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Phygitalization of points of sale: how will this impact retailers?

The retail sector is in a state of flux with consumers being increasingly connected, the rise of “phygitalization” of stores, technological innovations… Some brands have succeeded in offering an enriched and memorable consumer experience that goes beyond mere digitalization of points of sale. But what are the organizational impacts for retail chains? How can the success and durability of these transformations be guaranteed?

Hyper-connected (84% of French people buy online), increasingly educated, and using multiple devices, the 2018 consumer is nothing like their counterpart at the start of the new millennium. In their free time, they are constantly checking out their favorite products and brands that they end up knowing more about than any salesperson. 64% of these ‘new consumers’ systematically carry out online research before going to a store, are often millennials, and have become real experts.

They no longer want any disruption in their customer journey and the purchase process as they move from online to offline. They are looking for a seamless omnichannel experience. The smart “phygital” era has arrived: commerce where meaning and value are central and where the online and the offline are reconciled.

To respond to these new consumer behaviors, brands have no choice but to adapt their strategy and rethink their points of sale. Because consumers still like to shop in store! They need that “physical experience” that they can’t get from online shopping: seeing the actual product, the immediate availability of the product, trying it out, touching it feeling it… In short, a real sensory experience.

“Phygitalization” or the art of combining e-commerce and stores

This fusion of the physical world with the digital has three advantages for brands: it makes life easier for the customer, it creates a stronger relationship, and engenders stimulation.

This is why new services and tools have appeared at some points of sale: the use of augmented reality, e-reservations, click and collect, and mobile payments… This digitalization can also be brought about by the introduction of different technologies such as beacons, NFC, geolocation, Wi-Fi… The goal is to implement all available tools in order not to disrupt the omnichannel experience which is so essential today.

This can also be realized by equipping salespeople with tablets so they can give consumers better advice, installing touchscreens so customers can access information on the store’s e-commerce website, or by setting up RFID checkouts that offer a real time saving. The cashier moves the product over the RFID mat or tray, the tag is detected by the system and automatically added to the receipt. No time is wasted looking for the label on each and every product to scan it.

Some brands have carried out a 360° reflection and have succeeded in offering a truly innovative consumer experience that goes beyond the mere digitalization of points of sale

Nespresso was the pioneer in the implementation of this “phygitalization” strategy. The brand was one of the first to reengage with the consumer experience by creating different customer journeys according to their profiles (quick buyings/product experts etc.) and, over the last ten years has become a benchmark for excellence in the creation of the customer experience. The famous coffee capsule producer communicates in the style of a luxury brand even though they offer a mass-market product.

Established retail chains are not alone in having gone beyond the mere digitalization of their points of sale by totally rethinking their concepts. The pure players have also succeeded in creating their own physical stores and in offering their customers a unique and innovative experience.

Take the case of Made.com for example, that created a store/showroom in the very center of Paris to offer their customers ‘a seamless journey’. They give their customers the chance to ‘touch’ the samples and provide them with terminals equipped with tablets that customers are free to use to access the descriptions of products on display. In the center of the store, there’s a long table with a series of iMacs where customers can view products and order them. An events space also hosts popup exhibitions with works by up-and-coming talents, partners and co-workers. Thus, the store becomes an experience place for meeting and discovery.

What do these innovations involve in terms of organization?

This digitalization of the point of sale cannot happen without a total transformation of distribution networks and sales methods. It’s the entire journey, the attitude of the salespeople, the sales tools… that must be totally redesigned. Customer databases must now be ‘unique’ and include both ‘physical and ‘digital’ purchases. For the retailers, this involves identifying the customer at every step in their journey.

Retail brands find themselves confronted by profound and wide-ranging transformations: transformation of information systems, transformation of working and business methods, transformation of managerial attitudes, and cultural transformation.  And it is by bringing about these transformations successfully that retail chains will be able to respond to constantly-changing market expectations.

How can retailers bring about these transformations successfully?

Lack of support for teams in the long term is the main reason for the failure of transformation projects, particularly in the retail sector, where workers are at the center of product distribution. That’s why it is essential to concentrate efforts and investments on creating ownership and adoption of these changes internally.

In addition, transformation is an ongoing process that must be supported by an overall vision and organized throughout all the different stages in the project, from the preparation, via the launch, and through to its sustainability. In order to succeed, the will must be created, it must have meaning, and engage workers in the long term with the best user experience, just like the experience that retailers want to deliver to consumers in-store. Amongst the levers for engagement that need to be implemented to guarantee the success and sustainability of these transformations are:

Would you like to know more? Read our blog post 7 keys to the successful adoption of your transformation project. And for more information, please feel free to contact us to discover the best practices of our retailer clients.