What is phygital?

Phygital
Astrid Baron - 09/02/2021

What is phygital?

1/ The evolution of the shopping journey in physical shops :

The world is changing, consumer habits are constantly evolving and companies have to adapt continuously. The health crisis we are experiencing only amplifies this phenomenon. The retail sector, like many others, has faced many difficulties in recent months. The global crisis has put many retailers in an unprecedented situation. Physical sales (excluding food) have been in dire straits, while e-commerce and click & collect have soared. In its latest study published before the second containment, the FEVAD confirms the soaring figures in favour of distance commerce. We can observe an annual increase of +15.7% by e-commerce sites over the last 12 months. This corresponds to no less than 1.7 billion transactions. Could phygital be the solution?

Consumer adaptation to the crisis :

Faced with this health crisis, consumers have also had to adapt and have changed their purchasing habits. A third of French people bought fashion items on the internet between the two confinements. 90% of online buyers are satisfied with their purchases and 46% of them declare that they intend to buy again on the internet in the next 12 months(source Kantar).

The containment will have had the effect of confirming two trends. 1/ consumers want to consume locally and, failing that, to know the origin of their products 2/ digital and omnichannel are now essential. A return to local commerce but above all, a new explosion of digital. A new era is coming.

2/ Phygital, a new era:

Until now, retailers have deliberately kept the channels separate, Offline VS Online. However, a number of factors have changed everything, starting with the marketplaces that have become essential, such as Amazon and Zalando, and the impressive growth of DNVBs (Digitally Native Vertical Brands). The model of the 1970s, the large surface with a car park, is no longer a reference, and is being replaced by more specialised, smaller and more customer-oriented brands.

The health crisis has prompted many retailers to turn to click & collect or web-to-store solutions to maintain business during this period, as the article in Les Echos indicates.

From multichannel to omnichannel :

Boundaries are being erased. Pure e-commerce players are investing in brick & mortar (as the big retailers had previously invested in e-commerce). DVNBs are opening stores, Amazon is buying up established brands, Alibaba is innovating and creating the shops of the future. We have moved from multichannel to omnichannel and are entering the era of TOTAL commerce. It is necessary to sell above all, by all available means, on all available channels, and the crisis has only accelerated this process. A fundamental trend emerges from this upheaval, the need for the physical point of sale to open up to digital and, conversely, for digital to find a way to offer a more "physical" experience. This is known as Phygital.

What is phygital? It appeared in 2013 and is the convergence of "online" and "offline". A contraction of the words "physical" and "digital", which refers to a marketing strategy, phygital commerce is a physical point of sale that integrates the data and methods of the digital world with a view to developing its turnover.

This is a way of giving physical shops back a sales lever while reducing their costs. It is important to note that the customer journey is now multi-channel. While 80% of sales are made in-store, 60% of consumers use the Internet to get information beforehand. It is therefore essential to bring digital to the point of sale through phygital. To grasp this new trend, and these new buying habits, companies must quickly adapt their tools for interacting with consumers.

But what are the advantages and disadvantages of physical versus e-commerce sales? What does phygital bring?

3/ The limits of the physical are exceeded by the digital:

Despite the rise of e-commerce sites, customers remain loyal to shops and attach great importance to the advice and expertise of salespeople. 70% of French people However, 70% of French people say they would like to return to a physical shop.
Buyers like the immediacy of the experience: asking for a service, advice, returning an item (easily), modifying a product, trying it out, testing it, obtaining technical information... these are all advantages that physical shops can offer as opposed to digital stores. On the other hand, physical shops have certain limitations that e-commerce sites do not have. It is impossible for them to display an unlimited number of items. Retailers have to optimise their display space, making do with a limited storage area. A limit that the visual merchandiser cannot exceed and which can be a source of difficulty when setting up the shelf or the shop window.

The role of the merchandiser :

The role of the merchandiser is to optimise the space and to ensure that each product is properly displayed so that it is able to " sell itself ". The lack of space can therefore have a strong impact on the value of products and thus reduce sales. Digital technology pushes back the walls of the point of sale and offers the possibility of offering a multitude of products to an infinite number of customers without space constraints. Range extension without physical limits.

Moreover, physical sales are constrained (at least in Europe) by the short opening hours often imposed. Where digital allows 24 hours a day / 365 days a year, physical stores are limited to stricter daily hours. This is one of the great strengths of online shops in this match between physical shops vs. e-commerce.

As a result, e-commerce sites, for example, are seeing their turnover soar from 57 billion in 2014 to 115 billion in 2020 according to FEVAD figures.

4/ The limits of digital exceeded by the physical:

However, the digital channel is still not able to offer a complete shopping experience. In the digital sphere, consumers cannot smell, taste or even touch the products. The brand universe is also somewhat impacted, especially in the marketplace. The presentation of products or brands is not as impactful as in a traditional shop. The price remains the only factor that triggers a purchase.

In a shop, impulse buying can be generated by the way a product is displayed, by the understanding of its use, the advice of a salesperson, the quality felt by the buyer's physical senses. On Amazon it's more complicated. Comments, reviews, ratings will do some of the work, but for the emotion, the feeling, the perception of a shape or a use, we are still far from the account.

Eager to find an authentic experience beyond the act of purchase, physical shops still hold an important place in the hearts of customers. Moreover, the figures are explicit: in France, digital commerce represents no more than 10% of total commerce. Even with an online customer service, nothing can compete with real live sales advice, hence the importance of phygital.

In a face-to-face meeting, a skilled salesperson will be able to take into account the expectations and the different problems highlighted by the customer, who will appreciate being taken personally into consideration. A good salesperson will be able to make the exchange more individual while having a real impact on the perceived value of a product and the turnover generated.

The importance of customer service in luxury :

Luxury is by essence the sector in which customer service is paramount. A customer who buys a luxury product expects to have an experience at least equal to that of the product they are buying. Customer relationship management is therefore of major importance for the major brands and the department stores that distribute them. This is particularly the case in Galeries Lafayette shops. Each sales advisor has access to a customer relationship management solution that allows him or her to identify the customer and to know key information such as his or her average basket, purchases and loyalty status. In this way, the sales assistant is better able to lead the customer towards an experience that suits him or her.

However, online shopping is still much more convenient than going to a physical shop. Avoiding rain or heavy traffic, not needing to queue on busy days are arguments to be taken into consideration.

We can therefore rather say that online and offline channels can complement each other perfectly. The future of commerce thus lies in both directions: enhancing our physical shops with new digital technologies and putting the physical (human interaction, usage illustrations, customer knowledge, personalised advice) into the digital.

II/ Phygital, a strategic hybrid solution :

1/Phygital: How to bring digital into the physical world?

Phygital brings real benefits to traditional shops, boosting footfall and the customer experience in shop through new digital means. While some may see it as a replacement, we would rather talk about complementarity.

The aim of this new channel is to stay as close as possible to the physical customer journey while digitising an existing point of sale. Indeed, phygital allows toimprove the customer experience by adapting to new needs. It can also make the physical shop more dynamic by increasing the services offered, more frequent interaction with the brand universe and an extension of the ranges offered.

Some examples:

Undiz machine

The Etam group is a reference in this field. Undiz, with its "connected" flagship on the Champs Élysées, is a good example. The concept is the "Undiz Machine": the customer chooses his product on a connected terminal and receives it a few moments later after it has travelled in a capsule from the stock to the shop, through tubes crossing the sales area.

Zara has also decided to experiment with a pop-up shop in the Westfield Stratford shopping centre in London. In this pop-up store, the trend of the physical shop is reversed and everything is done to structure the sales experience around the web. Few clothes are stocked, unlike in a traditional physical shop, giving a better visibility of the product. The staff is equipped with tablets and accompanies the customer throughout the purchasing process. This makes ordering easier.

The main innovation is the provision of a product recommendation system. Information screens are integrated into the mirrors and advise the customer. For example, if the article is a T-shirt of a certain colour and size, the software will suggest trousers that match the colour and size.

Does artificial intelligence serve the customer at the expense of a human relationship?

 

2/ Phygital: How to bring the physical into the digital?

The importance of maintaining a link with the customer is paramount. In an ultra-competitive sector, it is important to maintain one's authenticity, one's brand universe and one's customer relationship. Human relations are all the more valuable in a world where physical contact is increasingly restricted.

How to create a physical experience in digital? Digitalising your physical shop allows you to clone your shop in 3D. It also allows you to completely rethink the customer's journey in the shop in order to offer them a different and immersive experience, to guide them towards the products they like, to guide them towards additional purchases and to respond to their need for autonomy. In both cases, it serves as a link with the physical shops. By adding an interaction with a physical person, you respond even better to this problem.

The Clarins brand is banking on the point of sale to provide an experience exactly like that of a shop. Discover the skin workshop, book a treatment in-store or take advantage of exclusive online services such as the digital skin diagnosis or the new virtual make-up trial. Everything is packaged to provide a real customer experience similar to an in-store experience without a human presence.

How to maintain a human relationship with the customer? 

In its virtual boutique, the Charlotte Tilbury brand has taken up the concept of the virtual boutique but has put the emphasis on the human relationship thanks to the welcome given by the designer herself. As soon as you enter the showroom, Charlotte Tilbury is there to welcome you and guide you through this interactive space.
The brand's universe is directly perceptible and the physical link is preserved. A fine example of phygital.

3D showrooms augment (not replace) physical shops. Iks offer an experience as close to reality as possible. As close as possible to the customer, supports are also put in place to order the product directly and then deliver it to the customer's home. This is a way of freeing oneself from the storage constraints of the traditional retail model, while offering a shopping experience similar to that experienced in a shop.

III/ How to approach its phygital transformation in the digital channel?

1/ Define the main lines of its virtual shop (range, universe and shopping path):

In order to create the best possible virtual shop, it is important to define its main axes. Whether it is in the purchase path, the range or the brand universe, it is important to prepare the physical shop well in advance. Once shot, the 3D shop remains the same. So how can you best prepare and make this transition to phygital?

Whether it is for the marking out of the customer path, the merchandising to be adopted or the optimisation tools to be put in place, virtual reality in a test and learn perspective can facilitate the implementation. We can analyse where the customer's eyes rest, how they navigate in the shop or how sensitive they are to its layout.

This will also generate new data. Brands like Tesco are already experimenting with this type of solution to analyse the customer journey. The brand's customers can move around a virtual shop while the brand analyses their behaviour and reactions to the signage or packaging. Once this data has been collected, it is possible to optimise the point of sale for better performance.

The buying process is therefore of prime importance in setting up an online shop.


The importance of merchandising :

The intervention of the visual merchandiser upstream is also an important phase in the development and implementation of your virtual shop. Once shot, the 3D shop is reproduced identically and cannot be modified. It is therefore necessary to be able to imagine the planograms in advance, to divide them by universe, to think of the coloramas and to imagine an overall view of the showroom. The characteristics and merchandising codes are perfectly respected in a virtual showroom. This allows you to remain in harmony with the universe of each brand.

The choices are therefore judicious in order to be as close as possible to the interest that we want to arouse in the consumer and to reproduce the brand universe as well as possible. But how can we be sure of the impact that our virtual showroom could have?

 

2/ Analyze and optimize your online shop:

Once our virtual shop has been created, we need to be able to analyse the results. In the race to innovate, retail players have more and more tools at their disposal, all of which have one thing in common: data. Data management and analytics are essential in improving the customer experience. But what is the purpose of analysing this data? It allows a qualitative and quantitative analysis of the customer experience. Virtual shops will be evaluated in the same way as websites, according to customer conversion rates, pathways, waiting times and satisfaction. The analysis is fully customisable and can show the impact of virtual showrooms.

Clearly, this new data will be useful in informing the content marketer about the nature of the new information needs of the "connected" consumer.

These technologies will contribute to the construction of a new world that brings adaptive and connected environments to life. (Far beyond a mobile or a headset). This will once again blur the line between physical and digital.

IV/ Best practice: the 360° showroom and VR showroom :

Even if the 360° showroom is often the most used by the big brands, there is another approach. The 3D showroom or virtual reality showroom. The objectives are not the same. The 360 as mentioned above will reflect the brand. Via an emblematic shop, a flagship, the latest concept shop. The virtual reality showroom is a customised shop. Designed for a web customer journey, with photo and video content to illustrate the brand and graphically worked on virtual reality engines.

1/ MRK client case, a phygital clothing shop:

MRK showroom

Visit our showroom

Maison Rabih Kayrouz (MRK) is a high fashion brand created in 1999. Their pieces are entirely produced in Europe, mainly in France with an international clientele. In the current health context, it is difficult for the brand to continue presenting its collections. During fashion week or to its private customers spread all over the world. In addition, customer relations are an important part of the brand's identity. To combine digital sales while continuing to immerse the consumer in the world of the brand, MRK chose to set up a 360° virtual showroom. The perfect mix. Presenting the collections, selling, and guaranteeing access to the emblematic showroom that is intimately linked to the brand.

Limited in their movement, the 360° showroom proved to be the perfect solution to continue accessing the collection while staying at home. In terms of interactivity, it's the best you can do. Available on any type of PC or mobile device, this type of solution offers multimedia content in 3D or photo accessible to all. Popular with luxury brands, or for B2B use, there are more and more virtual shops or showrooms on the market. A perfect case of phygital.

The 360° showroom brings real added value to the physical showroom. A true clone of an existing location, it pushes back the limits of the physical. It also allows you to connect wherever you want, whenever you want.

2/ Case study 3D Showroom: Nespresso :

The 3D showroom is the creation of a customised shopping environment, not linked to a real environment. Unlike the 360, it does not necessarily reproduce an existing shop or showroom. However, it can be created from scratch, leaving designers free to use their imagination.

However, Nespresso has not taken this direction. As a pioneer and leader in e-commerce, Nespresso also offers its customers an incomparable boutique experience. It is also completely uniform wherever you are in the world.

Their idea of a 3D showroom was to find a way between the physical and the digital. Recreating the merchandising codes of a boutique, transposed into an online digital experience. The 3D showroom provides these mechanisms, but with more emotion, more immersion, more input for the user.

In terms of interactivity, the customer can make his or her own journey as in a physical shop. The showroom is connected to the CRM for order taking.

3 / The contribution of Retail VR technology in the phygital :

On the 360 showroom :

The design of a virtual showroom can be done very quickly. A perfect transition to phygital. Retail VR technology allows the showroom to be scanned in 360° and integrated into the platform within 24 hours. All this in only 4 steps:

1/ A briefing meeting to prepare the showroom and make an appointment for the 3D scan.
2/ Retail VR captures the physical showroom and then integrates it into the platform within 24 hours.
3/ We implement the interaction points with your brand and help you personalise the showroom to your image
4/ Retail VR delivers the final virtual tour

The big plus? Your showroom is customisable. From the product sheet to the integration of videos etc. Everything can be modified to reflect your brand universe.

The contribution of technology to the VR showroom : 

The design time for a 3D showroom will be greater than a 360° showroom. But on the other hand, it will have the possibility of developing the merchandising, the product offer... everything is entirely modifiable.

1/ A briefing meeting to discuss the physical appearance of the shop with the brand. There are many possibilities: setting up a video call / basket / wishlist
2/ Working with merchandising: Expectations vary according to the brand.
Lactalis : recreating a department with the merchandising layout highlighted BEFORE / AFTER.
WD40: Putting products in a context of use.
3/ Modelling the sales universe / products in VR (Use of the 2D/3D converter)
4/ Setting up effects, inserting product sheets / connection to the CRM for order taking.

Major brands such as Dolce Gabana, Clarins, Delvaux and Dior now offer immersive visits of their virtual or 3D showrooms. Some are even connected to e-commerce sites. The new digital era has never been so present.

Be inspired by these examples of virtual shops to offer new shopping experiences in virtual reality! shopping experiences in virtual reality!

Improve your processes and boost your sales with virtual and augmented reality.

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