Retail and consumers in a phygital world: How to achieve frictionless retail

The concept of "phygital" represents a convergence of physical and digital shopping experiences to create a holistic and enhanced customer journey. It is a strategic approach that leverages digital technologies to enhance physical interactions and vice versa. At its core, phygital is about creating touchpoints where digital and physical elements coexist harmoniously. 

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Using the retail sector as an example; this might involve a customer using a mobile app to browse products online and then visiting a brick-and-mortar store to physically examine and purchase the item. Conversely, the customers could use technology such as augmented reality (AR) to visualize how products will look in their space before making a purchase decision. 

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In a phygital world, the customer journey is designed to be frictionless, with seamless transitions between physical and digital interactions. This means that customers can start their shopping journey on a website, continue it on a mobile app, and complete it in a physical store without experiencing disruption or inconsistency in service. The aim is to provide a unified and engaging experience that meets the evolving expectations of modern consumers, who increasingly demand convenience, personalization, and immediacy.

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So in this article, we will look at how to achieve frictionless retail in a phygital world. But first, let's understand how consumer behavior has evolved in the phygital era.

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Consumer behavior in the phygital Era

Consumers today expect a frictionless experience when shopping. A shopper might research a product online, check its availability via a mobile app, and then purchase it in a physical store. According to a study by Harvard Business Review, 73% of consumers use multiple channels during their shopping journey. This highlights the importance of a cohesive omnichannel strategy.

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The demand for convenience and speed is also another factor. 

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Consumers want quick access to products and services while putting in minimal effort. This expectation extends to every touchpoint; from fast-loading websites to efficient checkout processes and speedy delivery options. A study by Statista shows that online shoppers expect “faster delivery” times in 2024. When asked about their delivery expectations for online purchases across various categories, nearly two-thirds of global shoppers said they expect to receive their items within 24 hours. Four in 10 said they want items delivered in under two hours. 

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Studies like this highlight the importance of providing prompt and efficient service to meet consumer demands

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The influence of the COVID-19 pandemic

The COVID-19 pandemic has also dramatically reshaped consumer behavior. It accelerated the adoption of digital channels and changed how people shop and interact with brands.

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The pandemic forced many consumers to turn to online shopping due to lockdowns and social distancing measures. This shift has had a lasting impact on global e-commerce with sales skyrocketing. In the US alone, e-commerce sales hit $702.43 billion in 2020. In 2019, it was $539.43 billion. That is a 30% increase.  And even as physical stores have reopened, many consumers have retained their online shopping habits.

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In physical settings, health and safety concerns during the pandemic have led to a preference for contactless interactions. Consumers now favor curbside pickups, contactless payments, and self-service kiosks over physical interactions. In a 2021 survey of 1,000 shoppers, 60% of buyers said that when given the choice, they prefer to use self-checkout over a staffed checkout aisle. Even after the pandemic and things gradually returning to normal, cashless transactions keep growing worldwide.

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Convenience and instant gratification

In the phygital era, consumers expect quick, easy, and efficient interactions that cater to their busy lifestyles. 

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Consumers expect immediate access to product information and reviews. They use their mobile devices to research products on the go and make informed decisions quickly. In a 2023 survey by ESW, 23 percent of the respondents said that they research a product online and purchase it in-store. 

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Another convenience customers have come to expect is on-demand services. 

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The rise of on-demand services has set new standards for convenience. Whether it's food delivery, ride-hailing, or streaming content, consumers expect instant access to services. This expectation extends to retail, where on-demand options like curbside pickup and same-day delivery are increasingly popular. Customers want it here and want it now! According to PwC research, the on-demand economy is expected to soar to $335 billion by 2025.

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In summary, consumer behavior in the phygital era is shaped by evolving expectations for seamless integration, personalization, and convenience. Brands that adapt to these changing behaviors and meet these heightened expectations will thrive in the phygital world.

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How to achieve frictionless retail

Businesses should offer frictionless retail to meet the evolving expectations of modern consumers who demand seamless, personalized, and convenient shopping experiences across both physical and digital channels. Providing a frictionless experience increases customer satisfaction and loyalty. Which will lead to increased sales. Here are key strategies to achieve frictionless retail in a phygital world:

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1. Have an omnichannel strategy

An omnichannel strategy in retail refers to a cohesive approach that integrates all of a retailer's physical and digital channels to provide a seamless and consistent customer experience.  Here are key elements of an omnichannel strategy:

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a. A unified customer experience:

The core of an omnichannel strategy is to ensure that customers have a consistent and seamless experience across all touchpoints. This means that whether a customer starts their journey online and completes it in-store, or vice versa, the transition should be smooth and without any disruptions. 

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b. Uses integrated technology:

Retailers must leverage integrated technologies such as Customer Relationship Management (CRM) systems, Enterprise Resource Planning (ERP) systems, Digital Asset Management (DAM) systems, and other software solutions that allow for the synchronization of data across all channels. This ensures that inventory levels, customer data, product images,  and transaction histories are updated in real-time. With integrated technologies, customers will get accurate information regardless of the channel they interact with the business through.

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c. Seamless inventory management:

It is best practice to use a centralized inventory management system. The system would provide real-time visibility of stock levels across all locations. Customers should be able to check product availability with accurate pricing at all times. Whether they plan to purchase online for home delivery or later in-store. 

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d. Multiple fulfillment options:

Offering a variety of fulfillment options enhances the convenience for customers. These options include home delivery, buy-online-pick-in-store (BOPIS), curbside pickup, and same-day delivery. Providing flexible and efficient fulfillment solutions will significantly improve customer satisfaction and make retail less frictionless.

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2. Take advantage of advanced technologies

Here are several ways advanced technologies help achieve frictionless retail.

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a. Augmented Reality (AR) and Virtual Reality (VR):

AR and VR technologies can enhance the shopping experience by providing interactive and immersive ways to engage with products. For example, AR apps allow customers to visualize how furniture would look in their homes or try on clothes virtually.

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Source: Ikea ARKit app

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This will help them easily visualize a product so they can quickly make purchase decisions.

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b. Internet of Things (IoT):

IoT (Internet of Things) devices are interconnected physical objects embedded with sensors, software, and other technologies that enable them to collect and exchange data over the internet. These devices can range from everyday household items like smart thermostats and refrigerators to industrial equipment and retail tools such as smart shelves and RFID tags. In the retail context, IoT devices facilitate real-time inventory management, personalized customer interactions, and streamlined operations. 

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Here are some examples of how IoT devices can help with frictionless retail:

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Beacons

Source: BLE Mobile Apps

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Beacons are small, Bluetooth-enabled devices placed throughout a store. They can communicate with customers' smartphones via the store's app, sending personalized offers, product information, or navigation assistance as they move through the store. This enhances the shopping experience by providing relevant information and promotions in real time.

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Connected POS Systems

Point-of-sale (POS) systems connected to the internet can offer a more seamless checkout experience. These systems can process various payment methods, including mobile wallets and contactless payments. They also provide real-time inventory updates and customer purchase history.

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Automated Checkout Systems

Source: Supermarket News

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IoT-enabled automated checkout systems, such as Amazon Go's "Just Walk Out" technology, use a combination of sensors, cameras, and AI to track what customers pick up and automatically charge their accounts as they leave the store. This eliminates the need for traditional checkout lines, providing a truly frictionless shopping experience.

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Smart Mirrors

Source: JustStyle

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Smart mirrors in fitting rooms use augmented reality to allow customers to virtually try on clothes and accessories. These mirrors can also suggest complementary items and provide information about the products. It enhances the in-store experience by reducing the need to physically try on multiple items.

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c. Mobile technology:

Mobile technology significantly enhances frictionless retail by providing convenient and personalized shopping experiences. Here are some ways retailers can use mobile technology can help achieve frictionless retail:

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1. Have a mobile payment solutions

Mobile payment solutions like Apple Pay, Google Wallet, and Samsung Pay allow customers to make secure, contactless payments using their smartphones. According to Statista, the value of transactions processed by mobile payment solutions is forecast to grow by 289 percent between 2023 and 2030. These solutions streamline the checkout process, reduce wait times, and provide a quick and easy payment option, enhancing the overall shopping experience.

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2. In-store navigation

Source: PR Newswire

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Large retailers should have mobile apps equipped with in-store navigation that use GPS and beacon technology to guide customers to specific products within the store. A Yes Marketing survey of over 1,000 consumers of all ages shows that over half of consumers use mobile apps when shopping in-store

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In-store navigation allows customers to find what they need quickly. This will reduce the chances of them getting frustrated and then abandoning their shopping. 

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3. Offer AR features 

AR features in mobile apps allow customers to visualize products in their own environment before purchasing. For example, IKEA’s AR app lets customers see how furniture would look in their homes, contributing to a 43% boost in online sales. 

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Sephora’s Virtual Artist app, which allows virtual try-ons, has seen millions of users engage with the feature.

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4. Allow click-and-collect services

Mobile technology enables click-and-collect services. These services allow customers to shop online and pick up their purchases in-store or curbside. Retailers can use the mobile apps to notify customers when their orders are ready. In 2022, 44 percent of consumers tried click-and-collect shopping in France.  In the United Kingdom, it was almost six out of ten consumers and 42 percent in Spain.

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3. Offer personalized retail services

Retailers can leverage customer data to provide personalized experiences for customers. This can include personalized product recommendations, targeted marketing messages, and tailored in-store experiences. For example, sales associates can access customer profiles to offer personalized assistance and recommendations. This will allow stores to create a more engaging and relevant shopping experience for customers.

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4. Provide 24/7 support

Providing round-the-clock customer support through AI-powered chatbots and virtual assistants ensures that customers can get assistance whenever they need it. These tools can handle common queries, guide customers through their shopping journey, and escalate issues to human agents when necessary.

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But note that while AI and automation are important, human interaction remains important for complex issues and personalized service. Retailers should ensure that customers can easily transition from automated systems to human agents when needed. 

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Common phygital retail challenges

The integration of digital and physical shopping experiences poses several challenges that retailers must navigate to successfully blend these realms. Here are common phygital retail challenges and possible solutions:

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1. Difficulty integrating multiple technologies

Integrating various technologies, such as e-commerce platforms, in-store systems, mobile apps, and CRM tools, can be complex and costly. Ensuring these systems communicate effectively to provide a seamless customer experience is also a significant hurdle.

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Solution: Invest in robust IT infrastructure and middleware solutions that facilitate data integration and communication between different systems. Use APIs (Application Programming Interfaces) to enable seamless connectivity and data exchange. It’s also best practice to adopt cloud-based platforms. They ensure scalability and also offer real-time synchronization of data across all channels.

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2. Maintaining a consistent brand experience

Delivering a consistent brand experience across both physical and digital touchpoints is challenging because it requires meticulous coordination and alignment of various elements such as branding, messaging, and customer service standards. Consistency means ensuring that every interaction a customer has with the brand, whether online through a website or mobile app, or offline in a brick-and-mortar store, reflects the same values and quality. Discrepancies in these elements can confuse the customer and diminish their overall experience.

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Solution: Implement a unified brand strategy. This will ensure consistency in branding, messaging, and customer service across all channels. Use a Digital Asset Management (DAM) system to store, manage, and distribute brand assets. (See how DAM assists frictionless retail in the next section).

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3. Inventory Management

Accurate and real-time inventory tracking across physical stores, online platforms, and distribution centers is a major challenge. Coordinating various fulfillment options even adds further complexity.

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Solution: Adopt advanced inventory management systems that provide real-time visibility and synchronization across all channels. Implement RFID (Radio-Frequency Identification) and IoT technologies for precise inventory tracking. Retailers can even use machine learning algorithms to predict demand and optimize stock levels. This will reduce the risk of stockouts or overstock situations.

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4. Customer data privacy and security

Handling large volumes of customer data across multiple channels raises significant privacy and security concerns. Retailers must comply with data protection regulations and ensure data security to avoid getting fined.

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Solution: Implement robust data security measures, including encryption, secure access controls, and regular security audits. Ensure compliance with data protection regulations such as GDPR and CCPA. Educate customers about your data privacy practices and provide clear, transparent information on data usage. This will build their trust in your organization. 

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5. Consumer adoption

Convincing customers to adopt new phygital services and technologies can be challenging, especially if they are resistant to change or unfamiliar with new technologies.

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Solution: Educate consumers on the benefits and ease of use of phygital services through targeted marketing campaigns and in-store demonstrations. Provide incentives, such as discounts or loyalty points, to encourage adoption. Offer robust customer support to assist with the transition and address any concerns.

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Role of Digital Asset Management (DAM) in phygital and frictionless retail

Digital Asset Management (DAM) systems can play a key role in helping retailers offer seamless phygital retail experiences. By efficiently managing digital assets, DAM systems ensure that brands can deliver consistent, personalized, and engaging content across all consumer touchpoints. Here's a detailed look at how DAM supports phygital retail:

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1. Allows for efficient asset management:

A DAM system acts as a centralized repository for all digital assets, including images, videos, documents, marketing materials, and more.

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By providing a structured and organized approach to storing digital assets, DAM systems enable retailers to easily search for, retrieve, and use digital assets. This efficiency is important in maintaining consistent branding across all touchpoints, from websites, mobile apps, and social media to in-store displays.

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2. Allows for real-time updates:

Retail environments are dynamic and the ability to update content in real-time is essential. DAM systems allow retailers to make instant changes to digital assets, ensuring that promotional materials, product information, and marketing campaigns are always up-to-date. This agility helps in responding quickly to market trends and customer feedback.

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3. Allows for consistent brand messaging:

With retail brands selling hundreds of products both in physical and online stores, a huge amount of digital assets are created every day. These assets include product images, promotional videos, and other marketing materials. And in a phygital world where customers are shopping online and offline (in-store displays), you want them to have a consistent buying experience regardless of the touchpoints they are interacting with. A DAM system will ensure this. 

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DAM allows for version control. This ensures that only the latest and approved versions of assets are used, reducing the risk of outdated or incorrect branding.

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4. Improves personalized and localized content:

DAM systems enable retailers to manage localized versions of their digital assets. With localization, they can cater to different markets and demographics. With Wedia for example, retailers can customize marketing materials and product information to suit regional preferences and regulations. This will enhance the relevance and appeal of the brand.

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DAM systems can integrate with customer relationship management (CRM) systems and other data sources to also deliver personalized content. For example, different product images or promotional videos can be shown to different customer groups based on their preferences and previous shopping behavior.

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DAM even supports the delivery of dynamic content that can change in real time based on user interactions. Customers viewing a particular product online can see tailored recommendations or personalized promotions that adapt as they navigate the site.

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5. Offers scalability and flexibility:

As retail brands expand and their asset libraries grow, DAM systems provide the scalability needed to manage increasing volumes of digital content. DAM solutions also integrate with other systems, such as e-commerce platforms, content management systems (CMS), and marketing automation tools. This integration enables a seamless flow of assets and data across the entire retail ecosystem.

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To learn more about how an effective DAM solution can help you achieve frictionless retail, then check out Wedia’s DAM solution. Book a demo now.