In brief:

• Retailers are striving to create unique in-store experiences to attract customers who are increasingly inclined towards online shopping.
• Despite the rise of online sales, a significant portion of revenue, around 75-80%, still comes from in-store purchases.
• Motivating and retaining front-line teams in the face of digital transformation is crucial, with the right tools, technology, and training playing a vital role.
• Leveraging data to drive digital experiences and understanding the relationship between online and offline sales is key to driving growth in retail.

‘Phygital’. Is it a buzzword, is it a mangled marriage of two words, is it even a word at all? One thing is for certain: phygital – otherwise known as the intersection of physical and digital – is crucial to the future of retail.

We know in-store traffic is almost certainly going to be down permanently. As customers get complacent with the ease of online shopping, what can be done to tempt them into store?

GDS Group hosted a panel discussion exploring this very question at its Retail North America summit with some incredible names from eBay, Mars, custom suit makers Indochino, and a best-selling author and podcast host.

Table of contents:

Why ‘phygital’?

For Indochino’s Director of Marketing, Stephan Lukac, it’s all about creating an experience. “With the ease of being able to order anything online, we need to create a differentiator to get bodies into the store. The experience offers front line staff the opportunity to upsell or cross-sell much better than we can in an online setting.”

For something so personal as a bespoke suit, it seems a no-brainer that customers would need to enter the physical store. Indochino prides itself on enabling the customer to move seamlessly between on and offline channels to create their garments.

Lukac elaborates: “For us, ‘phygital’ is having a good understanding of customer experience and the ability to capture customers online first, then steering them to one of our retail locations to go through the suit fitting and talk with a style guide. Once we have their measurements, they have the opportunity to go back to online to make their order.”

The in-store experience remains valuable to consumers…and growth!

This number has been shrinking since the 2020 global pandemic rocked the foundations of retail. Host of the Retail America Tour podcast, Ron Thurston, says it’s the physical stores, and the people that work there, that matter. “The most special moments in your life are sometimes related to…the once in a lifetime purchases you make. You want those in store purchases to be memorable…It’s about the magic that’s created within the four walls.”

Thurston spent many months on tour in a caravan visiting retail stores across America. The brands that wowed him most were the ones that were great to work for. He describes success as an amalgamation of having best-in-class tools, technology and learning and development to attract and retain top employees.

“Brands that provide the best resources across digital and retail are celebrated from a company point of view. Plus, frontline teams use the tools and engage with the business – everybody wins!”

Motivating and retaining front-line teams

So, what does this mean for retail staff? We know their expectations of what they need to do their job well are sky-high, and they need to be able to respond rapidly to customers who have already done their research into products and price points online.

“Insight shows us employees need better tools to do their jobs”
Ron Thurston – Host of the Retail America Tour podcast

“The digital side has become very important in hiring and retaining front-line teams…and on the flip side, brands that haven’t invested in the technology or their teams struggle to create brand loyalty. There’s a lot of work still to do.”

But how do we keep front-line teams motivated about the rapid transformation in digital growth? For Lukac, an important component is for staff to have access to data. “With made-to-measure suits, we must get the data right. If we can see staff are making errors, the data can help with coaching, build the team, and get them excited about what they’re doing.”

For Thurston, it’s all about providing the right training to suit employee comfort levels. “You have to meet people where they are – you can’t put them in a room and tell them how to use technology and think they will come out with equal skills. We need to provide training that is right for the employee…to have the best possible experience.”

Leveraging data to drive digital experiences

Another approach to ‘phygital’ is to consider how online and offline sales relate to one another to boost growth.

“We need to think about the value that online brings to the offline and the opportunity to drive sales”
Celia Van Wickel, Global Head and Director of Omnichannel Analytics – Mars

Working on the confectionary side of the business, Van Wickel admits – it’s not the most mature category online, but it continues to act as a growth engine. Mars leverages the online component to enable the business as a whole and is working to omnify data. “We are bringing online and offline data together to ensure incremental growth across retail and physical.”

For a purely online marketplace, eBay, the idea of ‘phygital’ might seem immaterial. However, confirms their Global COE and Senior Director and Data Science Analytics, Ashish Singru, they want to match global standards of physical retail by using data. “We need to understand how retail and physical are colliding,” says Singru. “We have done a lot of work to understand the moment of truth of when a customer is in-store and making choices – and how those relate to online. For example, how a product looks and feels.”

One strategy to capitalize on this is an investment in visual search. eBay sellers can offer better quality images when they list their products and, as a result are rewarded by appearing higher in search results.

Every retailer has their vision of where and how physical and digital collide. Whether it’s creating a magical in-store experience, empowering employees with the latest and greatest technology, leveraging data to replicate brick-and-mortar experiences online or digging into metrics to drive growth across the board – it’s clear harnessing the attributes of both on and offline are high up on retail’s shopping list.

Conclusion

The concept of ‘phygital’ is proven to be critical for retail’s future. Retailers may build distinctive and memorable in-store experiences that entice customers by seamlessly merging physical and digital interactions. While online sales are increasing, in-store transactions continue to account for a major part of revenue. As a result, merchants must invest in their front-line personnel by equipping them with the necessary tools, technology, and training to fulfil the demands of digitally aware customers. Using data to promote growth and understanding the relationship between online and offline sales can result in a seamless blend of on and offline experiences. As the retail business evolves, retailers seeking success in the ever-changing marketplace must leverage the benefits of both the physical and digital realms.