THE TIMES THEY ARE A-CHANGIN’

“The distinctions that we talk about today between stores, apps, pick-up, delivery and sites are continuing to blur into the background for customers. For them, it’s just Walmart.” asserts Walmart CEO Doug McMillon. As proof of its thesis, the retail behemoth founded by Sam Walton recently achieved success in halting nine quarters of slumping online growth and registered robust growth in its online sales. Meanwhile, Amazon, the very model of online retailing seems to have big ambitions to launch physical stores. It will be interesting to see how the e-commerce giant’s strategy to delve into the physical space, with its own omni-channel approach to the market, unfolds in the long run. The world of retail is clearly going through a profound transformation.

COUPLING THE DIGITAL & PHYSICAL FOR A COHESIVE CUSTOMER EXPERIENCE

We live in an age when the lines between physical and digital worlds have faded away to give way to a more interconnected phygital ecosystem. As consumers embrace a more connected world, shopper journeys now play out over multiple devices and numerous touchpoints that have burst onto the scene. What is irrefutable is this: Consumers don’t think channels, and neither should retailers.

And evidence of this abounds. Deloitte Digital reveals that 64% of in-store purchases were made from digital devices in 2015, up from 49% in 2014 and 36% in 2013.  Moreover, channel-agnostics, i.e., shoppers who are not wedded to a single channel are the most profitable kind of customers. According to a study by IDC in 2015, cross channel shoppers have a 30% higher lifetime value than those who shop using only one channel.

RETAIL ON THE HIGH STREET: IS ANYONE TRULY PHYGITAL READY?

The question is perhaps best answered by a recent Forrester study, which found that only 49% of customers receive a consistent experience across various touchpoints. However, there is a bunch of savvy retailers on the high street who have bucked the trend and forayed into the brave new world of phygital even as retail laggards continue to trim their store count by shuttering shops.

As one of the frontrunners in helping retailers get on the phygital bandwagon, Aspire Systems lists out the trends that would separate the phygital superstars from the “also-rans.”

#PERSONALIZATION IS THE HOLY GRAIL

Personalization is the mantra that will drive the future of retail. Winning retailers have incorporated mobile into the store to get the individual customer experience right through relevance and context-based customer intimacy.

Beacons and similar technologies are being used to make location-based recommendations to customers. Notable British fashion label, Burberry, for example, has launched a geo-fenced store in Soho that hooks shoppers in the proximity of the store by sending information on deals to their mobiles.

Savvy retailers are also employing push notifications based on an individual’s click and in-store behavior to provide highly relevant real-time recommendations about vouchers or products that might interest shoppers.  With the help of iBeacons placed across its stores, US department store chain Macy’s shoots highly personalized coupons straight to opted-in shoppers via their phones during a shopping trip.

Furthermore, mobile apps with inbuilt machine learning algorithms can also help shoppers build customized shopping lists to make the whole shopping experience more personal and convenient.

#FRICTIONLESS CROSS-CHANNEL FULFILMENT IS VITAL

Faced with the challenge of declining footfalls, retailers have embraced various cross-channel fulfillment programs with the help of a single, integrated view of inventory.

  1. “Click and Collect”-Phygital’s Poster Child

Also known as BOPIS (Buy Online Pick Up In-Store), this has been a particularly popular phygital initiative. Retailers like Walmart, Target, Toys R Us and Best Buy already fill a considerable percentage of their online orders through this option.

In what can be called a bold new initiative, UK’s second largest grocer, Asda,  has taken ‘click and collect’ to  a whole new level by launching a  service to collect (and return)  parcels bought from third party retailers through Asda stores.

  1. Growing while Shrinking with “Endless Aisle”

Endless Aisle is technically the reverse of BOPIS.  It allows retailers to sell items that are not actually present in the store or no longer in stock by extending fulfillment to e-commerce.

US Clothing and accessories retailer, Gap is successfully using this model to enable shoppers to place online orders from within the store and have the products delivered directly to their home.

In another noteworthy example, maker of denim products, True Religion Apparel has launched a program that leverages the popularity of Apple Watch to deliver an endless aisle experience. By integrating its Apple Watch app with its POS and Enterprise Order Management, the retailer is able to offer a localized inventory based on customer preference in its stores.

#TURNING STORE ASSOCIATES INTO PHYGITAL EVANGELISTS

Access to relevant information about customer profile equips store associates to provide a meaningful in-store engagement to today’s tech savvy shoppers and also leverage cross-selling and up-selling opportunities.

Retail chains like Target have provided their store associates with iPod Touches that connect to the internet to enable better customer service.

Associates toting mobile devices get alerted to the presence of opted-in shoppers and can access info about their brand preferences, past purchases etc. to provide highly tailored and timely suggestions to shoppers.

For example, a shopper who has an outdoor-sy lifestyle can be suggested the right kind of jeans to fill in gaps in his wardrobe and then can be pitched a pair of boots that are water resistant, to go with the jeans. Or a customer working on home refurbishment can be offered the tools to complete his project.

#REMOVING BARRIERS TO TRANSACTION

Currencies are not just tied to one’s pocket any longer and can flow from the physical to the digital medium and vice versa. Savvy phygitalists have latched on to this trend by coming up with solutions like mobile POS, QR-code based transactions and proprietary wallets to make check-outs easier and customers sticky.

Reward points accumulate as digital money in customer wallets, incentivizing them to make their subsequent purchases through the same retailer. Trips to the store also become hassle free as shoppers no longer stand in a queue to pay up; they can just wave past a counter and the right money is deducted from the wallet.

Coffee giant Starbucks is one notable example in this area. It has equipped staff with mobile devices for smoother transactions that help manage wait times for its customers more efficiently. Walmart too is setting up all of its stores in the U.S. to accept its in-house Walmart Pay mobile payments app.

#THE SOCIAL MEDIA BALANCING ACT : CUSTOMERS AS YOUR BRAND AMBASSADORS

A new customer just walked into your store after having read her friend’s FB-update about the phenomenal experience she had at Mango or how the store associate at Body Shop suggested just the right night cream for her specific skin type.

Interactions like these are helping retailers get new customers to visit their stores and even promote their new product collections. Word-of-mouth was never this powerful. And smart retailers understand that a single good experience shared online is worth a million of advertising dollars.

Customers might not be in a position to share reviews in-store as they might have to rush to the next appointment; but the savvy ones are reaching out to these customers later through push notifications on their mobile apps to understand their experience and get feedback.

Nordstorm has gone a step further by labelling its “Top Pinned Items” in stores with a Pinterest logo, to highlight the most popular items for its shoppers.

SOLVING THE PHYGITAL PUZZLE

Ultimately, it all boils down to connecting the numerous dots and scripting a more holistic journey that encourages the customer to move across various channels in a frictionless and seamless fashion. Winning retailers will be the ones who recognize and reward the customer, no matter where they are or how they are connected, with timely and tailored interactions

Watch our webcast : Phygital Retail – Merging online & In-store Customer Experience

Connect with our Mobility & Retail Experts to bring about Next-Generation Omni-channel Efficiencies.

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Krittika Banerjee

Krittika Banerjee

Research Analyst at Aspire Systems
Fond of exploring contemporary technical and digital innovations, Krittika is always updated with what is new on this front. She writes about innovation and latest technology trends in various sectors.
Krittika Banerjee