Why “Phygital” Is the Future of Retail Customer Experience

The gap between physical and digital retail customer experience is disappearing. In their place is the new “phygital” CX, in which digital data informs the physical experience, and vice versa.

When retailers get it right, the result is a positive feedback loop that delivers a seamless and personalized retail customer experience.

I recently spoke with Neil Saunders, Managing Director and Retail Analyst at GlobalData Retail, about what this trend means for retail businesses. “In essence, retailers need to stop thinking in terms of channels and make the whole operation seamless for stock visibility, fulfillment and customer tracking, and so forth,” he says.

An enhanced, friction-free and versatile CX is especially critical for solving the new and emerging problems presented by the pandemic. The good news is that retailers of all sizes can use technology to create a signature CX that blends on and offline channels. Here are 5 practical ways to start now.

1. Cross-Pollinate Recommendations and Offers

When you consolidate customer data across online and in-person activity, you can personalize offers in a more meaningful way. For example, a customer who bought a pair of pants online could receive a coupon for a matching belt, delivered digitally via push notification the next time they are in your physical store.

In-store actions can drive online communication as well: A customer who bought a new pair of shoes at your brick-and-mortar store could get a follow-up customer service email recommending new laces or a cleaning kit. In both cases, you’re using all the data available to make sure your communication with the customer is relevant, personalized, and far more likely to be welcomed.

Phygital CX can also nudge customers across the digital divide. A customer who has previously only shopped online might be tempted by an in-store exclusive, and vice-versa, as long as the offer was based on their purchase. And, an online-only customer might be tempted with an in-store coupon, or vice versa. 

2. Enhance In-Store Experiences with Online Additions

A branded smartphone app can be the gateway for enchanting in-store encounters. Customers could use AR to try on clothing, test-drive cosmetics, or even test out different fabrics and colors for furniture.

Through AR, stores can also place “digital signage” that is personalized to the customers’ purchase history. These signs can highlight relevant products, give additional information, highlight the design and history of a product, and more.

For example, a customer could search for a product in your app, while in the store. Through the phone’s camera, they would see an arrow directing them to the right shelf. Then they could scan the item’s tag for a pop-up animation that highlights the item’s designer and shows how it was produced from sustainable materials.

However, not every enhanced experience has to be as flashy as the above example. Something as simple as the ability to accumulate rewards points on both in-store and online purchases, and redeem them in either location, is a bonus for your customers.

3. Ensure Product Availability Across Inventory

Imagine your customer checks your website for a specific item. They see you have three in stock at your physical store. So they mask up, drive to the location — and the items are nowhere to be found. They can order from your website, of course, but now they have to wait for shipping and they’ve wasted a trip.

Smart inventory management is an essential part of the phygital experience. As customers routinely split orders between online, in-store, and in-between options like buying online and picking up in store, businesses with smart inventory tracking will be able to offer a better experience.

“Cloud computing is playing an integral role in helping retailers integrate online and store experiences. This is important as consumers increasingly shop across channels,” Neil says. “For example, the Cloud can facilitate good inventory management, giving online and brick and mortar stores greater stock visibility to support fulfilment options such as store and curbside collection,” he says.

IoT technology, smart shelves, and even robotic inventory tracking powered by A.I. are all tools that retailers can use to keep track of inventory — and keep their promises to customers about what’s in stock.

4. Prioritize Safety and Convenience

During our ongoing global pandemic, one way to enhance the customer experience is simply making customers feel more safe and making lower-contact shopping options as frictionless as possible.

For Saunders, this is especially important for small businesses that rely on foot traffic:

“Smaller retailers need to fully embrace digital in order to meet customer expectations. This means having an online presence that allows for transactions and using stores to fulfil orders. This has always been important, but is doubly critical during a pandemic that has disrupted in-store shopping patterns. Moreover, digitalizing things like payments with contactless options has become more important during the pandemic and consumers increasingly judge retailers on the availability of these options.”

There are plenty of options that businesses of any size can employ to enhance customer safety. Intelligent video uses artificial intelligence to enhance the capabilities of existing security cameras, turning legacy devices into smart sensors. The technology can help store managers enforce occupancy limitations and social distancing measures to improve the in-store experience.

Touchless/contactless checkout provides another layer of safety for customers who choose to shop in-store. Rather than tapping on a PoS device or handing a card to a cashier, customers can use their smartphone or NFC-enabled card to check out without picking up germs.

Finally, you can offer more convenience to customers who choose curbside pickup. First, smart inventory (as outlined above) can give customers a more accurate picture of what’s available for purchase. Second, you can minimize wait times and coordinate parking with intelligent video and queueing technology.

Connectivity Is the Foundation

From AR virtual dressing rooms to smarter curbside pickup, all of these technologies help create a seamless, enchanting, “phygital” experience for customers. And all of these technologies have one thing in common: They require robust, reliable connectivity.

If you’re just beginning to invest in modern CX solutions, connectivity should be the first item on your list. It starts with a robust Wi-Fi network, with wireless broadband as a backup. Once those are in place, consider your options for 5G solutions: While the technology is still in early roll-out, 5G’s enhanced speed, bandwidth and reduced latency will enable amazing customer experiences in the very near future.

Connect with Your Customers

It’s clear that “phygital” is the future of retail. But customer experience isn’t exclusively a retail concern. Every business, from banks to manufacturers to SaaS-solution providers, can benefit from improving customer experience. No matter what industry you’re in, you can use new technology to create an outstanding experience however your customer encounters you: Online, offline, or a seamless blend of the two.

Learn how AT&T Business can help: Visit the AT&T Business Virtual Retail Tour.