While unveiling its latest ‘hatchback with a twist’ – the New C3 in July, Citroën also announced the launch of phygital showroom in Surat, Gujarat. Customers can now order items online but pick them up from the store and also use AR to test an item virtually before buying it.
This new marketing strategy enhances engagement of the consumers and allows them to take advantage of the benefits of digital technologies inside traditional physical spaces.
Phygital as a phenomenon has already spread across sectors, from grocery, fashion, edutech to automobiles. It is the backbone of financial inclusion in emerging markets such as India where neither entirely-digital nor physical-only branch banking can serve efficiently.
This healthy mix of digital and brick-and-mortar presence of banking and financial services provides a practical and efficient way to progress, a report in FobesIndia said.
RE-INVENTING THE WHEEL OF E-COMMERCE
The term ‘Phygital’ was coined by the Australian agency Momentum, which claimed the copyright for the word in 2013, and uses it as its tagline: An agency for the Phygital World. The world started using it at the height of the COVID-19 pandemic, which saw a surge in e-commerce and acceleration in digital transformation. It brought e-commerce to the forefront in retail.
As the pandemic eased up, customers started to return to normal life and in-person shopping. At the same time, they did not want to miss out on the convenience of digital shopping. With consumers’ interest remaining skewed towards the in-store experience, market players ventured into a hybrid system, creating a synergy of physical experience as well as digital convenience.
Phygital creates a consistent omni-channel experience by obscuring the lines between the online and offline worlds. It is not just about integrating online and offline shopping channels, but also about providing a seamless purchasing experience to customers through a digital interface.
We are actually on a threshold of a new ecosystem that will be instrumental in shaping the future of the retail sector. “This journey from ‘physical’ to ‘digital’ and now ‘phygital’ ecosystem is where the future of retail lies,” founder & CEO, NDHGO, Kumar P. Saha wrote in the Times of India.
In grocery shopping, the phygital adapters (e.g. Dmart) are eating into the reign of both physical-only and digital-only players. Leading e-commerce platforms are also in the race to partner with local kirana (grocery) stores, thanks to the disruptive customer-focused trend called phygital.
“Phygital commerce has the ability to use the unorganised retail assets to integrate everyone — all the way from the consumer to the factory — and create massive scale to serve a billion people. This is where the real value creation and opportunity lie,” Area Online founder Yatin Shah told in the Economic Times.
THE NEXT BIG TREND
As the second-fastest digitising nation in the world, India is on the path to becoming a USD 1-trillion digital economy by 2025. With phygital playing a key role in driving the growth for local businesses as well as bridging the digital divide between the organised and unorganised market, maximising both online and offline to fuel each other has become one of the top priorities of retailers today.
Data reveals that the Indian retail industry, the world’s third-largest consumer market, witnessed 65 per cent of discovery happening online and 97 per cent of shopping taking place offline a year ago. There are 70 million online shoppers in India, of which only 10 million can be classified as ‘digital natives’. These numbers mean that today in a country of 1.3 billion people, less than one per cent would be considered digital natives. This implies the scope of going phygital.
“While e-commerce will continue to be an essential element of retail strategy, the future success of retailers will ultimately depend on creating a cohesive customer experience, both online and in stores,” the Harvard Business Review predicts recently.
This can be gauged from a Mobiquity survey, where consumers predicted that they will use curbside pick-up even more once social distancing has relaxed – up to 125 per cent of their total volume of purchases.
So, the winner will be the one who can offer an affordable, high-quality experience both online and offline to a billion people.
THE THREE I’s & BRAND LOYALTY
Phygital retail strategy focuses on three I’s – immediacy, immersion, and interaction. While immediacy and immersion come from the digital realm, interaction is from the physical world. These are applied in various permutations and combinations in a retail business ranging from catalogues and products to sales and customer service. While robotic digital signage and demand sensing in catalogues can help customers find products and immediately check stocks for a particular item, chatbots and AI algorithms can speed up the selling process. Similarly, targeted marketing campaigns can encourage cross-selling and upselling, according to an article published in Capillary.
In other words, the phygital route helps to reach out and interact with more customers with this model emphasising ease of use, speed, convenience, and support. Besides responsiveness and comfort in retail stores, the use of AI, VR and mixed realities, which have the power to blend together one’s perception of real and virtual space, help those products and services whose value cannot be judged before consumption.
Bausch+Lomb , a leading eye-care brand, has integrated features like virtual trials allowing customers to make informed choices after trying out lenses and frames virtually. Apparel brands, including Asics, Fabindia and United Colors of Benetton, are engaging with customers on WhatsApp through their store managers, who send personalised recommendations to customers and accept the orders placed through phone calls on WhatsApp or online portal. Thus, it reduces the delivery timeline.
Brands like Spar and Namdhari have also adopted phygital strategies to ensure quick deliveries by recommending products based on their previous purchases and creating a seamless option of same-day delivery of orders.
According to Mintel Global Consumer Research, legacy food, drink and food service could open new concepts like popup shops or online environments where they could connect with a more diverse and nuanced consumer base.
Phygital, without doubt, is fast reshaping the retail landscape, with overall D2C (direct-to-customer) experience, which is also the prime driver. And with brands embracing this change proactively to boost their business, the model is set for further growth in India with customers staying loyal to those that elevate their experience.