Phygital Retail Revolution: Adapting to Change
The pandemic has hit the retail world like a typhoon! Amidst all the uncertainties and lockdowns, most retailers have flocked to digital methods like never before. With stores getting shut, ecommerce has become the obvious alternative. Add to that the significant changes in customer behavior and expectations. Some businesses are even trying out stuff from sci-fi and making the digital shopping experience as close to the real one with sounds, effects, and so on! Does this mean the physical stores and traditional shopping experience is dead? Unlikely though.
It’s more likely that by 2025, traditional shops will spring back to action, but in different avatars and with more inventive experiences, giving rise to what we might call a “phygital experience”.
Retail stores have a bright future ahead of them
When lockdowns became the new standard, companies, and shoppers emphasized on “go digital,” expanding eCommerce’s share of global retail sales from 14% in 2019 to about 17% in 2020. The global in-store or brick-and-mortar retail channel created 18.5 trillion US dollars in revenue in 2020. The same year, global retail sales totaled about 22.5 trillion US dollars. But this “Go-digital” is not a one-size-fits-all business. Some businesses have gone entirely online, while others are still committed to the idea of a retail store, while the majority are somewhere in the middle. But there is one thing that almost all retailers have in common. They are increasingly focused on being technologically savvy.
Will you believe if I say a table can order food for you? Envision you walking into a restaurant and ordering food with an interactive touchscreen table. You’ve made your choice, chosen your ingredients, and placed your order by simply scanning the QR code. When your order is ready, you will receive a push notification with your name on a custom box. Yes, we are setting foot in the realm of “Phygital” – physical and digital concurrently, where there is no such thing as a physical or digital world, but which is fully interconnected. Let’s see some examples:
1. In-Store Navigation
In-store navigation is a typical issue in retail stores. Big box retailers like Walmart, Lowe’s and Home Depot are experimenting with several intriguing wayfinding technologies that enhance consumer navigation within physical stores. Lowe’s was one of the first stores to launch an app that included augmented reality interior mapping. This mobile service, instead of displaying a 2-D picture, projects navigation signs and pricing promotions on top of the user’s field of view. Users may also use voice or visual search to discover a certain item and then be told where it is in the shop. Envision robotic store assistants with built-in 3D scanners that allow the user to identify and even guide them to products by navigating through the shop. What if the consumer has a query that the robot is unable to answer? Not an issue. The robot automatically initiates a video conference with a human service member who may assist them as needed. IoT gadgets with integrated technologies such as Bluetooth, Wi-Fi, magnetic locations, etc. can also help with in-store navigation.
2. Product Information
With COVID-19 issues likely to persist for some time, shoppers may begin to scan barcodes and QR codes not just to pay for things, but also to obtain information about those products directly onto their smartphone. This will reduce direct product handling while also addressing concerns about sustainability and accountability by being more transparent about production practices.
3. Contactless Payments & Self-Checkout
The use of swipes and phones are being phased out by taps and wallets. Tap-and-go card purchases at grocery stores and pharmacies grew twice as quickly as non-contactless transactions globally and 2.5 times faster in Asia Pacific between March 2019 and 2020, according to Mastercard. Many food and beverage establishments have integrated touch screen ordering and payment. Facial ID & biometrics has eliminated the need for physical payments. For example, in California, a fried chicken restaurant business Daddy’s Chicken, has adopted contactless payments to expedite the ordering process while safeguarding consumers against COVID. It is utilizing kiosks equipped with face ID technology to enable consumers to conveniently purchase and redeem loyalty points across all locations. Kroger began testing a smart cart with automatic checkout, while Amazon unveiled Dash Carts at Amazon Fresh locations, which rely on Just Walk Out technology.
4. Emergence of new fulfillment methods
In the face of transition, traditional tactics can no longer succeed. Increased consumer preferences, major technological advances, and the advent of omnichannel commerce are only a couple of retail phenomena reshaping the industry. Curbside collection, local delivery, contactless payment, and Buy Online Pick Up In-Store (BOPIS) are all becoming increasingly common. However, these fulfilment approaches offer convenience for day-to-day operations as well. They are simple, easy, and blend in seamlessly with customer lifestyles. ReRoot, a small retailer headquartered in Denver, embraced these new fulfilment approaches with open arms. Since there was a high demand for curbside delivery, the team converted their small retail area into something more akin to a distribution center. Likewise, Bed Bath & Beyond announced that a total of 1.2 million consumers ordered BOPIS, accounting for 16% of the company’s total digital sales. The fact that BOPIS (buy online, pickup in-store, i.e., ‘click and collect’) has grown in popularity is concrete proof of this.
5. Digital enablement of stores and personalized customer experience goes from Important to Essential
The use of face recognition to provide an in-store experience is on the rise – that is when a customer enters a retail shop, a camera identifies the customer and alerts the store executive. They are also given data points specific to the customer’s interests based on their shopping history and demographic data. This lets store executives have personalized communication with the customer. AI assists retailers to spot trends and forecast consumer tastes, while Augmented Reality allows consumers to put on clothing or scope out room decor, and “scan and go” applications are transforming the way shoppers pay. Virtual dressing rooms are one of the most fascinating augmented reality developments in the fashion industry. Since “try-before-you-buy” is more complex to handle when adhering to public health mandates amid the COVID-19 pandemic, augmented reality plays a unique role in assisting customers in making purchasing choices. Ralph Lauren’s flagship store in New York also has smart-mirror fitting rooms where customers can order various sizes and colors, display product stats, and even change the room lighting all from the linked mirror. Similarly, Oak lab developed interactive changing rooms using similar technologies. The smart mirrors suggest other products that consumers frequently combine with the things they are choosing, completing their ensembles, and bringing the convenience of online shopping into the store.
In times to come, we’ll be seeing digital mannequins change their outfits in real-time depending on who you are and what you’re carrying in hand. More in-store opportunities will be ¬¬¬available to help customers interact with the items, explore them, and learn about them. But, unlike today, when you go to buy the stuff, you might not just take it off the floor and head out the door. It might even meet you in the car or even at your house.
Reimagining the Physical Store!
Foot traffic in physical stores would slow to a trickle unless stores give shoppers a convincing value proposition. Consumers are now getting habituated to order a wide variety of items from the comfort of their own homes. They won’t go into shops unless retailers give them a compelling ground to do so in the future. Emotion, personal touch, exploration, and culture would be essential for stores to succeed. Physical retailers will need to become frictionless in more ways than one, as the brick-and-mortar shopping will become a high-touch, sensory-driven experience. Contactless purchases, fewer physical touchpoints, and the expansion and simplification of click and collect are all part of this strategy.
Is the retail store apocalypse here? Not at all! Think of mangoes – the way you smell it, even if it’s been several months since you went to the store. How about trying on clothes to see which fabric and size suit you. The human touch and experience can never happen in eCommerce. Besides it takes time for an online order to arrive and then you return it if it is not to your satisfaction, then again wait for another one to arrive! Shopping is multifaceted. We want to see, touch, smell, put on, and (occasionally) taste the things we’re purchasing, and the eCommerce experience will only take us so far. No online shopping can replicate the experience we get in a physical store.