Future Stores: Building ‘Phygital’ Brand And In-Store Experiences

During this time, the retail sector has witnessed rapid shifts in consumer habits. While shoppers have gratefully embraced the convenience and immediacy of online commerce, they also crave the tactile and social experience of the physical store. Optimising both online and offline so that both can complement each other has therefore become a top priority for today’s retailers.

Euromonitor research indicates that 78% of all purchases will still be made in-store by 2024. Research by Google indicates that 73% of consumers are channel-agnostic, in whether they buy online or offline. With offline interest still a critical factor and online browsing increasingly influencing buyer activity at the start of customer journeys, it’s clear that retailers must evolve the experiences they deliver.

One way to achieve this is by bringing the convenience of digital to the in-store environment. Marrying physical stores with digital technologies enables retailers to create interactions and environments that combine physical and digital, to become “phygital”.

How The Metaverse is Showing the Way

This video depicting activities at a New York City Zara store has been creating a buzz on LinkedIn and YouTube lately:

In many ways it reflects the current state of thinking and aspiration around the Metaverse -- the new “immersive internet” that melds physical reality with the worlds of gaming and movies, involving avatars, digital property, and digital modes of exchange. While the technology is still in its relative infancy and universal interoperability between systems and virtual worlds will require standardisation and massive upgrades in network and edge cloud infrastructure, the Metaverse concept nonetheless provides ideas and strategies that can assist phygital retailers today.

Offering in-store services and experiences that cannot be had online is one way to go -- by bringing together the sensory and human connection of visiting a store, with an ultra-personalised digital layer to make the buying journey seamless.. In China for example, many brands are using WeChat, Machine Learning (ML) algorithms, and social commerce, to drive personalisation and unique customer experiences that entice consumers back into their stores. These experiences range from uniquely tailored fragrance recommendations, through fitting rooms that shoppers can book in advance via mobile apps, to previously reserved tables at the in-store cafe.

Phygital Manifestations At Work

Consumers often combine in-store and digital shopping in two ways: they may do research and read product reviews online before shopping in-store, or view and touch products in a physical store, before purchasing items online. As Jheeva Subramanian, CFO, BHG Singapore observes: “Offline stores need to be fully integrated with online channels. But how to digitalise your offline stores? - You can have interactive screening that shows customers the inventory of all stores. They don’t need to be super connected. Having a unified commerce solution - a single point-of-view to know the interest of consumers is good enough.”

A number of phygital mechanisms are taking these patterns of behaviour into account. Examples include:

Kiosks

[Image source: The Guardian]

KFC in China has been creating phygital experiences, in ordering kiosks that cater for these behaviours. At their new range of fully phygital locations, consumers can place their orders on touch-screens upon entering the restaurant, and use facial recognition to complete payment. Artificial Intelligence (AI) linked to the new phygital technology can use predictive analytics to determine what customers might want to eat, and offer them customised menu options.

Mobile Apps and QR Codes

Mobile apps have an enormous role to play, in the move to phygital retail. They can provide a one-stop portal for consumers to conduct product research, select or reserve items, exercise their options to customise them, make payment, and arrange for pick up or delivery.

QR codes are assisting phygital retailers to expedite processes for consumers, and adding extra functionality to mobile apps that promotes interaction and engagement. For example, scanning a QR code with their mobile phone enables customers to make menu or inventory selections instantaneously and -- in these health and safety-conscious times -- without the need to touch anything.

Voice

Organisations in a number of sectors including retail and healthcare are adding voice skills or commands to platforms like Alexa, to help consumers perform everyday tasks. Incorporating predictive analytics can enable smart voice-powered systems to provide useful suggestions based on the preferences and routine behaviour of the user.

As Mayank Singh, Head - Digital Business, Marketing and Technology, Domino's Indonesia observes about conversational commerce: “In retail, for a discovery issue, customers search for a product in the digital medium. It can be easily solved in conversational commerce because there is a personal touch and retailers can use the algorithm to show, attribute and personalise better than in a traditional medium.”

How Nike Went Phygital With NikePlus

Since 2018, sports footwear giant Nike has been using personalisation techniques similar to those used online for Nike Live -- a retail concept based on the needs of its NikePlus members. Initially launched across five zip code areas in the city of Los Angeles, Nike Live projects the look and feel of a set of pop-up stores, each with a neighbourhood focus.

Products and services available at each Nike Live store are chosen on the basis of a comprehensive understanding of its host neighbourhood. Leveraging data from online transactions, Nike provides offerings specific to each store. Offerings from the Nike by Melrose design range are selected using insights gained from NikePlus member activity and buying patterns that span Nike’s range of digital touchpoints, which includes Nike.com, the Nike App, the NTC, NRC, and SNKRS apps.

The Nike Live Stores act as a service hub for local NikePlus members who, with access to the Nike by Melrose scheme, get access to services from the Nike App at Retail feature set, such as Retail Home, NikePlus Unlocks, and Nike Scan. Every two weeks, NikePlus members can use their membership passes to redeem items from a kind of digital vending machine called the NikePlus Unlock Box.

[Image Source: TechCrunch] 

How The New Sephora Experience is Bringing Phygital to France

After a successful launch in New York last year, cosmetics powerhouse Sephora is testing a similar phygital retail format at two venues in France. The first is a pilot store inside the Nantes Atlantis shopping mall, while the other is situated at the Val d'Europe shopping centre -- a store that features a life-size mirror/screen for trying out virtual make-up styles.

At both locations, The New Sephora Experience will blend physical retail with digital technologies and processes. Visitors to the stores can benefit from a bespoke beauty prescription, using dedicated iPad stations at the Beauty Hub. These handheld devices will also enable shoppers to learn from tutorials or find their personal colour palette -- with or without the advice of an in-store make-up expert. Group courses on specific themes will also be available from the Beauty Hub. The digitally connected Beauty Hub also features monitors that enable customers to search the entire Sephora range. 

As part of the new phygital experience, Sephora has launched a Skin Patch service which enables its beauty consultants to establish a customer's skin type and give targeted advice on suitable products, from analysis of a facial patch.

As part of the new phygital experience, Sephora has launched a Skin Patch service which enables its beauty consultants to establish a customer's skin type and give targeted advice on suitable products, from analysis of a facial patch.

Image Source: (FashionNetwork.com)

From cyberspace, Sephora, which operates more than 2,400 stores in 33 countries, is also reaching out to consumers via social media. An in-store Beauty Board will showcase pictures, looks, and products liked and shared by Sephora enthusiasts on Facebook, Instagram, and other platforms.

An official statement from the brand reveals that: "The New Sephora Experience is a new generation of Sephora stores - more attractive and more captivating - which entirely reinvents the customer experience.

A Final Thought...

Alexander Toft, Head of International Market Expansion, LEGO poses the question: “As the world opens up, what does this balance looks like for e-commerce and physical retail - and what can big brands like Nike, Lego, and small start-ups do from an omnichannel perspective?” Stores need to dynamically choose multiple personifications based on the context of customer interaction and the roles of their store associates. Yet the question remains – how can they get started and how will the Metaverse change the way we interact with customers?