Physical and digital retail have largely remained separate, with purchases made either offline or online. But consumer behaviors are changing; we scan QR codes in physical stores to make payments or learn more about a certain product; we use mobile apps to redeem offline discounts on our frequent purchases. And now, brands are increasingly embracing the hybrid of physical goods and digital counterparts — a fusion of physical and digital retail experiences called “phygital.”
The initial phygital trend began with the introduction of Web 2.0-centric retail technologies like augmented reality (AR)-driven retail apps and smart carts. Now, with the rise of Web 3.0, a modern internet built on blockchain, retail is evolving once again.
This shift toward a phygital model isn't just a passing trend; it's necessary for businesses to stay competitive when data and technology are dictating how customers interact with businesses. Yet, the true union of the physical and digital worlds in consumer retail experiences still has barriers to overcome.
The 'Phygital' Merge: Mobile Phones as Bridges
Today's mobile phones are at the forefront of this shift.
Imagine stepping into a store where your phone instantly communicates with the store's ecosystem. Based on your previous interactions with the brand, customized promotions pop up on your screen. Retailers are now leveraging technologies to create such frictionless shopping experiences..
Grabango, a tech startup, offers self-checkout at exit kiosks in Giant Eagle and Circle K. Amazon.com's “Just Walk Out” tech lets customers grab items and be billed at exits, piloted in Amazon Go, some airports, and sports stadiums.
Beyond personal recommendations, the possibilities are endless. AR could transform trial rooms, allowing for virtual try-ons. Location-based alerts could notify shoppers of ongoing flash sales or exclusive events. And through mobile wallets and near-field communication (NFC) technology, payments become seamless and swift.
Modern consumers, while shopping for clothes, might not care how AR tech or geo-located notifications work on their mobile phones, but they'll surely appreciate a virtual trial room or a personalized recommendation based on their location.
Take beacon technology, for instance. Since brands bombard us with online ads and promotions daily. Wouldn't it be great if our phones could direct us to the sale item we saw online when we were in the store? Consumers are gently nudged to products they abandoned online. A simple scan could suggest outfit choices or display item variants without the need for complex interactions.
Simply put, merging the digital and physical isn't just about novel interfaces or tech gimmicks; it’s about providing real utility, tangible benefits, and, above all, simplicity. Only then will the masses truly embrace the "phygital" transformation — and it's mobile phones, our constant companions, that stand to be the bridge making this union possible.
Navigating the Future of 'Phygital' Retail
With mobile phones as the catalyst, the future looks promising. However, there's a balance to maintain. We must create solutions that connect with younger, tech-forward consumers while ensuring we don't push away those who cherish the traditional shopping culture.
Luxury consumer brands have notably led the way in this regard. Partnerships like Nike and RTFKT or Gucci and Palace have successfully rolled out campaigns to their communities twinning physical luxury goods with a nonfungible token (NFT) digital twin. These activations also typically leverage NFC chips embedded in the physical item, enhancing customer experience, boosting product discovery, and directly addressing the counterfeit challenge via secured product authentication. These launches also rely on users' mobile phones to enable brands to offer, and users to tap into these exciting new phygital experiences.
In the grand scheme of the ever-evolving retail environment, we've only taken the initial steps in the broad "phygital" journey. Retailers that smartly weave the digital and physical worlds aren't just gearing up for survival; they're on the path to setting new standards, creating benchmarks, and reimagining the perfect shopping experience for the "phygital" era.
Toby Rush is the Kansas City-based CEO and co-founder of Redeem, a platform that allows users to store and use Web3 assets via their mobile phone.
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Toby Rush is the Kansas City-based CEO and co-founder of Redeem, a platform that allows users to store and use Web3 assets via their mobile phone. Toby previously served as an executive at Alibaba Group, and in 2016 he sold his biometric company EyeVerify to Ant Group — the fintech affiliate of Alibaba — for US$100 million. Rush also co-founded and led Rush Tracking Systems, a computer vision and RFID solutions venture that was later sold to a Private Equity firm. Toby holds a BS in engineering from Kansas State University.