Phygital: when "physical" and "digital" enter into synergy

The digital revolution of the last thirty years has transposed many "real-life" activities into more or less similar digital experiences. Instant messaging simulates (and evolves) the postal letter, videoconferencing imitates live exchanges, the e-commerce website transposes the physical store and, ultimately, the metaverse aims to encapsulate life in a virtual environment.

Today, we're witnessing an interesting shift in this dynamic, with a trend that seems to be reversing. Insofar as the virtual has far surpassed the possibilities offered by the real, it is now the "physical" world that is transposing digital innovations. Click & Collect, Mobile-to-Store, order kiosks, the ultra-connected salesperson and mobile payment all reflect this trend. What's more, more and more Pure Players, or exclusively digital brands, are opening physical stores, as documented in this Brand Experts survey.

As the two worlds become mutually inspiring, the real and the virtual tend to overlap, and the e-commerce-physical store divide is destined to fade in favor of a new shopping experience, with a perfectly integrated pathway. Physical and digital are merging harmoniously to form "phygital".

What is "phygital"?

Phygital, a contraction of the terms "physical" and "digital", is a marketing concept that describes the fluid, intuitive and dynamic integration of digital and physical experiences in the consumer's purchasing journey, from the pre-shopping phase through to after-sales service, and even beyond (loyalty, ambassador programs, etc.).

Phygital is a direct consequence of changing consumer purchasing behavior. Consumers combine the best aspects of each universe according to their needs and preferences. They want to complement their physical experiences with information, immediacy and convenience, and complement their digital experiences with human interaction and "sensory" experiences (touching and trying the product). The phygital experience is not simply the sum of virtual and real experiences. Rather, it's a synergistic experience, whose value exceeds the sum of physical and digital values.

Phygital is undoubtedly the ultimate culmination of the omnichannel trend. It therefore poses a major challenge for retailers: that of tracking customers across all the channels they use, whether real or virtual. The company needs to be able to aggregate first-party data concerning the same customer in a rational, fluid and real-time way, whatever the source: phone call, email, instant messaging, social networks, purchase in a physical store, etc.

The phygital experience: what objectives for retailers?

In many respects, the phygital experience is a de facto necessity for retailers, because contrary to what one might think, consumers remain attached to both physical stores and digital experiences, as the figures show:

• According to a study by Comarch, 85% of French people want to try out products in-store, 88% prefer to buy offline and 56% still think thatoffline is the easiest way to shop.
• According to the Fédération du e-commerce et de la vente à distance (FEVAD), e-commerce now accounts for two-thirds of retail sales (2021), up 20 points on 2019, with a total value of 129.1 billion euros (+24.9% in two years).
• An IDC study explains that 82% of European "Y" generation consumers no longer see a "real border" between the physical and the digital, and expect unified, personalized experiences from retailers.

The primary objective of phygital investments is simply to meet consumer demand. The convergence ofonline andoffline also aims to :

• Regain the brand's influence in the pre-shopping phase, when consumers independently gather information about the products they are considering;
• Better organize flows in physical stores to maximize sales (eliminate "immobile" waiting, refer routine requests to digital or an automation system, etc.);
• Move towards "extended" commerce, which is not limited either to the geographical boundaries of the physical store or to the e-commerce website;
• Take advantage of geolocation features to extend the physical store's catchment area;
• Extend the shopping experience by staying in touch with consumers to multiply cross-selling opportunities and repeat purchases.

Phygital experiences: some concrete examples

#1 Amazon Go

Amazon has more than 20 Amazon Go supermarkets in the USA. Customers access them by scanning a code with their smartphone, and purchase products without going through traditional checkouts. An electronic invoice is sent to the customer, and the total price is debited from the registered bank account.

#2 Timberland

Timberland has introduced TouchWalls in its busiest stores. These are digital kiosks that enable customers to explore the brand's product catalog, check the availability of sizes, add products to the basket, etc. All the advantages of phygital can be found here: optimized flow in crowded physical stores, semi-automation of services that do not require increased personalization, collection of browsing data to personalize marketing campaigns, etc.

#3 Undiz

Undiz, a subsidiary of the Etam group, has opened an ultra-connected store in Toulouse, offering an unprecedented customer experience. With a limited sales area (just 50 m²), Undiz has equipped its outlet with four touch-screen terminals to enable customers to explore its catalog, including a section listing the products stocked in the store's reserve. These products are delivered in just a few minutes via air-propelled capsules fitted with RFID tags that identify the reference at the checkout.

#4 Nike

In February 2019, Nike inaugurated a pop-up store exclusively for users of its Nike SNKRS app. The brand used geolocation data to inform users within a 40 km radius of the store's opening. As an incentive, Nike launched a limited-edition product available only in the pop-up store. Also on the program: a vending machine offering free Nike accessories on presentation of a QR code generated by the mobile application.