Why Retailers Must Embrace the 'Phygital' Experience

The whirlwind of the pandemic and the fluctuating economy over the last few years has left retailers quickly adapting to the new demands of today’s consumers. Now that the dust has settled a bit, retailers continue to look for new ways to provide the best experience for shoppers — both in-store and online. Furthermore, they're looking for ways to keep their customers engaged while continuing to build loyalty during a time when providing value is more important than ever. For most brands, meeting these demands requires creating — or expanding — the "phygital" experience for their customers.

With so many shopping options now available, consumers want a seamless brand experience no matter where they're shopping. To explain it plainly, the phygital experience is a mash-up of a brand’s digital and physical storefronts so they coexist. Digitally enhanced in-store shopping provides frictionless transitions across channels, allowing customers to interact with and purchase from a brand when, where and how they prefer.

The pandemic exponentially increased e-commerce services out of necessity, and consumers have shown they like the convenience. In fact, experts predict e-commerce sales will top $7 trillion by 2025. So why do people want an in-store option when there's a wide availability for buy online, pick up in-store? They like the experience of shopping in-store, especially those retailers that provide multisensory, technology-driven interaction.

Large, well-known retailers are integrating more technology throughout their store locations. Sportswear giant, Nike, is offering shoppers full-sensory experiences at its Nike Rise stores with LED and interactive displays and integrated app features. It also offers personalized services like Nike Fit technology that scans shoppers’ feet to help them identify ideal styles and sizes. For an exclusive experience, the brand's flagship store in Manhattan has a floor that’s only accessible to loyalty program members.

As another example, Starbucks is now offering customers Starbucks Odyssey, a Web3 initiative that's a secure blockchain-powered part of the company’s loyalty program. It's a digital community with the goal to deepen emotional bonds between members and the brand all while connecting members with one another.

Members enter Odyssey from the Starbucks app and complete interactive games otherwise known as journeys to collect journey stamps, which are NFTs. Members can also purchase limited-edition NFTs using a credit card. The NFTs unlock special benefits and rewards like a virtual espresso martini-making class, exclusive merchandise, and a trip to one of Starbucks’ coffee farms in Costa Rica.

Here are a few additional ways brands can delight consumers with phygital experiences:

• Integrate app capabilities into the store experience: Allow customers to check inventory, access member pricing and offers, or scan and pay right from their phone.
• Consider loyalty’s role in product usage: Give members the ability to unlock benefits after consistent use or deliver relevant content based on their purchase patterns. Analyze product use data for deeper insights on what would attract customers or bring them back.
• Consider integrating Web3 and loyalty strategies if already in the metaverse: Use loyalty mechanisms like currency and tiers to reward Web3 activity and make the Web3 experience better for identified customers through data collected on them. Recognize the best customers and offer them exclusive Web3 assets and experiences.

Further meshing digital and physical shopping allows brands to creatively differentiate their loyalty offerings and provide member-exclusive experiences. As brands continue to leverage data to better understand their audiences, they position themselves to innovate immersive, technology-driven, phygital interactions that are truly personalized, meaningful and memorable.

Lisa Schneider, account director, and Ashley McMillin, account executive, are part of The Lacek Group, a Minneapolis-based data-driven loyalty, experience, and customer engagement agency. The Lacek Group is an Ogilvy Experience company.