Insights

Is Your Store Ready for the “Phygital” Customer Experience?

By Aila Staff

December 12, 2023

The rise of e-commerce, particularly during the last 3 years, has permanently changed the retail industry. Even though customers have returned to shopping at brick-and-mortar stores, their shopping habits have been irrevocably changed and so have their expectations for the kind of experience they have in store. 

There’s no denying that e-commerce has changed the landscape of retail forever. Statista projects that e-commerce purchases are on track to make up 25% of global retail sales by 2027. However, customers still want in-store experiences, with research finding that 54% of consumers surveyed preferred shopping in a physical store compared to online. In short, they want a retail experience that allows room for both online and offline transactions and touchpoints.

Customers are increasingly looking for a “phygital” shopping experience that combines the best of both digital and physical retail capabilities.

Retail enterprises need to examine their existing operational models to identify where and how they can create a seamless combination of physical and digital touchpoints in their online and in-store experiences to remain relevant. Retail organizations that fail to capitalize on emerging customer trends like phygital not only run the risk of losing revenue, they risk losing customers who will migrate to competitors that do, stagnating their growth and earnings. 

So how can retail stores introduce phygital experiences in the customer journey? And what benefits do they bring to both retailers and customers?

Understanding “phygital” and what it means for retail enterprises

So what exactly do we mean by “phygital”? As mentioned above, “phygital” is a retail experience that combines both digital and physical elements to create an online-to-offline (O2O) shopping experience, and vice versa, that’s seamless. It’s built on the foundations of convenience and autonomy to create fully immersive customer experiences that begin online and continue offline. 

Customers have more autonomy and freedom to decide how they want to structure their purchases and service experiences. Instead of being tied to a predefined online or offline service process, they have more flexibility to switch between them without having their experience disrupted.

It’s more convenient and being able to access a store’s digital and physical storefront allows for greater personalization in a customer’s experience when engaging with a retail brand. 

Offering omnichannel services in combination with in-store services is a key phygital offering. Other examples of phygital in retail include click-and-collect, self-checkout, and pop-up stores. It’s important to understand that phygital isn’t limited to one or several service offerings. 

self-checkout interactive kiosk for iPad loop

It’s part of a larger operational shift occurring not just within retail but across many sectors, as digital and physical experiences begin to become more indistinguishable. Phygital is all about “bigger picture” thinking within retail spaces. It entails stores examining their current operations and identifying gaps and opportunities to combine online and offline experiences. 

It’s not just about introducing more tech solutions, it’s about incorporating them strategically so that a customer’s in-store experience essentially becomes an extension of their digital experience online.

Phygital is about replicating the convenience of the digital experience in key focus areas within a brick-and-mortar store.

Mobile shopping has also impacted the way consumers shop. The convenience of being able to shop and make purchases anywhere at any time naturally has made mobile the premier platform for most e-commerce purchases. Statista found that mobile e-commerce purchases made up nearly 60% of all e-commerce sales around the world in 2023. 

Additionally, shoppers also like to use their mobile devices while in-store. Research shows that at least 80% of in-store shoppers use their mobile devices to read product reviews, compare prices, and get more information. This highlights consumer demand for quick access to answers when browsing a store, which retail stores can meet through phygital service offerings.

Going phygital starts with a strong digital foundation

Regardless of how you want to introduce phygital elements into your retail stores, one thing is certain: your store can’t “go phygital” without the proper hardware and infrastructure in place to facilitate a seamless blend of both online and offline customer experiences. 

The easiest way to roll out phygital experiences is to first introduce instant, digital services that can augment and enhance in-store experiences. Self-service kiosks placed at key locations throughout stores give customers the freedom and autonomy to access the services they want without waiting in line or going on a hunt around the store for answers. It elevates your in-store experience without placing additional strain on your current employees.

Self-service kiosks bridge the gap between the experience customers have in-store with the one they expect to have. 

Aila’s self-service platform places digital services at your customers’ fingertips, including self-checkout with cashless payments, smart fitting rooms, gifting and loyalty program sign-ups, access to alternative payment methods, product discovery and inquiry, and collections and returns.

What add-value services can going phygital enable?

With self-service kiosks creating the foundation necessary for phygital, retailers can roll out a host of value-added services that combine the best of both physical and digital retail experiences. Let’s take a closer look at a few phygital services for retailers and what they entail.

“Endless aisle” is a phygital experience that lifts the limit on what customers can purchase while in a store. Retailers can use self-service kiosks to offer shoppers their entire catalog, unlimited by what’s available in store. Customers can digitally check out their purchases at a kiosk and arrange for in-store pickup or at-home delivery. It allows customers to browse your inventory and arrange swift, simple payments and shipping. 

Click and collect, also known as BOPUS (buy online, pick up in-store) can also easily be facilitated in-store through self-service capabilities. Shoppers who have bought an item online can pick up their order at their nearest store of choice. They can check at a kiosk using their order or tracking number, which will alert staff members who can retrieve their order. Self-service kiosks could also house software powering smart lockers that automatically open when customers type in a code or scan their ID cards. 

Self-checkout is a phygital experience that’s inherently tied to self-service kiosks and it’s one of the most (if not the most) important phygital service customers want. Emulating the counter and cashier-free experience of e-commerce checkout, self-checkout lets customers scan and pay for their items at a kiosk, eliminating the need to wait in line. It’s faster, easier, and mimics the convenience of online shopping for in-store customers. 

Phygital becomes possible through self-service

Through self-service kiosks that power augmented phygital experiences, retail stores can increase customer engagement, boost loyalty and retention, and minimize lost revenue from frustrated or dissatisfied in-store customers. What’s important to understand here is that retailers first need the hardware necessary to create the foundation for powering seamless, personalized phygital services and experiences. 

 

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