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How retailers can create a successful phygital strategy



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June 9, 2022 | 6 min read

Consumers may have flocked online during the pandemic, causing an unprecedented shift in the growth of digital retail, but their return to store since has shown that they still value the physical side too

Consumers may have flocked online during the pandemic, causing an unprecedented shift in the growth of digital retail, but their return to store since has shown that they still value the physical side too. They have proved to be channel-agnostic consumers who expect their experiences to reflect that, whether they are instore or online.

And so, more than ever, we are seeing retailers looking to operate a true phygital strategy. What does ‘phygital’ mean? It is a clicks (digital) and bricks (physical) offering that combines digital and in-store strategies to deliver the best of both worlds.

McKinsey senior partner Eric Hazan, speaking in a report about the future of omnichannel shopping in 2030, describes it as, “physical and digital at the same time, where there is not a physical world or digital world in retail, but rather a completely connected one.”

Marrying both channels more closely offers retailers the opportunity to offer a more cohesive customer journey using the strengths of one channel to support the weaknesses of the other, creating a more powerful force as a result.

Why everyone seems to be going phygital

The power of the phygital strategy is proven by the fact that it’s something that even pure play giants such as Amazon are doing. This is because it offers a richer opportunity for experiential retail that simply can’t be generated online. Amazon has been experimenting with physical store formats since 2016 as it looks to push its brand yet further.

In the UK, leisurewear brand Gymshark was launched as an online brand by two 20-year-old university friends in 2012. Since then the company has grown hugely, especially during the pandemic. But despite its success it knows it needs a physical element to drive growth further.

Although the company has launched popup stores previously, its first permanent Gymshark store will open in Regent Street in London in summer 2022. Founder Ben Francis has big ambitions for the store and a clear understanding of its role in building the experiential link between physical and digital that phygital enables. "It's going to be incredible,” says Francis. “It's going to be experiential, and we want to bring as much of that Gymshark vibe and community into this place.”

For Gymshark, this building of community is as important - if not more so - than the ability to shop. Gymshark promises that the store will include experiential spaces that bring the conditioning community closer together than ever before – from special events and community hangouts to workout spaces and more.

Existing physical retailers are also increasingly adopting a phygital blend of physical and digital in their stores. Ikea for example will open a central London store at Oxford Circus on London’s Oxford Street in the former Topshop flagship. The store is due to open in autumn 2023.

The store itself will focus on home-furnishing accessories such as lamps and curtains, which are easier for customers to buy and take away. But there will also be a café and a range of room sets on display designed to inspire customers to order online instore, with items from the retailer’s full range of furniture available to buy for home delivery.

Using gamification to support your stores

So how can you better align stores and digital? Game mechanics can be hugely powerful in marrying online and offline channels and driving the integration of phygital strategies further. Many Leadfamly customers use such games not only to drive sales and engagement online but to physically push customers into stores too, such as allowing them to pick up a prize.

It’s a strategy that works particularly well for store openings and Leadfamly has seen a number of brands use gamification campaigns to get to know its customer in the flesh as well as online.

At Danish skincare brand Ecooking the retailer used gamified marketing to support the recent launch of its first company-owned flagship in Copenhagen, the first in a planned series of stores for the brand.

The company’s Spin the Wheel game received over 9,000 game plays with many customers coming in to collect their prizes on opening day. Tina Søgaard, Ecooking founder and owner, said the results were overwhelming. Speaking at the opening she said: “There have been many people who wouldn’t be here if not for Leadfamly. What is great about handing the prizes over to the customers has been that they can be sure how to use the products and that it actually works for them.”

Building excitement for store openings

Although Ecooking used gamified marketing to drive customers in store, at stretchy formalwear retailer Shaping New Tomorrow the brand used it in a campaign to reward the superfans who attended the launch of the company’s flagship store in Denmark’s Aarhus.

It created a Wheel of Fortune game that was available exclusively for customers to play while waiting to enter the store and gave them the chance to win boxers and a t-shirt. The exclusive event drove excitement since it was only available to the superfans waiting in line but also provided fun and entertainment while they were in the queue. However, more importantly it allowed the retailer to collect valuable first-party customer information to enable future personalisation. This is one of the key advantages of gamified marketing since customers have been proven to be more likely to share information when playing.

Within the first hour of the campaign go-live the brand had 200 registrations. By the end of opening day, that number had tripled to nearly 600 unique registrations with an average 32 game plays for each customer. “Being able to provide our guests with an awesome experience while waiting in line is really special,” said Jacob Bech, digital marketing manager at Shaping New Tomorrow. “The value of entertainment and the number of unique registrations unite perfectly with this concept.” The tactic will be used in future store openings.

Why gamification is the perfect fit for a phygital strategy

These are just two examples of how retailers can use gamified marketing to blend their physical and digital experiences but there are more too. And the results are powerful with increases in website traffic, AOV, and sales as a result. Is it time that your brand got phygital?


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