Retail brands need to offer customers an integrated experience across physical and digital channels.
Social media shopping, AI assistants, immersive shopping experiences aided by virtual and augmented reality, click and collect – the number of new shopping formats and possibilities stimulated by the development of new technologies is long and has been growing steadily. However, despite all these new technologies, recent research has shown that expectations that consumers would abandon physical stores have not been borne out. It is becoming increasingly clear that both physical and digital ways of shopping will be part of consumers’ shopping habits. The hybrid future of shopping is ‘phygital’.
A new role
While physical stores will not disappear anytime soon, their meaning has completely changed. From being a place of transactions, where consumers buy products, they have become a place of experiences, where they get in touch with the brand through different senses, be it touch, smell or taste. The mere acquisition of a product is no longer a sufficient reason to motivate consumers to visit stores. To attract them, companies must develop activities that create positive and memorable experiences involving cognitive, emotional, behavioral, sensorial and social components. They can use new technologies to reduce pain points, increase convenience, and make the whole experience more pleasant.
Take Carrefour’s recently launched Carrefour Flash store in Paris, a fully digitally connected store that uses Amazon Go technology. Consumers choose products in the store and go directly to the check-out, where their baskets are automatically displayed on a tablet. All they need to do is make contactless payment or input a code to make their purchase. Another example is Nespresso’s new flagship store in Vienna, where consumers can access immersive rooms and digitally interact with top chefs and coffee farmers to learn how their coffee is made, explore its characteristics and find out about the sustainable activities developed by the company.
A new consumer
At the core of the phygital trend there is a new consumer, who expects companies to create seamless and consistent shopping experiences. They want to be able to navigate smoothly from the company’s website to the physical store, and vice-versa. These omnichannel consumers, who are more empowered than ever, want to decide when, where and how to shop. To delight and engage them, companies need to use new technologies in creative and unexpected ways. Fashion retailer Zara has developed a ‘store mode’ concept, initially in Spain and later extended to UK, Japan, Europe and the US, which allows consumers to use the company’s app to check the availability of a product in a physical store, buy it and collect it within 30 minutes. If they prefer not to buy a garment before seeing it physically, they can use a geolocation function to find it in a store near them and book a fitting room.
New technologies can also be used to foster social interactions, allowing consumers to communicate with each other, both face-to-face and online, sharing their experiences and increasing their enjoyment of shopping. Companies can promote in-store social events, such as new product launches, or develop online activities, whether on their own websites or with the support of social media platforms. This is the case with some beauty companies, such as Sephora, which has implemented Facebook Live Fridays: consumers can watch videos, chat with influencers and other consumers, and make purchases, directly through Facebook.
While social shopping is important at any age, it is vital for younger consumers including Generation Z (born from the mid-1990s to 2010) and Generation Alpha (born between 2010 and 2020). Companies targeting these generations have encouraged social shopping in a variety of ways, both physically and online. For example, Hamleys, the famous toy store in London, has designed a highly immersive and interactive 3,000 sq ft space where customers (or their children) can play in groups, participate in gaming challenges and learn from gaming experts. Similarly, Champ, a North American toy store that describes itself as a “family experience company”, developed White Elephant, an online gift exchange that promotes social shopping by creating a sense of community among families and friends.
With new technologies developing at pace, what can companies do to ensure that they are not moving in the wrong direction in this scenario for the future of shopping? Fundamentally, they must focus on their consumers. The future of shopping relies on a deep knowledge of consumers’ intrinsic motivations and an understanding that, for the customer, there are no perceived barriers between online and offline. New technologies, in this context, are a means of providing richer and better shopping experiences that meet and exceed customers’ needs and desires across distinct marketing channels and at different stages of the customer journey.
Whether they are in a physical or online store, or switching between one and the other, the customer is unchanged. They expect to interact with the brand at several levels: accessing valuable and customized information, getting advice from company representatives, interacting with other consumers, and having fun. Likewise, they expect the negative aspects of shopping, such as waiting – whether to pay in stores, or for delivery of their online purchases – to be minimized.
Shopping must progress and adapt to our evolving habits and expectations. New technologies continue to play an important role in the improvement of consumers’ phygital experiences.
Clara Koetz is a faculty member at Rennes School of Business.