decisive element in terms of loyalty.
According to the data from the Adyen Report on Retail 2020 , 74% of Spaniards say that they will continue to buy in local stores because they want it to remain open, but they need to maintain the highest standards of experience to ensure that this feeling does not decline.
“When consumer confidence falters, the experience of each purchase is key,” explains Alberto López, Head of Business Development at Adyen for Spain and Portugal. “Once it has been possible to retain the consumer”, he assures, “it has been captured forever.”
Technology is what allows us to go further and create experiences much more complete than those offered by the traditional retail sector. The second benefit that phygital brings is in the vision that the company has of the consumer himself, which becomes much more complete.
The customer experience benefits from the implementation of technology, since it allows the personalization of the physical environment by using indicators, as is done in digital marketing, to obtain a better understanding of their behavior through data.
Finally, the phygital experience is closely connected to the use of technology. A phygital store incorporates new payment methods, such as omnichannel payment gateways or contactless experiences; virtual or augmented reality solutions, which allow access to products in a completely different way; or artificial intelligence, which helps to better connect with consumers in a more personalized way.
The objective is to generate a more complete and satisfactory shopping experience for the customer, as well as to create new business opportunities for companies.
Bet on progress with the adoption of the phygital environment
To understand in a practical way what the phygital experience is, nothing better than to resort to examples. Cashierless stores – like Amazon’s or Casino’s – are not just physical spaces with an eye-catching name or a connection to an ecommerce brand, but a highly digitized new vision of retail.
The consumer uses an app as an entry key, takes the products he needs and leaves the store without doing – or that illusion is created – anything. Technology has taken care of processing your purchases.
The fashion or beauty industries have been other great pioneers, incorporating tools such as virtual mirrors to create immersive experiences at the point of sale or augmented reality testers to see how, for example, your face will change with a tone of specific makeup, or how sunglasses fit your face. The potential of the phygital is not limited to these sectors. Any industry can take advantage of it and use it to reach consumers more seamlessly and memorably.
For example, Futbol Emotion is a niche company, specialized in selling equipment for soccer players. It is also one of the examples of how to implement a phygital strategy in parallel with expansion and internationalization and helps to achieve growth objectives. The company uses the Adyen payment platform to offer the same payment experience on all channels and equalize the customer experience in all of them.
Key to connect with the post-covid world
All of these experiences have become much more important after the health crisis. During the hot months of the pandemic, what consumers were asking for were many of the features of the phygital experience (for example, contactless payment or the presence of in-store technology to reduce interactions with other people).
The stores had to undergo a digital transformation process and incorporated many solutions that until then they reserved for their ecommerce experience. Despite the changes, this trend has not been reduced. You could say that the future of retail will be phygital or it won’t.
Returning to the data from the Adyen Retail 2020 Report, it is clear that those companies that best survived the coronavirus crisis were those that were digitized. They will also be those who are capable of responding better to the challenges of the immediate future that arise in the face of the digital transformation of companies in our country.
More than half of Spanish consumers want to return to stores and buy as a pleasure activity, but at the same time 73% of those surveyed believe that brands should continue to sell through various channels and 72% that the simple user experience it is as important as the quality of the product to form its image about the company.
The future of the physical store rewritten through technology
“We are entering the world of phygital, physical and digital at the same time,” McKinsey analysts make clear in their latest report on consumer sentiment. It’s a wake-up call that marketers and retail strategists shouldn’t miss. The phygital experience is here to stay and will mark the present and the future of what consumers live every time they walk through the door of a store.
According to the ECB, the use of cash in Spain is around 27%, a far cry from Denmark and countries like Sweden, France or Estonia, which are at levels below 10%. With these data it is inevitable to think that to pay in the future you will no longer need money or cash: JogoTech and Adyen have just presented a solution that will allow consumers to scan a QR code on their mobile and thus pay for everything that is on their shopping cart.
They will not even have to queue to pay for their purchases. The future of the transformation of companies in any sector is inevitably governed by digital.
Data from a recent study on the perspective of Spanish companies in 2021 carried out by KPMG determined that 62% of companies include digital transformation among their strategic priorities, 68% stated that digitization will be one of the main challenges they will have to face and that, in turn, technological tools are the areas most present in this year’s investment plans.
Therefore, to be prepared we must learn the paradigm shift and understand that the destination of stores will be to arrive, see, enjoy and let digital simplify our lives forever.