In just a few years, digital shopping experiences have gone from being a minority to a majority, multiplying without apparent stop. During the pandemic, home became work, and faced with the difficulty of going out, online shopping skyrocketed. In addition to commerce, medicine and education also evolved rapidly, combining physical and digital presence. The pandemic showed us that it is possible to study from home. Doctors multiplied consultations by videoconference. Trade underwent an incredible transformation.

A McKinsey study found that, in 2020, the growth of digital products and services was ahead of schedule by an average of seven years. Analysts predict that we will never return to pre-pandemic shopping behavior, and that the future will further integrate digital shopping.

According to the IAB Spain 2022 e-commerce study, the number of online shoppers in our country is growing, reaching 24.7 million people. Spanish e-commerce users buy online an average of 2.8 times/month and their satisfaction with the service continues to rise, with a rating of 8.2 out of 10. Despite this reality, almost 20% of users still prefer physical interaction, so they will start browsing online and then make their purchase in a physical store. Digital-analogue coexistence is thus destined to survive.

 

What is Phygital?

While the word is relatively new, many of the technologies needed to merge the two worlds have been around since the 1990s.

Phygital (an acronym for Physical + digital) is the union of the physical and the digital with the goal of making more informed decisions that better align with the customer’s needs. It is not something that works in one direction, since it is the result of a combination rather than a translation of information or experiences.

For example, let’s think of brick-and-mortar stores with salespeople who already know customers’ preferences from their online profile, or a mobile app that notifies customers of exclusive in-store events and offers discounts for their purchases.

 

A hybrid world

Very few brands, nowadays, can claim to be purely physical. Customers are increasingly researching online options before making a purchase decision, which means their journey to any brand is digitally mediated even if they weren’t online.

There are no longer any barriers between physical and digital. Any brand, marketing or communication strategy must have the ability to integrate both worlds. Companies can benefit from the information and data that technology provides them, they can also take advantage of the strength of technologies to enhance a difference with competitors. On the other hand, customers expect digital technology in physical stores and personalized experience in online stores.

Phygital strategies take the best aspects of each environment to create a much more complete and satisfying customer experience. They provide the opportunity to browse, compare, and shop; But they also allow you to add emotion to the relationship with the brand, which will be truly responsible for a total connection. Regardless of how great digital platforms are, customers always value their real-life experience with the brand positively. We don’t want a fully digital life yet. We like to touch objects, smell them, feel their touch…

 

Multichannel, Omnichannel, Phygital

Channels are the means through which a brand creates awareness and promotes its product or service. They can be of all kinds, from a website, a brick-and-mortar store, a billboard, and even product packaging. Multichannel, Omnichannel, and now Phygital are similar terms, but they don’t mean the same thing:

    • Multichannel refers to the use of more than one channel to market and communicate information about a brand. These multiple channels are not integrated with each other. A billboard, for example, is not directly connected to the website, they are separate channels that are used to increase awareness of a brand.
    • Omnichannel also refers to the use of more than one channel to communicate with customers. However, in this case, multiple channels are integrated to create a seamless customer experience. In other words, a customer can pick up on one channel where they left off on another.
    • Phygital goes a step further than even Omnichannel, as it aims to fully connect offline and online experiences: it seeks total consistency in the customer experience and in the purchase process.

 

Some examples

Starbucks has been able to brilliantly bring the two worlds together. Its app has become the largest mobile payment system in the U.S. Coffee lovers can use their app to order and pay for coffee, send coffee “gifts,” collect reward points, and access sales and special offers. The brand is even expanding its digital/analog experience with high-end coffee roasters that feature augmented reality capabilities.

IKEA and its IKEA Place AR app, allows customers to design their home décor with IKEA products. The app overlays selected furniture over an image of your home, allowing you to see what the final result will look like. It’s an ingenious way to combine the famous IKEA catalog with a real-world experience.

Timberland has incorporated digital panels into its Manhattan stores. They make it possible to complement the real experience, taking data from a previous digital selection. Customers can tap on products and learn more, create personalized shopping lists. In turn, Timberland collects data on the interaction between dashboards, online visits, and store visits to analyze them and improve brand experiences.

Similarly, any McDonald’s store offers you the possibility of a digital in-store purchase. When you walk into the restaurant you find some digital kiosks that are a perfect example of Phygital in action. Even if the customer is in a physical store, many still prefer the convenience and speed of digital to place their order.

 

How to bring the two worlds together

You don’t have to be Starbucks, Ikea, Timberland, or McDonald’s to bring together the best of physical and digital. You can approach it from different angles:

    • The physical lives digitally on social media. Consider strategically activating your social networks, a space that can bring your brand to life based on its products, its spaces, and its values.
    • Open the dialog. Take advantage of Hashtags and live event posting. Hashtags encourage users to live tweet or post about their in-store experience. Event scheduling, an increasingly valuable way to generate traffic (digital or physical), can be a great way to foster the brand experience.
    • Harness the power of location. If your brand has an app, geotagging can be used to send push notifications about special offers as prospective customers approach the store. It’s possible to do the same in-store, alerting users to special personalized offers as they browse your products.
    • Rethink your physical space. Physical spaces are ideal for creating experiences and encouraging personal interactions. There’s a reason why many service-based businesses, such as banks, are moving toward an in-store hospitality-centric approach, such as incorporating coffee shops, lounges, and free Wi-Fi, while relegating ordinary account management to their apps.
    • Measure and analyze. Understanding the
      customer journey
      is a must, especially if you’re going to make changes to it. Use the data you collect to understand how customers interact with your brand and to identify any areas for improvement, catering to their interests and optimizing their experience.

 

The future is here

The line between digital and physical experiences will soon be so blurred that customers won’t even recognize the difference. New technologies such as Artificial Intelligence, Augmented Reality or Virtual Reality will help create a new generation of services and products. The rise of so-called web3, blockchain, and cryptocurrencies seems unstoppable.

Recently, Rosalía’s latest tour has sparked a debate about what we meant by a live concert. Their show without musicians focuses on a strong visual and choreographic component, combined with pre-recorded musical bases. It is a commitment to a disruptive format, which combines physical presence with an important digital interface that may be a prelude to the new Metaverse.

Meanwhile, the architecture of the Metaverse continues to take shape by innovating in the realms of immersive experiences. The new normal is becoming a reality based on the hybridization of seamless interactions between online and offline experiences.

In any case, cross-cutting brand management, in a way that ensures consistency whatever the environment, is more important than ever. Be sure to review the experience of your website, your store or office, your employees, and your customers. Think that small islands of coherence in a sea of chaos can significantly boost your business.

 

 

Carlos Puig Falcó

CEO of Branward