Let’s get phygital: embracing the hybrid retail world
How can brands leverage the right marketing strategies to prepare for the future of retail?
It may be hard to imagine now in a world of clicks and cardboard parcels, but before the pandemic, a lot of retailers were confused about who digital shoppers were.
“Many brands treated digital and in-store as two separate channels with different KPIs,” explains Ricardas Montvila, VP global strategy at customer insights platform Mapp. “There was a view that physical customers were different from those who used ecommerce. Some even thought that it was online avatars buying up their sofas and their dresses!”
A digital shift
Covid lockdowns, however, changed this perspective as bricks and mortar stores were largely closed and everyone moved online. It led to retailers ramping up their ecommerce services, physical retailers rapidly adopting online for the first time and pure-play digital brands expanding their capacity.
This included more online delivery slots, click and collect services, product samples being sent in the post and digital payment options. “The pandemic caused the shift towards digital retail to accelerate far more quickly than previously forecast. Customers had to switch to ecommerce – even those who weren’t tech-savvy or preferred the in-store experience. They largely enjoyed and embraced it,” Montvila says.
When the lockdowns eased and stores re-opened – albeit with social distancing rules still in place – retailers adopted additional services such as pre-booked changing room slots and expanded online/mobile apps to include product catalogues. This allowed customers in-store to browse online and buy using self-serve contactless, touchless terminals, or wait till they returned home.
“Post-lockdown if you were selling cosmetics, it was still not possible to get people to try on make-up at the counter,” explains Montvila. “But consumers adapted really well. They understood that they couldn’t use a changing room or try on some lipstick, but they could still buy and then return the item if unhappy.”
As such, there has been an expansion in so-called hybrid, ‘phygital’ shoppers – those who shop not only in-store but also online.
According to a report on Primary Shopping Methods in 2021 from the National Retail Federation and IBM Institute for Business Value, around a fifth of baby boomers and a third of generation z now shop in a hybrid fashion.
“Retailers now realise that the person who browses online and watches YouTube videos and the one that comes into the store are the same person,” says Montvila. “They haven’t transformed from that avatar into a physical being. People are shopping across both channels. Maybe some retailers thought things would go back to normal post-pandemic, in that we would all go back into stores, but a lot of the changes we have seen will remain and evolve. That means digital, physical and hybrid.”
It also means, he adds, that those in the C-suite have an increased desire to accelerate their omnichannel services. “They are more aggressive about spending their money on innovative and exciting technologies,” says Montvila.
This includes contactless checkouts, as seen in clothing retailer Zara and Amazon Fresh grocery stores. “With the Zara example you simply put your items in the self-service checkout, an RFID scanner calculates how much you owe, and you pay,” Montvila explains. “For those who don’t like twiddling their thumbs whilst the assistant folds their clothes it is very welcome!”
Another example is magic mirrors, which have been utilised by firms such as Charlotte Tilbury to harness virtual reality to allow customers to try on make-up digitally in-store.
A need for more insight
According to a recent report from Mapp – ‘Retail of the Future’ – customers simply want to keep the ‘convenience and ease of online shopping, yet yearn to see, touch and inspect before buying’. They want a frictionless experience combining their online and in-store experiences from offers to product selection and ease of payments.
They also want not just to shop but to enjoy either a communal shopping experience, such as in-store drink or food tastings, or more individual experiences, including personalised styling. Fun is also on the agenda as retailers try to make customers into fans, not just shoppers. Toy store The Entertainer, for example, sends PDF colouring-in pages of favourite characters to parents via email to build excitement around the brand.
For retailers and their marketing departments to take full advantage of this shift, they need to know more about the hybrid customer. They must carry out a comprehensive analysis of not just their growing digital customer base but also the omnichannel to optimise their strategies. Data collection, both online and in bricks and mortar stores, needs to be enhanced and combined into a comprehensive customer profile.
By doing so, they will understand the cross-channel journey and how customers are interacting with their brand to engage them with the right marketing content, campaigns and offers, at the right time in the right place.
“Marketers have been scratching their heads on how to truly understand the cross-channel customer journey. They had assumed that their entire digital consumer footprint was whatever people were clicking on their apps or websites. Now those in-store transactions and interactions also need to be matched and linked with the digital data,” explains Montvila. “It is very difficult for a single marketing department to look at their dashboards and understand what the hell is going on.”
Solving data confusion
In fact, less than a third of ecommerce businesses can identify over 21% of visitors on their website. That’s down to data silos, fragmented data and not having software which knits it all together.
Montvila says this is to the advantage of Martech solutions such as Mapp, which can provide the necessary customer insights both from online and offline channels. The Mapp cloud platform offers a 360-degree view of a customer using multiple sources of accurate and real-time data, including historical purchases and browsing, and behavioural data such as in-store interactions and demographics.
“As a result, marketers no longer need to make decisions based on gut feel or intuition,” he states. “Through Mapp, they get AI-powered actionable insights which leads to more personalised and effective campaigns.”
Indeed, one of Mapp’s key customers – fashion company Vivienne Westwood – has used real-time, offline store purchase data, and all ecommerce transactions to now identify a third of all its website visitors. This has led to more tailored marketing campaigns and greater customer engagement.
Montvila says Martech solutions like Mapp can also predict future customer behaviour. For example, “by taking a unified look at a person’s data we can predict that if they order one type of flooring sample then they will buy in the next 13 days and spend £1500, but if they order another type, they will convert in two months spending £800,” he explains. “That information totally transforms how you speak to the customer. You certainly won’t be giving 50% off incentives for those looking to buy in 13 days but you could consider an offer for the other customer. You can be smarter in your messaging and ensure you have a higher chance of conversion.”
Montvila believes hybrid retail will continue its growth surge. “We’ll see more self-checkouts and click and collect with digital aisles in all stores,” he says. “Mobile apps will evolve from just product catalogues to helping customers design their new kitchen or find the best make-up. We could also see more real-time marketing push messaging to give offers to customers walking around in-store. It’s a phygital future.”