Van digitaal en fysiek naar phygital. Make the connection!

Physical, digital, omnichannel. How relevant are these terms still in the current 'total retail' world, or 'new retail', as Alibaba calls it? The playing field of digital retail touchpoints is changing faster and faster. How do retailers bring structure to this myriad of possibilities?

Digital touchpoints play a role in 90% of shopper journeys. It has been calculated that of every dollar spent in US retail, 56 cents are influenced by digital interactions. At the same time, physical remains important. Because even though an ever larger part of our lives is played out online, 28% (books, music, games and films) to 70% (household shopping) of shoppers say that they prefer to shop in a physical store. 

What is very striking is that Gen Z - the digital natives, the generation that will determine the future of retail - appears on average to have a greater preference for physical shopping experiences than for purely digital interaction.

Het mag duidelijk zijn: retail speelt zich nu én in de toekomst af op het snijvlak van digitaal en fysiek. Digital + physical = phygital.

Build your in-store digital experience on four layers
How do you, the retailer, arrive at the perfect mix for enticing, engaging, servicing and activating your shopper, now and in the future? Well, you put that mix together by making your best selection from the four 'layers' of customer-focused phygital experiences:

  1. Information, Inspiration & Activation
  2. Interaction
  3. Transaction
  4. Production

1. Layer 1: Information, Inspiration & Activation
How do you establish contact between your store and potential buyers? How do you slow them down in their walk through the shopping centre and tempt them to step inside your shop? And once they are inside, how do you guide them along all your merchandise, motivate them to shop with you, and share their positive experiences? That is what this first digital experience layer is all about.

Create impact in the street and stopping power through eye-catching videos, animations or digital artwork on screens in your shop window. Tempt your shoppers with inspiring videos and guide them through your shop with smart digital signing.

Motivate buying with electronic shelf labels and activating animations, such as Alibaba's "Home Times" with its electronic price labels, which show the lowest prices on the Tmall platform fully automatically.

Create relevance for your brand and specific products by integrating social media content (digitally) into your concept, as Hunkemoller does in its HKMX store in Berlin. Reduce the perceived waiting time at the checkout with attractive branded content. Send your visitors off with a feel-good message and inspire them to share their purchases, and follow your social media channels after they leave your store.

The biggest trend: Dynamic, Programmatic & Real Time
Do you want to automatically adjust the price of a product in all your stores as soon as your competition does this? Do you want to immediately show the latest sports collection for young women as soon as a camera 'sees' that a lady of around 30 is entering the shop? Do you want an offer for umbrellas or raincoats automatically flashed on screens in your shop window when the chance of rain rises above 50%?

This is a trend that I like to call 'Dynamic, Programmatic & Real Time': digital in-store media that automatically adapt to relevant variables. These may vary from the time to the weather and even the personal characteristics of the shoppers who are in your store at any given time. This makes your shop always up to date, relevant and effective.

1.2 Layer 2: Interaction
Under the influence of digitisation (and especially 'smartphonisation') shoppers seem to want to shop more independently. Within a few years, the number of shoppers that want a 'self-guided shopping trip' has risen from over 30% to 66%. No less than 78% use a smartphone at least two to three times per shopping trip. But where do you focus?

Obviously, you focus on the added value for your (potential) customers. After all, if there is no added value and no willingness to use it, then every innovation is doomed to failure. Visitors to physical stores appear to have three major frustrations, which we can use to convert interactive digital experiences into attractive benefits for your concept:

  1. 71% find it difficult to compare products in the shop.
  2. 65% find it frustrating when they fail to find a certain product.
  3. 65% are negative about the lack of personal offers in the shop.
  4. 64% experience insufficient guidance and explanations / demos.

If you want your shoppers to experience as few of these frustrations as possible, then you should first focus your interactive phygital experiences on these applications:

  • Guiding & Guided selling
     Guide your shopper to the right products, to prevent lost sales and to make the shopping experience as positive as possible, including personal advice tools that help them to make the right product choice, with personal advice linked to this.
    Take for example the smart shelves at's 7Fresh or Coop's Future Store, which recognise products and automatically provide more information about them, or the Amazon Alexa experiment from the Bottlerocket Wine & Spirit independent liquor store, where the smart speaker provides customers with advice on the perfect whisky and smart lighting leads them directly to it.
  • Product comparers
     If you want to compare different products with each other, do you do this online or in the shop? The future lies in in-store apps (for smartphones or in-store touch screens) that easily recognise products (via QR or bar codes, RFID or image recognition) and clearly list the various characteristics, prices and customer reviews. A good example is Nike's digital table and that of 11teamsports in Berlin. This helps the shopper to make the right choice, creates an extra experience, and takes away the inclination to delay purchasing in your store.
  • Develop a mobile loyalty system that recognises your shoppers in the store and can make personal offers based on variables such as savings balance, customer value, time since last visit, and social influencer score. This enables you to make the offers and privileges even more personal during a visit to your shop. Target's app surprises shoppers in the store with unexpected personal offers, while TanQyou surprises its customers with personal petrol prices based on different loyalty variables.
  • Look into the possibilities of 'mixed reality' (Augmented Reality and Virtual Reality). In 2017, 442 million dollars were already invested in AR and VR in the global retail sector, while total investments in AR and VR are expected to increase eightfold by 2021.  Most of all, phygital retail environments offer great opportunities for education and experience. For example, Audi has been offering virtual test drives for a number of years. In Lowe's Holoroom, you can learn how to perfect your do-it-yourself project. 

The trend: Proximity services
Proximity services are still in their infancy, but will take off in a big way in the coming years, led by major players like Google. Shoppers are increasingly recognised, personally informed and activated through a variety of localisation technologies. Have you just jumped off your bike at the station? Google will immediately tell you the timetables. Are you entering a shopping centre? Google will tell you where you to find the shop you want.

What are the next steps? As you enter your favourite retailer's shop, the app will immediately tell you which items on your wish list are still in stock and ask if you want to be led to them, or whether you want the items set aside. And you will do this with a single voice command (after all, voice is becoming an increasingly dominant interface).  The boundaries between cool and creepy are continuing to fade, but, in combination with big data and predictive analysis, proximity services are going to have a major impact on how we shop.

One of the biggest frustrations of shoppers in physical stores is queuing up at the checkout. In the coming years, shoppers will start to wonder more and more: "Where is the checkout?" After all, in the phygital retail reality, shops are an extension of your digital retail instead of the other way around and the checkout moment is less frequently at a specific cash register, as we know it today.

Another issue is lost sales. Research shows that two thirds of Dutch consumers would like to be able to order an item that is not in stock directly in the store and have it delivered to their home (for free).

Particularly in fashion retail - which still has to cope with high lost-sales percentages (up to 30%) - the in-store web kiosk appears to be able to make a major contribution to sales, as long as it is actively used by employees. There are retailers that have more than 20% of their 'online' sales generated by in-store kiosks.

From mobile payment solutions that allow customers to pay an employee at any place in the shops (so that, in theory, you never have to queue) to self-scanning apps and devices that automatically deduct your shopping basket from your virtual wallet, we are seeing the checkout moment move to different places in the customer journey.

The trend: Frictionless Retail
 Up to now, paying for your purchases has always been a physical act. Whether you use cash, a (contactless) debit card, credit card, smartphone or contactless payment ring, you always have to perform a final action to complete the transaction between you and the retailer. The promise for the near future is that you simply take the products off the shelf at your local supermarket, put them straight into your bag and walk out of the store. While the products are automatically placed in your virtual basket, the store's stock list is instantly updated, you receive an overview of the purchased products in your app, and you automatically pay for all your purchases at the end of the month. This is shopping without ever having to pay anything in the traditional sense.

Layer 4 Production 
In addition to convenience, consumers want surprise, entertainment, unique experiences and on-demand products and services. In turn, shops and shopping centres want traffic and added value.

The possibilities are obvious in supermarkets and hospitality, but also in fashion and sport 'the shop as a maker' is getting more and more attention.

The possibilities can be divided into four main categories:

  1. Produce: The store as a factory
     In its Berlin store the Korean company YUN produces tailor-made spectacles within 20 minutes, while Unmade lets you knit one-off clothing items (industrially). The unique process that Adidas developed for their Futurecraft 4D makes it theoretically possible to manufacture a complete shoe using an incredible 3D printer and weaving machine.
  2. Assemble: Manufacture finished goods from semi-finished products
     At Nixon, you can assemble your unique, personal watch by appointment at their customisation bar, while at New Balance in New York you can watch your shoes being made in real time. One fantastic innovation is Nike's Maker Experience, where you use video mapping to check what your ultimate Nike Presto should look like on your feet and then have it manufactured within one hour. Closer to home, MyMuesli lets you easily create your own muesli.
  3. Tailor & Customize
     At Converse Blank Canvas in New York, you can give your All Stars a unique touch, while at Uncover Amsterdam you can have products personally 'tattooed' by laser.
  4. Repair & Recycle: Give products a second life
     In the Nudie Repair Shop and the Denoism Atelier you can let your denims be endlessly patched and made completely unique, while Patagonia extends the lifespan of your favourite items indefinitely.



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