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Online, offline, everywhere: Coronavirus as the driver of omnichannel commerce

The coronavirus pandemic has exposed weaknesses in many areas of the economy and society and revealed the true scale of our shortcomings. The consequences of underestimated or deferred issues, such as home schooling, have become very apparent. In the past year, politicians, parents, teachers and students have learned the painful lesson that, without up-to-date learning strategies, without an efficient infrastructure, without data protection compliant platforms and without all those involved having the necessary media skills, the virtualization of education cannot succeed.

The same is true of the digitalization of sales and marketing: The coronavirus lockdown has accelerated the paradigm shift and mercilessly exposed existing weaknesses.

 

Coronavirus has shone a light on the challenges of selling

 

For a number of years, Amazon, Zalando, Apple and others have been demonstrating the advantages of incorporating both brick-and-mortar and digital channels into Customer Experience and User Centricity strategies. Many retailers and brands were already following suit before the coronavirus pandemic, others were hesitating – often with drastic consequences – as during the first lockdown, sales models without digital sales options, such as eShops, digital marketplaces, social media or affiliate platforms, came to a standstill almost overnight.

An increasing number of market players are drawing their own conclusions from this enforced “emergency stop” – but not always the right ones! As simply establishing or optimizing an online shop solution is not sufficient to set yourself up successfully for current and future sales. Branding, marketing and sales will fundamentally and permanently change, irrespective of the end of the pandemic. Coronavirus is merely shining a light on the need for action. The focus: Omnichannel.

 

In the future, omnichannel will be at the core of every commerce strategy

 

Customers interact with brands, products and offerings via different touchpoints within various digital and brick-and-mortar channels. It must be possible to address the customer’s situation-based needs by means of these touchpoints and channels – for example, providing information or product advice for positioning within the Relevant Set1, as well as the actual sale or increasing loyalty within after-sales.

Omnichannel consistently focuses on the customer. High-quality seamless networking of channels is crucial for a compelling brand and product experience. The aim is to communicate consistently with the customer across all channels and for the customer to be able to access “their” sales offers at every touchpoint at any time.

This orchestration principle2 is currently experiencing massive change as the result of progressive digitalization and the coronavirus pandemic – on the one hand, in terms of smart functionality within touchpoints and channels and, on the other hand, in terms of the role that the individual touchpoints and channels play within the customer journey.

 

Showrooming and webrooming are being redefined

 

“Showrooming” and “Webrooming” refer to typical shopping scenarios or end-to-end journeys within the networking of digital and brick-and-mortar channels:

  • With showrooming, the customer draws their inspiration from brick-and-mortar stores and then seeks advice and broadens their product knowledge within digital channels (eShop, comparison sites, expert blogs, social media) and also makes their purchase online.
  • With webrooming, the customers uses digital channels to obtain information on a product or a brand. Depending on the product, the customer also sets up a configuration online but then makes their purchase in a store.

During the coronavirus pandemic, many small, local retailers have made a virtue of necessity and used showrooming in a modified form, by specifically designing their store displays for product presentation. In this case, a call to action – for example in the form of QR codes – links to either the retailer’s own webshop or to digital marketplaces, where the customer can buy the products presented.

In recent months, larger operators, above all, have redefined webrooming: In conjunction with the click and collect model, they have transformed their brick-and-mortar retail spaces from a point-of-sale to a point-of-experience. Customers find and order their desired items via the brands or the retailer’s online channel and then collect them from their local store. Despite same day delivery, the need for this kind of shopping experience has increased during the coronavirus pandemic, because delivery services are frequently overstretched and are, therefore, less reliable. Furthermore, there is also a desire for a “hands on” product experience, which cannot be entirely replaced by virtual product presentations.

The orchestration and roles of channels are thus experiencing a distinct shift. It is largely the role of the brick-and-mortar store that is changing: The store is now primarily operating as a presentation space, in which products are staged and brought to life, with more in-depth research and the purchase transaction increasingly moving to digital channels.

 

Brand management, customer centricity and logistics are becoming more challenging

 

Not only in lockdown, but definitely amplified by changed coronavirus shopping behavior, customers, who would previously have preferred not to shop online, are also turning to digital services – and will also continue to use them after the pandemic. Brands and retailers must face up to this fact. There is therefore an urgent need for action in terms of ensuring a presence, offerings and sales options on digital channels and, if necessary, expanding them further.

The vendor’s own online shop is not sufficient for this, but rather the omnichannel principle described above must function properly. The availability of products on digital marketplaces and a presence within suitable social media channels is crucial. It is important to achieve an intelligent balance between the loss of control in terms of brand management and becoming an authentic part of the customer dialogue, by highlighting the relevance and usefulness of the brand, product or offering for potential customers and continually adjusting it. What is absolutely essential is a precise knowledge of target groups and their persona, as well as an understanding of the individual customer’s actual requirements during the particular phase of the customer journey.

In terms of technology, the challenge is to consolidate data from all the systems in which user information is collected and stored (e.g.web analytics, CRM, eShop, ERP, etc.) to establish a “Single Point Of Truth”. All market players, regardless of their size, are facing this challenge i.e. in future, retailers and brands without appropriate digital infrastructures and platforms will barely be able to compete.

Product information, the individual customer’s needs profile, as well as logistical aspects, such as inventory management for the various touchpoints, must be available across all channels – both digital and brick-and-mortar. It must also be possible to flexibly adjust orchestration of the channels to changes in the customer’s shopping behavior – in order to ensure in the future, in situations such as lockdowns, that trade does not grind to a halt.

 

And what about B2B?

 

The same paradigm shift also applies to the B2B market. When sales representatives or consultants are no longer allowed to visit their customers during a pandemic, or on-site appointments need to be reduced for economic reasons, sales dialogue needs to take place virtually via digital platforms. And, in doing so, the customer expects exactly the same shopping experience as for private B2C shopping – but with the special characteristics of a B2B sales process, such as shopping lists, bulk discount prices, purchasing limits for employees, bulk consignments, etc.

 

The recent experience of the coronavirus pandemic makes it essential for all retailers and brands to face up to the “Sales Shift”. The digitalization of marketing & communications, sales and business processes is a must. What is absolutely vital is a digital infrastructure, which is based on intelligent and powerful software solutions. The first step is an intensive analysis of the customer journeys of target groups and the development of an omnichannel strategy based thereon.

 

 

1 In Marketing it is a phrase for a brand or product of interest to a potential customer. A product or brand which is in the relevant set is likely to be bought.

2 The principle of harmonizing all channels in terms of communication, branding, interaction and transaction options.

[SUCCESS STORY] BRIDGESTONE EMIA: A new B2B platform

The world’s largest tyre and rubber manufacturer, Bridgestone, partnered with SQLI to define and implement a new B2B SAP Commerce Cloud platform.

Mock-up-success-story-bridgestone-eng

Their goals:

  • A mutation to the omnichannel
  • Improve the overall user experience

 

Download our Bridgestone success story

A checklist for your Unified Commerce strategy

When you create a strategy for your e-commerce business, and the main goal is to provide a seamless customer experience, I believe there are some key areas you need to consider. By doing so, you will be able to increase your chances of creating a Unified Commerce strategy that enables customers to shop on their own terms.

Using this checklist provides you with an ideal oppounity to approach your ecommerce strategy from both your customers and your company’s perspective. Here is the checklist in 4 different steps:

1. Start with a vision

I recommend that you start with a vision; where you want to be in the future. This vision should be attractive, and reachable. A really good vision also includes a purpose for the company. It could also include figures that motivate your vision. These can be hard figures, meaning numbers, or soft figures such as a Customer Satisfaction Index (CSI)Your vision will benefit from being “visualised”, and iis also wise to include the benefits for your customers.

I believe you should include the right stakeholders at this stage and get them involved them when it comes to working on the vision. And last but not least; anchor the vision amongst your top management. As e-commerce is the core strategy for many companies and it affects many parts of an organisation, this should not be too difficult.

2. Perform an As-Is analysis

In order to know where you’re going, a good start is an As-Is analysis. Tools you can use for this include the SWOT model (Strength, Weaknesses, Opportunities and Threats), covering where you are now and where you want to go (Vision). You can also use the PEST model (Political, Economic, Socio-Cultural and Technological) to analyse your status quo.

It’s important to understand the situation concerning your legacy system. Therefore you need to map out the existing system flora and what the key integrations are, since these will be an important foundation in the next phase. This is also important as it helps you understand what’s working well and whats not and why.

3. Conduct a Unified Commerce analysis

When you carry out your Unified Commerce analysis, there are certain areas you should check you have covered – or confirm that there is no need to cover. However, these areas consist of different opportunities, functionalities, complexity, channel integrations, and the need for system support and a lot more.

Unified Commerce is all about providing an optimised shopping experience across all touchpoints and contacts with the customer. Therefore every area should end up with identified activities, functionalities, definitions of how to fulfill customer needs or likewise. This allows yout to estimate, prioritise and budget what to do in the next steps.

This is what I recommend you go through when conducting your Unified Commerce analysis:

  • e-Commerce
  • Product information management
  • Order management
  • Customer relationship management
  • User experience
  • Content
  • Digital marketing
  • Digital in store
  • Point of sales
  • Payments
  • Analytics / analysis
  • Marketplaces
  • Customer service
  • Logistics
  • Cross channel
  • Internationalisation
  • Architecture
  • Requirement gathering & analysis
  • Organisation

4. Build the business case

An important part of your Unified Commerce strategy involves building a business case. What are the benefits, opportunities and the value of the proposed strategy and activities? How can you measure success? How can you make the case and what does it cost in the short and long term? And what resources are needed?

When it comes to Unified Commerce strategy you can benefit from thinking about it as a program and in terms of roadmap where you need to do things in a certain order. You may for example need to think about an infrastructure for certain areas before you can take the next step. This is common when it comes to a more extensive strategy that has a major impact on the organisation.

Depending on how complex your strategy is to implement, you will be able to choose between different models. You can use tools such as a/an: effect modelcost benefit analysisROI (return on investment), business impact analysisbusiness model canvas, business case priority model, and more. You can also include measurement methods such as a customer satisfaction index, an employee satisfaction index, internal efficiency and more.

Good luck with your Unified Commerce strategy. If you are interested in more information on how to be successful with a Unified Commerce strategy you can download our white paper on this topic at www.starrepublic.com where all these areas are covered in depth.

Headless architecture: the 5 advantages for an e-commerce website

“What is headless architecture?”; “How does it help us?”; “How can it be implemented?” are questions customers ask us on a regular basis. To better understand this type of approach, let me tell you about the 5 advantages of this type of architecture.

To start with, headless architecture is the logical next step for digital platforms: 

  • In the early days of the web, sites were built from scratch. They were integrated into the rest of the IS in an ad hoc manner, without any real plan. The sites’ content, presentation and business were mixed, which was a real challenge in terms of administration and maintenance.
  • From the turn of the millennium, site construction was industrialised, based on off-the-shelf solutions (portal, CMS, e-commerce). This was the golden age of service-oriented architecture (SOA), with an initial organised approach to sharing business components in the form of reusable APIs. The fundamental principles were established: separation between content in a web application and functions behind an API. 
  • Headless architecture is the 3rd of these waves. With the arrival of the smartphone, content, business functions and data had to be shared between different touchpoints. Naturally, the trail blazed by SOA architecture was seen through to its logical conclusion: exposing everything in API form and keeping only the frontend applications, which are certainly the simplest but those best suited to the channel.

Headless

1. Headless architecture makes omnichannel easier 

With its “API-centric” approach, headless architecture goes hand in hand with an omnichannel architecture. All the functions exposed in API form (customer account, product catalogue, cart, order management, etc.) can be easily reused on all channels.

 

2. Agile architecture 

By separating the front end (UX) from the back end (business), they can be upgraded independently, and above all at the right rates. Of course, the front end is upgraded much more quickly than the back. By separating them, the user experience can be upgraded much more quickly and brand time-to-market requirements met.

3. The ability to innovate 

From a UX point of view, by separating front from back, it becomes possible to look beyond the limits of OTS solutions and create a USP-level experience.  

From a functional point of view, headless architecture is part of a widespread trend of separating major “all-in-one” monolithic applications into applications focused on a specific business field. When an OTS solution is used, the quantity of built-in customisations can be limited and maintainability boosted. When a specialised need arises, innovative solutions that would have been complicated to integrate earlier can be identified.

 

4. Organisational separation 

Back when websites were built on monolithic OTS platforms, even the most minor development needed developers with specific skills, which were even harder to find if the product was specialised. By separating front from back, specialised technology-specific teams can be assembled. For example, a UX-focused front-end team of web developers, which are far easier to recruit, and a smaller back-end team of harder-to-come-by specialists.

5. A preference for the creation of “core model” platforms  

The fifth advantage concerns so-called ”core model” platforms. Many customers deploy e-commerce sites worldwide or for multiple brands. By separating front from back, it’s much easier to create a “core model” system based on a common API. The deployed brands or countries then have a lot of leeway to focus on the front and create a USP-level experience.

The way forward?

Headless architecture has become the most common structure for creating omnichannel, agile and innovative digital platforms. 

The principal digital solution publishers have taken this into account by reorienting their products for use in headless mode. Newcomers have also emerged, offering an “API first” approach to CMS and e-commerce from day 1.

Architecture headless 2

But implementing them in an existing system, which requires refactoring of existing applications, is quite a major operation, similar to open-heart surgery. Every implementation plan is unique, based on the existing IS, and takes a lot of architectural and planning work to build and deploy with the lowest possible impact.

[Checklist] Omnichannel: 7 tips for an effective IT organisation

Companies with a website and mobile app are increasingly looking to homogenise the two channels in order to offer their users service and experience continuity, while optimising development costs.

Download our checklist "Omnichannel - 7 tips for an effective IT organisation"

However, this functional homogenisation presents new challenges for IT departments. Very often, this involves significant changes in termes of organisation, tools and working methods, for several teams.

As “captains” of this transformation, IT departments need to ask themselves the right questions, be methodical and seek support if they are to guide the ship home. Here are some tips for success from web and mobile solutions project managers.

Download our checklist "Omnichannel - 7 tips for an effective IT organisation"

You will discover how to:

  • Work in feature teams
  • Apply standards and new methodologies
  • Adapt workspaces and rituals
  • Facilitate deployments

FORBES - Eric Costechareyre: Govern technology to unify commerce

Guiding marketing and digital departments over the past five years, omnichannel has initiated the cultural transformation of retailers based on the customer experience and journey. It has also revealed the inability of many organisations to translate this seamless journey in terms of both technology and internal governance. Unified commerce is aimed at meeting this dual challenge, which has been left vacant by omnichannel, in order to offer a friction-free experience at last.   

Over the course of two decades, we have moved from thinking in terms of supply to thinking in terms of demand. From a product-based approach to a service-based approach. From long production modes to very short cycles, in order to meet the need to bring products to market instantly and responsively. From in-store commerce to unified commerce, thanks to which it is now possible to switch between digital and physical to make purchases. 

 

Omnichannel: a transformation that is more cultural than technological?

 Multichannel, cross-channel or omnichannel yesterday; unified commerce today. The evolution of commerce over the past twenty years has been marked by many concepts, which illustrate the need for marketing and digital teams to bring meaning and understand the challenges involved. Core business functions have driven the cultural transformation among retailers, which today share a vision of a customer journey centred on an experience that is as smooth as possible. While this shared vision is attractive, it is coming up against a major obstacle: many organisations are not currently able to technologically translate the omnichannel approach in order to offer a truly seamless experience. 

Management and display of stock, payment at the checkout or online, delivery, after-sales service, etc. A little bit like the various parts hidden beneath a car bonnet, the user’s omnichannel experience is based on a complex machine, made up of various components that need to communicate and interact with each other. The difficulty lies in the fact that these digital applications do not speak the same language: they are designed independently and then linked up with the existing information system. Omnichannel has enabled a first giant step by making these applications communicate with each other. However, it has come up against the obstacle of technologically integrating these applications around a single data source. In other words, a single language making it possible to analyse and guide all the interactions of thousands of users with a brand in real-time.   

 

 Unified commerce: the best of both worlds at last?

 In addition to this technological challenge, there is that of enabling communication and cooperation between the various departments involved in these interactions, which by their nature speak little or not at all with one another. This is the challenge of unified commerce today: reintegrate governance of technology and of a more open company at the heart of the customer experience vision. Unified commerce therefore requires deep-seated cultural and organisational change, in order to synchronise the customer experience and the huge amount of data it creates. 

This can happen by rebalancing decision-making powers within executive committees for unified commerce projects. Information systems departments need to be involved from the outset, based on joint governance with core business functions. Beyond the obvious technological benefit, this convergence can bring other advantages, such as the integration of agile and iterative working methods inherited from digital, in order to manage these projects more efficiently and better meet the challenges faced by retailers. In other words, a common frame of reference needs to be created to unify commerce. 

Viuz - Paul Camicas - Unified Commerce: it's all about catching attention!

8 seconds! Just 8 seconds! This is the estimated average attention span of the human brain, according to an American study conducted in 2015 – one second less than the attention span of a goldfish in a bowl! The idea behind this is to inform marketers of the attention people are liable to pay to digital communications, given the huge amount of commercial offers and various information they are bombarded with. While this figure is a subject of debate, the fact remains that brands need to demonstrate agility in order effectively interact with consumers. Unified commerce can be a valuable aid to catch their attention. 

In any event, the “8 second” myth has become so well established that the result was even (mistakenly) attributed to another study carried out by Microsoft. However, the latter (which is based on quantitative surveys and neurological studies) provides a precious lesson: human attention is changing the way it grants time. If it’s boring, it switches. If it’s interesting, it focuses.  

 

In other words, our attention is not necessarily reducing; it is becoming more demanding and selective in the way it processes information. It is dealing with information in an increasingly intense manner. When people tap something on their screen, looking for a product or service, they don’t want to get lost in the maze of a website or be deluged with offers on their mobile, in the store or anywhere else. They want brands to satisfy them when they choose, care for them, and talk to them in a personalised and relevant way, without a lot of chatter.  

 

Unified commerce = “customer is king”?

It is against this background of demand for personalisation of the consumer experience that brands are adopting a unified commerce approach. This does not mean that a brand needs to be omnipresent, but that it must be able to interact effectively with consumers in order to provide them with a smooth, pleasant and efficient experience, in phase with their consumption habits. This is a bit like the old saying that the “customer is king”, meaning that everything must be done to make sure they are happy and that they return!

This paradigm shift is a major challenge for brands. Customers no longer want brands to appear everywhere, via websites, mobile apps, text messages, interactive corners or other physical and virtual points of contact. They want brands to take into account their point of view and preferences. In other words, “The Customer Is The Channel” (as stated by the American retail giant Target), and customers’ behaviours and expectations are the keys to reach them with relevance and without intrusion.

 

The major challenge of the right interaction

The challenge to be met is a minor revolution for brands. For them, being able to find the right way to interact with their customers means knowing them well and being able to talk with them in line with their personal expectations. While some will favour a mobile app to rent a car, for example, others will prefer going to a branch, comparing prices on Google or receiving a personalised letter at home. Unified commerce means that customer personalisation must be the central focus.

Personalising the commercial relationship requires harmonisation and synchronisation of all sales channels. This is the idea behind unified commerce. In other words, and to continue with the example of car rental, prices given on the website, on the mobile app, in branches and in the catalogue need to be consistent. In addition, each customer’s criteria and habits need to be integrated in all of these channels. The right interaction means catching people’s attention!

Digital identity, an essential aspect of the omni-channel experience

The Stanford University and Visa study “The Future of Transportation: Mobility in the Age of the Megacity confirms that digital identity has become a core issue in terms of new practices. In an omni-channel experience, where the notion of location is secondary to that of a fluid journey, identity management can fast become a stumbling block, and undermine the experience as a whole. As predicted by Scott Galloway, the way in which we define and validate our personal identity is a key issue this year. 

 

Digital identity: the standards you need to know about

This trend is being confirmed with the implementation of standards, and mainly: 

  • The GDPR (May 2018) that expands on the protection of personal data, through the principle of explicit consent in particular; 
  • The WebAuthn standard (W3C) by the FIDO Alliance (4th March 2019), which reduces reliance on passwords in favour of strong authentication through biometrics (FIDO2);  
  • The 2nd section of PSD2 (payment services directive), which is due to come into force in September 2019, aims to reinforce the security of financial transactions through strong customer authentication with a minimum of two factors. These factors could be a code, a password, a device, or biometric data (fingerprint, voice, iris, etc.).  

PSD2 also provide access to bank data through a secure API for Payment Initiation Service Providers (PaypalHiPay, SOFORT, Adyen, etc.) and account aggregators (LinxoBankin’, etc.). This puts an end to screen-scraping (the collection of screen display data). 

Brands are therefore having to rethink or strengthen identity management. 

 

What impact will this have on the digital world?

1.Ways of authenticating one’s identity

The implementation of strong authentication (Strong Customer Authentication, SCA), required by the FIDO Alliance and PSD2, is certainly the most challenging change for commercial and financial exchange platforms 

Market researcher 451 Research has found that many companies are not entirely aware of the impact of SCA. Our survey shows that companies are not properly prepared, and what is even more worrying is that they don’t fully appreciate the way in which SCA will transform online purchasing for European consumers says Jordan McKee, an analyst who works for the firm. 

This authentication will oblige companies to rethink the experience so as to take into account both the device being used and its biometric capacities. There will be several possible scenarios depending on your users’ level of knowledge, and the software architecture you have. This architecture will need to evolve to include trusted third parties to manage the authentication process, new biometric capacities, and data collection in keeping with GDPR directives. 

 

2.Personalisation of the user experience

Knowledge of the customer is essential to personalisation, and has therefore become the new godsend of any marketing approach. But this knowledge must be able to identify customers so as to give them profiles to make their individual experiences unique.  

Platforms that do not comply with these standards won’t be able to provide a personalised experience. It is therefore essential to begin integrating these new means of identification as quickly as possible. 

However, it isn’t always necessary to identify the user. Amazon has devised a recommendation system based on the product instead of the customer. By analysing the customer’s path, the system deduces a chart of inter-related products. Seeing as consumers can be versatile, it makes more sense for Amazon to base their process on products. 

 

3.Simplified payment

Newly simplified payments are resulting in transformations in points of sale and purchases. Retailers are taking a close look at mobile checkout solutions such as Square and SumUp, or concepts like Amazon Go and SmartShelf. SmartShelf technology offers the Frictionless Shopping” model, in which checkouts are replaced by computer vision. Cameras are linked to artificial intelligence, which analyses videos live. AI identifies a consumer and their feelings, and detects both their behaviour and movements, which means it is able to charge customers for the contents of their baskets in real time without them having to go through the checkout. 

And this is only the beginning, with the increase in facial recognition technology in China. Following in the footsteps of Sephora, Carrefour recently inaugurated its new French-style concept store on the famous Wangfujing Street in Beijing. It includes numerous innovations, in particular payment through facial recognition; a system launched in April 2019 in its 210 hypermarkets in Chian, in partnership with Tencent via WeChat. (SourceL’Usine Digitale 

But it still pays to be careful. Facebook Messenger’s experience in Europe shows that some methods of payment just don’t appeal to users. Furthermore, although GDPR and PSD2 are more secure, they also make the payment process more complicated, which is what Facebook found daunting in its experiment. The act of paying for something is still seen as sacred in Europe. 

 

4.Digital identity versus civil identity

This digital transformation is leading us into a digitised world that boasts lots of services and products, in which our digital identity will be as strong as our ID documents, thanks to technology and regulations that will make it unique and forgery-proof. 

Le Vote, Orange’s Civic Tech programme solution, relies on this digital identity to provide a solution for municipalities that wish to consult their citizens in local matters. The solution includes a website for elected representatives and a mobile application for citizens based on blockchain technology, to guarantee the security of polling. Le Vote is already in use in several municipalities in France, and will soon be available on an international level. 

It is easy to imagine that economy, performance and productivity logic will quicken the pace of this digital transformation. It will soon be increasingly difficult to do without a digital identity, to access State services (as in Estonia, where everything is done online), at work or in everyday life (and it has already begun).  

Phygital: How digital is transforming traditional stores and the customer journey

With the e-commerce boom, we are observing changes in practices and a crucial need for complementarity between physical stores and the virtual world of e-commerce and digital technology. This is what is referred to as ‘phygital‘, a portmanteau of ‘physical’ and ‘digital’ 

Consumers need to go to stores to physically see products. This is what is observed in certain markets, such as the automotive market. 

              
The end of traditional stores? 

While e-commerce is growing rapidly, it represents 10.2% of total retail sales worldwide (source: JDN – March 2018). While this proportion is increasing (8.6% in 2016 and 7.4% in 2015), physical stores remain the favoured purchase method. 

However, digital offers major advantages for traditional stores, by boosting footfall and enhancing the in-store customer experience with new digital technologies. 

Physical and digital are therefore complementary and not opposed. 
One of the best examples is the feedback given by the director of the NRF (National Retail Federation) in the USA at the recent NRF 2019: Retail’s Big Show. Held in New York, this show is one of the biggest global events dedicated to retail, new technology and connected commerce. 

In 2018, the director of the NRF predicted a catastrophe for physical retailers, with the huge increase of orders on Amazon. Today, we can see that the doomsayers were wrong. Retail has never been in better shape, with a record year and 4.5% growth in the USA in 2018, and the opening of nearly 2000 stores over the course of the year, in particular thanks to the integration of digital technology in the in-store customer experience

 
What are the major innovations and benefits of the phygital experience? 

New virtually-driven brick and mortar stores automatically recognise customers when they enter, either using artificial intelligence and facial recognition (which poses problems with the GDPR however), or by digital identification via the IoT (connected objects fitted with a chip that identifies customers). 

This is already the case, for example, in certain Uniqlo clothing stores, particularly in Japan. At the checkout, instead of scanning bar codes, all articles are placed in a basket and automatically recognised by connected chips inserted in the clothes. This avoids errors, prevents theft and, above all, makes it possible to increase sales by simplifying and speeding up the checkout process. 

Nespresso store

This is also the case in new Nespresso stores in Europe and the USA: customers select their coffee sleeves and place them in a large container themselves. The total amount to be paid is directly displayed, also thanks to the use of connected chips (or IoT). Customers can pay and leave with their coffee without the need for a checkout assistant. Employees are only there to offer advice on the best choice, which improves the customer experience

Nespresso store 2
Nespresso store

In the stores of the future, such as those presented at NRF 2019, there will soon be smart cameras able to recognise articles that customers stop in front of (in order to offer them relevant adverts). They will identify which products are placed in baskets or trolleys (without the need for a chip or connected trolley). This will enable customers to keep track of the amount to be paid as they shop and avoid the need to queue when leaving. 

Better still, some stores are taking the experience further by allowing customers to leave and be automatically debited for their purchases without going through a checkout. This technological feat is made possible by using artificial intelligence (AI) to recognise customers as they enter and leave the phygital store. 

Stand smart shelf

Smart Shelf Stand at NRF 2019 – https://www.youtube.com/watch?v=7Ps1ZIzAw24

The customer experience is enhanced by augmented reality in these next-generation stores. Imagine customers who visit an estate agent to discover their future home. Rather than a simple plan or drawings, augmented reality makes it possible for them to virtually explore the home. Using a tablet and an augmented reality application, they can move around and see the various parts of their future home. 

The connected mirrors presented at CES 2019 in Las Vegas offer a similar experience: in a fashion store, customers can try on clothes and make-up in front of a connected mirror without having to go to the changing rooms or beauty bar. Customers choose the clothes and beauty products that suit them best and go immediately to the checkout. 

Réalité augmentée

Augmented reality for make-up, Perfect Corp.

All of these innovations (IoT, AI, recognition cameras, augmented reality, etc.) contribute to making stores even more attractive for customers, by transforming their physical experience into a phygital experience

Phygital: the authentic customer experience 2.0. And all of this is no longer science fiction! 

Valérie Guichard 
Marketing Strategy and Digital Transformation Consultant 
&  

Ari Tordjman

Digital Business Development Director, specialised in customer and user experience

SQLI  

Every year, SQLI’s teams of digital experts attend major global events in the field of digital technology (such as CES Las Vegas and Retail’s Big Show in the USA, and Viva Technology in France), and report on the innovations presented. This article covers some of the discoveries made by teams from the SQLI Lab at the 2019 CES and NRF shows. 

Omnichannel and the challenge of consumer attention

To say that digital has changed the playing field for brands in recent years is an understatement. Technological innovation has sped up the transformation of commerce, blurred the boundaries between physical and virtual, and now governs relationships between brands and consumers, beyond the products or services they offer.  

Attention: the new grail 

Brands have entered the age of unified commerce. This is an age in which the idea of place is less important than that of the customer journey. An age in which the buying experience in physical and digital stores is as important as customer service (61% of people in France are prepared to leave a brand if the customer service is unsatisfactory*). An age in which the challenge is not so much to inform as it is to capture the attention of highly connected (75% of people in France have a smartphone and use it as their main means of accessing the Internet**) and, therefore, highly sought-after consumers.  

Experience and personalisation are two essential factors in the ability of brands to progress from indifference to attention. In their ability to transform a fleeting interaction into a memorable one. In their ability to make consumers want to come back, again and again, despite new and incessant temptations. In this age of unified commerce, the experience offered by brands must be persuasive and build trust. It must accompany consumers’ journeys and adapt to their changing expectations. 

Striving for agility 

This paradigm shift in the retail sector began with the advent of e-commerce and data as a central tool in the relationship between brands and consumers. By offering comprehensive and personalised catalogues, which can be accessed rapidly, simply and at all times, as well as ultra-responsive customer service, companies such as Amazon, Alibaba and Google have made agility and customisation the new standards in commerce. Today, these standards govern consumers’ expectations, whatever the nature of their interaction with a brand.  

In this age of unified commerce, more than ever, brands must develop their agility in order to attract the attention of consumers. The success of Digital Native Vertical Brands (DNVB) – such as Slip Français, Sézane and Made.com – which has opened up a new path between traditional retailers and e-commerce giants, illustrates this ongoing quest. By placing consumers at the heart of their business models and continuously enriching the experience they offer, these brands have managed to capture part of consumers’ available attention time. 

Experience creates value 

The key for brands lies in creating a unified, coherent and continuous experience, which creates a link between the various possible interactions with consumers, in order to convert this attention into memorisation.  The opening of physical stores by DNVBs therefore responds less to a need to create additional retail spaces as it does the need to extend and enrich the consumer experience through places to be explored that resonate with the brand’s world.  

This challenge is all the more important because the vast majority of consumers (77%***) now favour usage over possession. Within this context, experience takes precedence over the product and price, and is a central factor in value creation for brands. It brings them closer to their consumers by creating meaning and an emotional link that transcends usage and enriches daily life. 

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*Source: SAP Hybris – “Consumer Insights 2017” 

**Source: Baromètre du numérique 2018 

***Source: Observatoire Société de Consommation 2018 

 

Originally published in Les Echos