In retail, a distinction is often made between the in-store and the online customer experience, in terms of both organisation and deployment. The terms ‘Web2Store’ and ‘Store2Web’ are also used to talk about two different types of interaction. The aim of the ‘phygital‘ concept is to reunite these two approaches, which are mutually beneficial and in no way at odds with each other. In this article, we discuss the benefits of adopting a phygital strategy.
What can phygital do for brands?
- Provide overall rather than separate ROI for Web2Store and Store2Web
- Combine the advantages of each approach for the benefit of customers, who have a single relationship with the brand
- Maintain brand coherence
- Capitalise on distinct audiences according to the brand’s specific market objectives
If we look at concrete examples in retail, in particular in the French ready-to-wear market, the in-store experience is personalised. In the store, the range of products offered is local, while the online offering is global. Brands adapt their ranges to the specificities of local fashion.
The Web2Store approach
On a brand’s website, customers begin with the product and then check availability in the various stores nearby using the store locator. This way clients can sometimes get their product within an hour.
- Advantages for customers: certainty about in-store availability, the possibility to get the product within an hour and return the product to the store if required, time saved in the store, additional purchases (if customers buy a shirt, they can also buy a tie for example), in-store advantages (advice from sales staff, the possibility to try on the product, access to the whole catalogue, specific store benefits, no delivery costs).
- Advantages for the brand: ability to generate additional sales by cross-selling at the point of sale, no costs related to online retail (delivery costs), more opportunities to interact with customers, a study of browsing habits on the website to adapt and personalise the local offering, making it possible to reach and even increase the loyalty of users that favour online purchases.
- Disadvantages for customers: they are unable to benefit right away from the richness of the catalogue and in-store assistance and advice.
- Disadvantages for the brand: the possibility of showrooming (visiting the store to try on the product and determine size, and then compare/order online), competition between shops (franchises versus stores belonging to the brand), an obligation to apply the same prices in physical and online stores, the need to establish a policy for the allocation of sales at various levels: between sales staff at a single store, between stores belonging to the same brand and between the various communication media (flyers).
The Store2Web approach
The in-store customer experience is extended using tools that are specific to the digital domain. Among the various possible techniques, there is the digitisation of receipts.
- Advantages for customers: digitisation of the receipt means customers do not need to bring a receipt with them for exchanges or refunds, they can return products to the store directly via the website, which is also an advantage when the product is given as a gift, decentralised management of gift vouchers (which can be used in any store), personalisation of online experiences based on in-store purchases.
- Advantages for the brand: a customer loyalty policy independent of the geographic zone.
- Disadvantages for customers: there are few disadvantages. Perhaps the fact that they do not benefit from personalised advice in their web interface!
- Disadvantages for the brand: Churn: the potential risk of customers switching to another store or 100% online shopping.
Phygital, or bringing together Web2Store and Store2Web approaches
These examples illustrate well the added value of phygital, since it involves constant interaction between the two approaches. Brands must organise and formally establish a combination of the two approaches, and deploy a phygital-oriented policy using tools, systems and a specific organisational structure, which all too often features silos in click & mortar companies.
The target vision must clearly bring together Web2Store and Store2Web, as customers undeniably only have one relationship with a brand, which does not depend on individual channels used. It is, therefore, necessary to place customer service above all else, rather than seeking to maximise sales channels (customer-centric approach).
For example, in the banking sector, phygital is standard, since customers switch seamlessly between online apps and personalised advice in branches.
Deployment and challenges
Whether a brand is traditionally brick & mortar or a pure player, the main challenge is to deploy the phygital approach in a global and cross-cutting manner, without worrying about whether to apply a Web2Store or Store2Web approach. In order to achieve this, it is necessary to establish KPIs in order to monitor Web2Store and Store2Web approaches and understand how they feed off each other to the benefit of overall business performance. This also means correctly identifying customers in order to know where they are situated in their journey at any given moment (role of CRM and web analytics).
This new holistic approach does, however, have its drawbacks: it requires a comprehensive review of the internal organisation and synergies between online and physical channels, as well as the business model of course. This is what the press industry had to do throughout the 2000s and it was a particularly painful process. Some newspapers that were originally printed have practically become pure online players (such as the New York Times, which is currently transitioning to become 100% digital). Other papers, such as Le Figaro in France, have managed to maintain both approaches with a differentiated offering for online and offline customers (mixture of free articles and paid features). When an article is not available for free, customers have a choice between either reading it online for a fee, which is often modest (per article, or for a given reading time), or going to a shop to buy a newspaper. Still other newspapers, such as Le Canard Enchaîné (also in France), have remained 100% traditional print papers with no negative impact on their business performance.
To conclude, phygital is more a state of mind than a strategy. It is, essentially, an invitation to think about the real needs of customers at a given moment in their experience, which, from the point of view of the brand, is increasingly chaotic and volatile, as well as to think about their attachment to the brand rather than the brand’s internal requirements.
By Henrick Kac & Gwennael Grandmougin, Consultants in Analytics & E-commerce – SQLI Paris
- Putting an end to the opposition between digital and traditional - http://www.marketing-professionnel.fr/tribune-libre/roi-mesurer-investissement-marketing-201704.html
- Oxybul puts Web2Store and Store2Web at the heart of its growth plan - http://www.pointsdevente.fr/visualisation-darticles/detail/joue-avec-les-canaux.html