Emphasizing the Significance of PHYGITAL Stores in the Post-COVID World

August 11, 2021 By: Girish Kumar

Consumer behaviour towards shopping has transformed post-COVID-19 pandemic, as a result of social distancing norms, reduced tolerance levels due to lockdowns, increased technology usage, and being well informed than ever before. The line between online and offline retailing is blurring with the advent of digital technologies, thereby integrating both worlds and creating a challenging environment for retailers to compete in innovative ways. One of the biggest challenges for brick-and-mortar retailers post-COVID pandemic is to compete with online retailers by formulating a suitable strategy. In a similar vein, pure-play online retailers have also started investing in Brick-and-Mortar facilities to gain from the advantages of establishing a physical presence. While online shopping is transactional in nature, in-store shopping offers a memorable experience and hence retailers are seeking to combine them effectively.

In fact, stores have started playing the role of showrooms, distribution or pick-up centers, multichannel hubs, etc. that connect offline and online experiences, engaging customers and enhancing operations. For instance, Warby Parker, an American online eyewear retailer some time ago introduced its brick-and-mortar stores as interactive showrooms helping customers to try suitable frames, tailor them to their prescription and order them to be home delivered, thus redefining the role of physical stores. And, of late many pure-play online retailers have been opening physical stores. Similarly, Walmart modeled some of its stores to offer the same-day pick-up service, which allows customers to purchase on their digital channel and then pick their products at a store as they drive through their cars, providing greater convenience.

With these disruptions prevailing in the retail industry, an omnichannel strategy could apparently be the default standard of retailing that empowers traditional retailers with a differentiated service leveraging digital channels. Retailers who are able to build strong omnichannel capabilities would be in a better position. Over the last few years, the connotation of multichannel retailing has extended beyond just concurrent use of channels to an exciting customer engagement driven by the combination of channels, leading towards a unified brand experience. At the outset, omnichannel blends the advantages of Physical Stores and Digital Stores, providing a seamless “Phygital” Shopping Experience to customers.

With increasing expectations of digital-savvy customers, retailers have a tough task ahead in meeting those demands and hence are compelled to formulate an omnichannel strategy, to establish their omnipresence with multiple customer touchpoints. They need to ensure key functions are integrated for an omnichannel approach that continuously engages customers across channels. By designing an integrated operating model that aligns with the omnichannel strategy, retailers can reap the best of both the physical and digital worlds. As physical stores offer proximity to customers, pure-play online retailers are establishing their physical presence to reap the growth opportunities that omnichannel retailing presents. Being closer to customers allows them to get deliveries out more quickly and economically.

Although most brick-and-mortar retailers acknowledge that with all organizational costs, their offers can never match that of pure-play online retailers, they anticipate omnichannel as a strategy to be competitive in the market. There is an emphasis on the importance of integrating their physical stores with digital channels through a collaborative model, instead of having these channels independently compete with each other. Such a strategy can facilitate customers to buy products from the online store and pick it up from the preferred physical store or have them delivered to their home from a nearby store or other combinations of such fulfillment paths.

Likewise, redesigning their physical stores is critical to competitiveness, which requires optimizing their format and role to meet the demands of customers. It also provides them with a competitive edge over pure-play online retailers by leveraging their store assets and fusing the shopping experience across channels. Retailers with physical stores will do better not only by leveraging the power of the online world but by synchronizing the physical and digital worlds to provide shoppers with an omnichannel experience.

The rapid growth of online retailing and the intrinsic strength of offline retailing indicate that in the post-COVID world, retailers should leverage a combination of both platforms posing a greater potential for such hybrids. Thus, providing a competitive edge by leveraging store assets and blending the shopping experience across various channels. While brick-and-mortar retailers are adopting online channels as an omnichannel strategy in order to sustain the competition from pure-play online retailers, there is also a trend of pure-play online retailers opening physical stores to be omnichannel ready. These counter-trends are bound to create a level playing field, eventually leading all retailers to be omnichannel players competing to provide the best customer experience.

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