What is the Phygital Model in the Consumer-Retailer Relationship in a Post-Covid World?

by Adwright, 23 February 2021

I. Introduction

The phygital model, which is essentially the integration of digital and physical mediums, is not new. We are all familiar with the kiosk – a digital computer at places like the airport, bank or restaurant that allows us to check-in to flights, make payment transactions or place orders quickly and efficiently. This is an example of how digital experience is integrated with physical environments to create a smooth consumer experience. The pandemic has hastened the inclusion of such digital components in our daily lives. When the pandemic struck, businesses, schools and workplaces had to adapt quickly to digital solutions and integrate digital platforms and devices into their functions and processes. In light of these changes, phygital experiences have become commonplace and essential in the consumer-retailer relationship. The physical and digital platforms are no longer separate entities. The consumer experience is increasingly viewed as the entire process of interacting with a brand – a seamless transition between the physical and digital world.

II. Consumer Behaviour

Due to the pandemic, consumers have to adapt to using digital solutions to continue their daily lives under lockdown conditions. There has been a significant shift to digital alternatives for work, leisure, exercise, shopping and education. These recent changes are unlikely to fade away after the pandemic ends, as consumers become accustomed to the benefits of digital platforms. Experts predict that e-commerce will continue to play a significant role in our everyday lives – even more so than pre-pandemic days – and new users will continue to shop online even after the pandemic ends.[1]

However, consumers continue to desire interpersonal experiences, and physical brick-and-mortar stores are still in demand. Especially after spending extended periods of time at home due to the pandemic, consumers crave interaction with other humans. What is essential is not a choice between digital and physical, but the understanding that the division between these two mediums has become blurred. Especially for millennials and Generation Z, the threshold between physical and digital does not exist; 82% want to access products both online and in-store.[2] Brands have to invest in connecting with consumers on both digital and physical mediums.

III. Business Landscape

The pandemic has forced businesses to pivot to digital alternatives as well. Where previously many brick-and-mortar brands could conduct their businesses in the physical world, the pandemic forced these brands to move online in order to survive. Even after lockdown conditions have been lifted, companies have to continue to implement digital solutions that will reduce human contact and obey safe-distancing measures. Some of these options include mobile reservation systems, QR codes for touchless menus and payments and in-store virtual fitting rooms.

Case Study

Our client, HarriAnns, a Peranakan food manufacturer and café operator, had to quickly adapt to digital alternatives. During Singapore’s circuit breaker period, HarriAnns’ cafés were forced to close, affecting retail business tremendously. To sustain a brand presence in consumers’ minds, Peranakan hot food and kueh were brought online. This allowed consumers to continue purchasing food that they would have ordinarily bought at HarriAnns retail cafés. Gradually, consumers perceived HarriAnns as a brand with both physical and digital presence, and accessibility to products became a mainstay in HarriAnns’s brand identity. Currently, HarriAnns is exploring a “Go Digital” initiative, where there is an integration of online and offline platforms. Customers can order and pay for food from a QR code placed on tables at the café. They can also order food online and opt for dine-in, self pick-up or delivery. This phygital system gives consumers a more seamless and convenient experience while dining at HarriAnn’s.

The phygital model brings other benefits for businesses as well. The integration of digital solutions allows companies to handle a higher volume of transactions, alleviate manpower constraints at physical outlets, and collect consumers’ data. Such data will become necessary as the phygital model continues to develop as society progresses.

IV. Future Outlook

At the heart of it all, the phygital experience is about making the consumer experience effortless and enjoyable. As the phygital model continues to develop, the future of the phygital experience will likely hinge on anticipation – creating anticipation among consumers, and anticipating their needs. This has been successfully leveraged upon by Nike under the Nike Live concept.[3] In 2018, the first Nike Live store opened in Melrose, and its design was based on data gathered and analysed from the NikePlus mobile shopping app. The store’s location, product offerings and store-specific product lines were chosen based on the online shopping habits of local NikePlus members. Cutting-edge features that transited seamlessly from digital and physical included a QR code-enabled smart locker that allowed NikePlus members to reserve items online and try them on physically. Also, a curbside collection and return were set up where NikePlus members can text the store ahead of arrival. A Nike employee will assist these members immediately when they pull into the parking lot. Leveraging digital with physical stores and personal service has proved successful, as new Nike Live stores have opened in New York, Tokyo and Oregon.[4]

As more businesses continue to engage consumers in digital spaces, more data will be collected. It will become more common for businesses to analyse these data to provide personalised services to consumers. Eventually, data can be employed across digital and physical spaces to provide service recommendations in stores, on apps, social media and even partners’ channels, hence proliferating customer-brand interaction.

V. Conclusion

A phygital experience is intuitive, smart and customised. It is changing modern consumers’ experiences and influencing their habits and desires. Now, consumers are accustomed to interacting with brands both physically and virtually, and they no longer view a clear divide between the two mediums. While implementing future strategies, brands should look for ways to complement digital and physical mediums. In physical environments, digital components can be introduced, such as by integrating app features with physical retail. Businesses with predominantly online offerings should create opportunities for customers to physically interact with the brand through physical pop-up stores and events. In essence, brands that effectively utilise the phygital model to deliver memorable experiences to consumers across multiple channels will achieve long-term success.

Adwright has accumulated a wealth of experience in helping brands stand out from their competitors with unique and attractive brand stories. For over 20 years, Adwright has collaborated with clients that range from local SMEs to global corporations, spanning across a myriad of industries. We provide integrated solutions in branding, design, communications and beyond. Partner with us and embark on your unique brand journey today. To find out more about the services that Adwright provides, call us today at +65 6227 7227 or email enquiry@adwright.com.

References

[1] https://www.straitstimes.com/business/economy/online-shopping-trend-set-to-stay-after-curbs-ease-say-analysts

[2] https://everisus.medium.com/phygital-a-new-dimension-in-customer-experience-40d940f1cb58

[3] https://www.rga.com/futurevision/trends/nike-live-retail-success-human-touch

[4] https://www.retaildive.com/news/nike-pushes-small-format-expansion-with-new-nike-live-store-in-oregon/593782/

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