We all know that retail has been changing drastically over the past 20 years. What many people did not predict was that the change didn’t have a single direction of digitization, ecommerce, the end of purely physical stores.

Retail, like almost all markets and people, visited the future during the pandemic and discovered that the world will be, more and more, phygital. Since now.

In this document, we’ll discuss some of the transformations that the future points out and that still needs to be perceived and incorporated by most businesses, at least those that intend to survive in the next 20 years.

the phygital store

the space of experiences

In the transition from the era of the physical world to the phygital world, many people foresaw, or foresee (after all, we have just begun this transition), the end of physical stores. In perspective, however, this is one of those predictions of catastrophic ruptures not consistent with what people’s behavior points to.

The physical store tends to remain as the space of experiences. And it is not just a technological limitation of ecommerce, which will be overcome someday, but the fact that we are multisensory and physical. And gregarious: stores are places, meeting places.

In service stores, at least in most of them, physical presence is essential for the service to be performed. Especially those very personal, like the ones oriented to the body. In these cases, and there are many, the choice will start in advance in the digital environment, but it will end in the physical space, when looking, touching, smelling, feeling more broadly. If living is better than dreaming, feeling is better than imagining.

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the phygital stock

the space of information

The store’s stock in the phygital world increasingly ceases to be a deposit of objects to become a database about objects, those that are in the warehouse at the moment and those that are nearby, available to the store, even if they do not yet appear in their lists of objects in the warehouse.

Here, stock is a direct relationship with space and time. Objects have to be in a particular location, the store or the customer’s home, at a given time. For this, much more than having these objects in the warehouse, it is necessary to know where they are now and when they will be in the place where we will need them.

The phygital stock is not just what is in my deposit, but in the many deposits that are part of the ecosystem in which I am inserted; other stores, factories, distributors and carriers. The shared data of the business networks, their warehouses and vehicles expand the physical stock and the reach of the networks of people and algorithms that orchestrate the times and spaces of the objects.

In the phygital stock, what really matters is the treatment of data and the ability of stores to manage objects in the networks of deposits and vehicles in the ecosystem. The digital twins of physical objects are going to be increasingly important in such a context.

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the phygital purchase

the time to convince

If there was one thing the pandemic taught us, it was that people choose much of what to buy at home, starting their journey in the digital world.

The purchase may not always take place digitally; we still have a lot to evolve so that digital services surpass the quality of physical choice at the time of the purchase. But we’ve taken a big step in the past few months.

To cite an example, the convenience of buying from home, associated with the difficulty of receiving with the same quality as those who choose in the store, heated up the market for personal shoppers, people whose service is to buy, not deliver, but to make the appropriate choices in the physical store of the products that the person chose in the digital.

Physical store attendants need to prepare to act as personal shoppers, talking to people who “arrived to physical coming from digital” well informed about each product or service. There, there will be specialists to assist potential customers in the decision of the intended purchase and, almost certainly, of many others.

Phygital purchasing is, therefore, qualifying, part of a life cycle of information about products, services and people.

the phygital delivery

the time to anticipate

One of the main differences of the phygital store is, and will increasingly be, the ability to forecast demands, anticipate the objects that need to be closer in space and time of delivery and [or] services and their availability in space-time.

To this end, more than ever, digital systems based on intelligent algorithms are essential to get to know the customer and their relationships with products and services, to the point that it makes sense to start approaching objects [and the availability of services] in time and in space before the customer even starts the purchase process.

At the limit, it is possible to know the customer in an individualized way, personalized in fact, not only being treated as a profile, a group to which he belongs [laughs], but someone who will demand a certain object at a time and space known in advance.

The ability to manage and act on the lifecycle of large volumes of data and to treat each customer in an isolated or grouped manner is essential to align business expectations with market desires, to position them in the phygital world.

And, more than knowing inventory networks and customers, it is necessary to have information about distribution networks, who delivers what and when, in almost real time all the time.

the phygital marketing

the time to listen before speaking, and then speak

Marketing is probably one of the most advanced areas in the digital world. Because publicizing, making a product or service publicly known, is today an activity almost exclusively carried out in the digital space. And because the journeys and experiences of customers and users began in the digital space a long time ago and many occur entirely there.

Your customers, consumers, employees and competitors are digital, digital-first. The company, its channels and content must be there; otherwise… how to create context for trade?

People networks, targeted ads, audience and participation data, and many other digital-enabled features have shifted marketing, very quickly, from monological focus, from talking to potential customers, to a dialogical orientation of interactive discovery, of long experiences, of permanent discovery. And an explosion of possibilities.

The time of dialogical marketing, which hears more than it speaks on the networks, is the time of the phygital store.

It is as if, suddenly, the medieval craftsman could hear, not only his neighbors, but people from anywhere on the network, to understand their desires and from there to design, articulate, produce, position, price and advertise their products or services.

Phygital marketing is from the world of data, from the voice directed by digital ears and eyes, attentive to people’s behavior, desires and anxieties, in networks, in [almost] real time.

the phygital service

the time to talk

In the phygital world, the war of replicants, announced on the big screens in Blade Runner in the 1990s, is already a reality. We have become accustomed to speaking in [almost] natural language with digital systems that, behind pages, screens, microphones and speakers, don’t need to be anthropomorphic.

The behavior of people in personal communication systems, where more than half of messages are answered, on average, in less than a minute, is repeated when customers talk to stores. The minimum that is expected is a quick return, which makes sense, preferably in natural language. If it solves the problem, then…

But, far beyond chatbots, digital stores are ready to treat customers on any channel they want to use – omnichannel environments – exploring diverse digital mechanisms to keep customers as close as possible, creating a kind of remote intimacy. But present, alert and available. The phygital store does not close. Never.

This is a space where we have evolved a lot, although we still have a lot to innovate. But a product or service store, which is intended to be phygital but does not have the combination of strategies and technologies for phygital relationship with the customer, is no longer justified. When done right, it looks like magic, and customers and users think it is. And it creates value for everyone, simply by doing what is now the norm.

the phygital payment

the time to negotiate

Price, term and payment method are defined in context. In the phygital space, this phrase is even more true; prices, terms and payment methods need to be fluid, light and adaptable to the context. In times of payments made in bits, customers value convenience and personalization in all experiences.

The same product or service can change in price and form of payment from one moment to another because of several factors, from objective data and facts, such as availability and distribution costs, to subjective factors, such as the state and the customer’s need, until the impact of the weather forecast in its context.

Both for explicit or implicit conditions, it is data that will define prices and forms of payment in the phygital store. Negotiation is dealt with digitally, measured from indicators that point out conditions and limits, recorded digitally.

Phygital payment, more than an application that reads cards and watches from the customer (or receives a PIX) to close a transaction, is a set of intelligent data processing systems, capable of negotiating the best prices, terms and payment methods for the customer and the store, in the [almost real] time of purchase, integrating the physical, digital and social aspects, anticipating and mitigating the potential risks, vulnerabilities and impacts of the payment process itself.

© 2020 – 2021 tds.company all rights reserved

This text was written by professors Silvio Meira and André Neves.

[tds.company] is the home of strateegia, a theory of practice for strategic transformation, about which we wrote a long, illustrated sentence, which is available in pdf, at the link [http://bit.ly/TDSCsat]. Our strategic enablement work is done on a digital platform that can be tested for free at the link [http://strateegia.digital].

Photo by Christiann Koepke on Unsplash