Phygital: the key to unlocking the value of brick-and-mortar retail

By Laura Marsden

4 mins read

Phygital: the key to unlocking the value of brick-and-mortar retail

By Laura Marsden

4 mins read

In the last couple of years, e-commerce exploded; a shift that was already in motion was rapidly accelerated as the world was forced to stay home. Brick-and-mortar shoppers were forced to experiment with online shopping and quickly realised phygital benefits, and existing e-commerce shoppers only grew to appreciate its convenience more. The result? Amazon saw its biggest-ever profit in 2020 and Walmart announced a 97% leap in online sales within the same year. So with more consumers becoming e-commerce loyalists, it’s no surprise that many forecast the downfall of brick-and-mortar retail.


But they were wrong.


Whilst e-commerce has continued to grow (e-commerce increased by 6.5% in the US from 2021 to 2022 (USGov, 2023), what predictions didn’t appreciate was consumers’ steadfast love for the physical shopping experience. They missed the element of discovery, its tacticity and the ability to connect with the brand first-hand – all reasons why 81% of Gen Z consumers want to shop in-store to discover new products (Shopify, 2022). But these shoppers don’t want to choose one channel over another. They want the best of both digital and physical – the convenience and efficiency offered by online retail coupled with the experience of physical shopping. This is a reality which is reflected in originally “digital-native” brands such as Glossier, Away and Everlane expanding to a brick-and-mortar footprint.


So how can businesses deliver brilliant experiences that deliver additional value to consumers, whilst extracting as rich data from their physical stores as their online channels?


Welcome phygital!


Phygital fuses physical and digital elements to enhance both the online and in-store shopping experience. For consumers, both their online and in-store shopping experience can be enriched by phygital activations that make the experience more efficient, engaging, personalised and/or memorable. In return, retailers can extract valuable data from phygital activations by only allowing consumers who are account holders or those that are willing to give over their email to enjoy the offer benefits. Whilst a phygital strategy is useful online, it can be particularly advantageous in-store to make a brand’s physical footprint work harder.


We’ve been inspired by a number of brands who are effectively leveraging phygital in-store…


Sign-up required for entry: Amazon-Go


Amazon Go offers ultra-convenience with their high-tech enabled stores. Amazon monitors shoppers to allow consumers to seemingly walk out of their stores without paying, meaning no more queues or closing times. But in order to access these benefits, shoppers must enter using an Amazon account to automatically credit their accounts, consequently increasing their consumer base and enriching their database.



In-store personalised recommendations: Sephora, Singapore


Sephora’s recently launched “store of the future” in Singapore offers their new Skincredible service. This exclusive 1-1 in-store service with one of their beauty advisors uses their Skincredible device to scan skin to provide a personalised skincare regime, which is then emailed to the consumer after for safekeeping. This service cleverly expands Sephora’s consumer database whilst giving the consumer a highly personalised and luxurious experience.



Download for convenience: H&M, New York


H&M’s new concept store in Williamsburg, New York, leverages digital to give shoppers the ultimate experience. One of the boutique’s many activations includes the ability to skip the payment queues and check out anywhere in the store using their app, enticing consumers to download their app and create an account.



Unlocking new phygital experiences: Burberry, Shenzhen


Burberry’s shop in Shenzhen is designed to be enhanced by digital using a WeChat mini program. Before entering the shop, users create a profile and are assigned a digital avatar. Then using the app, shoppers can book the themed changing rooms, play their own music within the changing rooms, book appointments with stylists, and scan QR codes to unlock styling information. The more users use the app, the more content they unlock on WeChat. As consumers won’t want to miss out on the full shopping experience, consumers will be enticed to sign-up for the mini program and in doing so increase Burberry’s consumer data.



Digital services to entice consumers: Nike Style, Seoul


Nike’s new concept store in Seoul, Nike Style, expands the definition of sport, embracing the leisure side of sport and its shoppers’ adjacent interests. One of the main features of the store is its content studio that allows local creators and consumers to create content for their social media channels using customisable backgrounds. The content is then sent to the consumer’s social accounts / emails for them to then use. This interesting activation both draws more consumers into the store and provides Nike with a new source of consumer data, complementing their already extensive consumer data set gathered through their other offers in their ecosystem, such as from NRC, NTC and SNKRS.




So what does phygital mean for brands…


Be consumer first: Design digital tools and services with the consumer front of mind to ensure they are enhancing the consumer experience with convenience, personalisation and /or appealing to related consumer interests rather than cluttering the shopping experience.


Be value-led: Be clear on how the data collected will be leveraged to drive greater value to the business by helping to drive marketing efficiency, upsell and cross-sell.


Be collaborative: Think about meeting consumers where they are and partnering with retailers, technology platforms and/or other brands to deliver a better phygital experience, more easily. 


How can Manifesto help?


Manifesto are experts in identifying and implementing new business models that will drive consumer lifetime value through proposition design, experience optimisation and driving value from data. We have worked with a number of leading businesses across the CPG sector and have a proven track record of accelerating ongoing enterprise-wide change. Contact us to find out more.  

Read another post

Read another post