Analysis | Innovating through Phygital Retail Formats

Combine the emergence of online pure players in physical retail with the growth of mobile devices and we are beginning to see a movement in the emergence of new retail formats and seamless physical/digital shopping – otherwise noted as ‘phygital’.

Phygital shopping is a combination of utilising physical retail space supported and enhanced by the seamlessness and convenience of digital and mobile processes. Although the emergence of successful and engaging e-commerce brands has filtered through FMCG marketplace, it still needs to be understood that 95% of all retail sales are still captured by those with a brick-and-mortar presence. With this in mind, more and more pure players are making the move to physical retail, but on their own terms and with distinct differences.

A few key pure players haven’t just made the move from online to physical retail successfully but also created and implemented new formats. Retailers and brands should take note – not just online brands but native brick-and-mortar ones too. Understanding the effectiveness of these formats can help inform future travel retail strategy.

Beauty retailers such as Birchbox and Harry’s have revolutionised the subscription service format – however, both have been smart enough to offer something a little different in their physical stores. Harry’s have supported their shaving product offering with Harry’s Corner Shop – barbers in NYC where services are applied using the Harry’s range. The Birchbox store in New York plays on the element of surprise and discovery by allowing customers to make up their own Birchbox – a sort of pick and mix of beauty per say. These small sizes are not different to travel size formats – and rather can imagine that instead of separating travel size necessities at airside pharmacies and large size indulgences at duty free, why not have them both in one neatly packaged, multi-product box?

Bonobos, the online menswear brand championed its ‘Guideshops’ – stores whose only purpose is to help you try, touch and feel the clothes guided by a personal stylist. The move by Bonobos was particularly interesting to examine because its CEO Andy Dunn had previously stated that they would never do anything of the sort. Bonobos Guideshops focus wholly on service – but the crux of its makeup is that you cannot purchase or take away anything from the store, championing the showroom format. Apply this thinking with mobile shopping support and it could allow travellers to discover, browse, try on and engage with brands without the added carry on and be able to order those items straight to their destination knowing that it would be the right shape, form and fit.

And for brands outside the fashion and beauty realm, more non-traditional categories can also work in new formats. Online furniture brand Made.com created their showroom stores as a reaction to low sales because of a disconnect communicating to customers the quality of their products. The London showrooms equip customers with iPad’s so they can scan the curated selection of products in-store using RFID technology and save them to their online account, readily available to access anytime. The store also hosts a wall of drawers with cards and fabric samples that customers can take away, encouraging more tactile engagement. It also gives them an ability to touch and feel the fabrics and view colours accurately as well as providing a small takeaway piece that then will serve as a nudge later to buy online. Just because sales don’t happen in-store doesn’t mean they don’t happen at all.

There are already some examples of this by brands and companies utilising phygital and mobile formats within airports. The Fill My Fridge scheme at Hamburg Airport allows customers to choose a food package that they can order and pay for within the app and pick up on their way out of the airport at the Edeka store. With packs from Basic to Deluxe, it ensures that passengers don’t go home to an empty fridge after their journey. Especially convenient when considered that airport travellers are above the national average of smartphone users at 97% and companies like Mini-Me Labs utilise this by also shipping items to passenger’s homes or destinations to allow them to shop without the extra baggage.

As airport sales are expected to grow 73% by 2019 it is essential that brands and retails look to pure players to innovate as they have championed new retail formats that can ultimately provide better ways of shopping in travel retail spaces.

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