What is phygital?

1/ The changing shopping experience in physical stores

The world is changing, consumer habits are constantly evolving and companies must continually adapt. The health crisis we are going through only amplifies this phenomenon. The retail sector, like many others, has been confronted with numerous difficulties in recent months. The global crisis has plunged many retailers into an unprecedented situation. Physical sales (excluding food) have been in great difficulty while e-commerce and click & collect have been soaring. In its last study published before the second containment, the FEVAD confirms the soaring figures in favor of distance commerce. We can observe an annual increase of +15.7% by e-commerce sites over the past 12 months. This corresponds to no less than 1.7 billion transactions. Would the phygital be the solution?

Consumer adaptation to the crisis

Faced with this health crisis, consumers have also had to adapt and have changed their buying habits. A third of French people bought fashion items on the internet between the 2 confinements. 90% of online buyers are satisfied with their purchases and 46% of them declare that they intend to buy online again in the next 12 months(source Kantar).

The confinement will have had the effect of confirming 2 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, many factors have changed everything, starting with the marketplaces that have become essential, such as Amazon, Zalando and the impressive growth of DNVBs (Digitally Native Vertical Brands). The model of the 70's, the big surface with a parking lot, is no longer a reference, this model is fading away in favor of more specialized, smaller and closer to their customers.

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

From multichannel to omnichannel

The borders are erased. Pure e-commerce players are investing in brick & mortar (as the big brands had previously invested in e-commerce). DVNBs are opening points of sale, Amazon is buying up established brands, Alibaba is innovating and creating the stores of the future. We have gone from multi-channel to omnichannel and we are entering the era of TOTAL commerce. We must 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. We will then talk about Phygital.

Definition of phygital

What is phygital? Appeared in 2013, it 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.

A way to give back to physical stores a sales lever while reducing their costs. It is important to note that the customer journey is now multi-channel. If 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 understand this new trend, and these new buying habits, companies must quickly adapt their interaction tools with consumers.

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

3/ Digital overcomes the limits of the physical world

Despite the rise of e-commerce sites, customers remain loyal to stores and attach great importance to the advice and expertise of salespeople. 70% of French people say they would like to return to a physical store.
Buyers like the immediacy of the experience: ask for service, advice, return an item (easily), modify a product, try it on, test it, obtain technical information... all advantages that physical stores can offer, unlike digital. On the other hand, physical stores 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 optimize their display space, by making do with a limited storage area. A limit that the visual merchandiser cannot exceed and that can be a source of difficulty when setting up the department or the shop window.

The role of the merchandiser

The role of the merchandiser is to optimize the space and to ensure that each product on display 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 to propose a multitude of products to an infinite number of customers without space constraints. Range extension without physical limits.

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

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

4/ Digital limits surpassed by physical ones

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 on marketplaces. The presentation of products or brands is not as impactful as in a traditional store. The price remains the only factor that triggers a purchase.

In a store, impulse buying can be generated by a product's presentation, by the understanding of its use, by the advice of a salesperson, by 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 stores 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 a real live sales advice, hence the importance of phygital.

In a face-to-face meeting, a qualified salesperson will be able to take into account the expectations and the various problems highlighted by his 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 the luxury sector

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 as good as the product he is buying. Customer relationship management is therefore of major importance for the major brands and the department stores that distribute them. This is notably the case in Galeries Lafayette stores. Each sales advisor has access to a customer relationship management solution that allows him or her to identify the customer, to know key information such as his or her average basket, purchases, or "loyalty" status. This way, the sales associate is better able to lead his customer towards an experience that suits him.

However, online shopping is still much more convenient than going to a physical store. Avoiding rain or heavy traffic, not having to queue on busy days are arguments to consider.

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

II/ Phygital, a strategic hybrid solution

1/Phygital: how do you bring digital to the physical world?

Phygital brings real advantages to traditional stores, boosting traffic and the customer experience in store through new digital means. While some may see it as a replacement, we would rather talk about complementarity.

The goal of this new channel is to stay close to the physical customer journey while digitizing an existing point of sale. Indeed, the phygital allows toimprove the customer experience by adapting to new needs. It can also boost the physical store by increasing the services offered, more frequent interactions with the brand universe, and an extension of the ranges offered.

Some examples of companies experimenting with phygital

The Etam group is a reference in this field. Undiz with its "connected" flagship on the Champs Élysées is a good illustration. The concept : 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 store, through tubes crossing the sales area.

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

The novelty lies mainly in the provision of a product recommendation system. Information screens are integrated in the mirrors and advise the customer. For example, if the article is a T-shirt of a certain color and size, the software will suggest a pair of pants that will go with it and in the same measurements.

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

Be inspired by these examples of virtual stores to offer, you too, new shopping experiences in virtual reality! shopping experiences in virtual reality!

2/ Why go phygital?

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

How to create a physical experience in digital? The digitalization of your physical store allows you to clone your store in 3D. It also allows you to totally rethink the customer's journey in the store in order to offer him a different and immersive experience, to guide him towards the products he likes, to direct him with relevance towards additional purchases, to answer his need of autonomy. In both cases, it serves as a link with physical stores. By adding an interaction with a physical person, you answer this problem even better.

The Clarins brand is banking on the point of sale to provide an experience exactly like that of a store. 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 makeup trial. Everything is packaged to provide a true 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 takes up the concept of the virtual boutique but puts forward the human relationship thanks to the reception of 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 great example of phygital.

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

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

1/ Define the main features of your online store (range, universe and buying path)

In order to create a virtual store, 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 store well in advance. Once shot, the 3D store remains the same. So how can you best prepare yourself and make this transition to phygital?

Whether it's for the marking of the customer path, the merchandising to adopt or the optimization tools to implement, virtual reality in a test and learn perspective can facilitate the implementation. We analyze where the customer's eyes are, how he navigates in the store or how sensitive he is to its layout.

This will also generate new data. Brands like Tesco are already experimenting with this type of solution to analyze the customer journey. Customers can move around a virtual store while the brand analyzes their behavior and reactions to the signage or packaging. After collecting this data, it is possible to optimize the point of sale for a better return.

The buying process plays an important role in the implementation of the virtual store.

The importance of merchandising

The intervention of the visual merchandiser is also an important phase in the development and implementation of your virtual store. Once shot, the 3D store 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 about the coloramas and to imagine an overall view of the showroom. The characteristics and the merchandising codes are perfectly respected in a virtual showroom. This allows to stay 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 store

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

Obviously, this new data will be useful for content marketers to understand the nature of the new information needs of the "connected" consumer.

These technologies will help build a new world that brings adaptive and connected environments to life. (Far beyond a mobile or a headset). This will blur, once again, the boundary between physical and digital.

IV/ Best practice: 360° and VR showrooms

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 store, a flagship, the latest concept store. The virtual reality showroom, on the other hand, is a custom store. Designed for a web customer journey, with photo and video content to illustrate the brand and worked graphically on virtual reality engines.

1/ MRK case study, a photorealistic showroom with a phygital focus

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 to ensure the presentation of its collections. During the 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 has chosen to set up a 360° virtual showroom. The perfect mix. Presenting the collections, selling, and guaranteeing access to the emblematic showroom intimately linked to the brand.

Limited in their displacement, the 360° showroom proved to be the perfect solution to continue to access the collection while staying at home. In terms of interactivity, it is the best. 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 uses, there are more and more virtual stores or showrooms on the market. A perfect case of phygital.

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

2/ Nespresso customer case, a 3D virtual store

The 3D showroom is the setting up of a customized shopping universe, not linked to a real environment. Unlike the 360, it does not necessarily reproduce an existing store 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 came from looking for a way between the physical and the digital. Recreating the merchandising codes of a boutique, transposed into an online digital experience. The 3D showroom brings these mechanisms, but with more emotion, more immersion, more contribution for the user.

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

3 / The contribution of Retail VR technology to phygital

On the 360 showroom :

The design of a virtual showroom can be done very quickly. A perfect transition to phygital. The Retail VR technology allows to scan the showroom in 360° and to be integrated in 24h on the platform. 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 customize the showroom to your image
4/ Retail VR delivers the final virtual tour

The big plus? Your showroom is customizable. From the product sheet, to the integration of videos etc. Everything can be modified to be as close as possible to your brand universe.

The contribution of technology on the VR showroom:

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

1/ A briefing meeting to discuss with the brand the physical appearance of its store. The possibilities are numerous: set up a video call / basket / wishlist
2/ Working with merchandising: Expectations vary depending on the brand.
Lactalis : recreate a department with the merchandising layout BEFORE / AFTER.
WD40: Put products in a context of use.
33/ Modeling in VR the sales universe / the products (Use of the 2D/3D converter)
4/ Setting up effects, inserting product sheets / connecting 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 with e-commerce sites. The new digital era has never been so present.

Be inspired by these examples of virtual stores to offer, you too, new shopping experiences in virtual reality! shopping experiences in virtual reality!

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

Frequently asked questions (FAQs)

- What defines the concept of phygital?

The notion of phygital is defined by the harmonious fusion of the physical and digital worlds. It is the clever interweaving of the tangibility of the real with the innovative flexibility of the virtual. In short, phygital embodies the intelligent convergence of these two distinct universes, creating unique and enriching experiences for individuals and businesses alike.

- What is phygitalization?

Phygitalization represents the evolution towards the close integration of the physical and digital worlds. It's a process in which the boundaries between real and virtual experiences become blurred, creating an environment where technology and reality come together to offer more immersive interactions and experiences.

- What role does phygital play in today's marketing strategies?

Phygital marketing plays a crucial role in contemporary strategies by offering a two-dimensional approach. By blending the physical and the digital, this revolutionary method enables companies to create innovative, holistic marketing campaigns. By merging physical media such as posters or packaging with digital tools like QR codes, Phygital marketing creates engaging experiences for consumers. These synergies between the real and virtual worlds strengthen brands' connectivity with their audiences, stimulating interaction and engagement. In short, Phygital marketing offers an innovative approach to captivating consumers in a landscape where the boundary between the real and the virtual is gradually blurring.

- What are the advantages of a phygital strategy?

The benefits of a phygital strategy are manifold, and positively influence both companies and consumers. This innovative fusion of the physical and digital worlds offers a series of advantages:

1. Enriched experiences: Phygital enables consumers to enjoy richer, more interactive experiences by combining the advantages of the real and virtual worlds.
2. Personalization: Phygital interactions offer personalized experiences based on consumers' individual preferences, enhancing their engagement.
3. Enhanced connectivity: By linking physical and digital channels, Phygital improves connectivity between consumers and brands, encouraging ongoing interactions.
4. Continuous Innovation: This convergence encourages constant innovation by offering new ways of designing products, services and experiences.
5. Ease of access: Phygital offers increased accessibility to products and services, enabling consumers to explore and interact with them in a flexible and convenient way.