How retail stores can revamp customer experience by going ‘phygital’

ANALYSIS: RETAIL How retail stores can revamp customer experience by going ‘phygital’

Consumers are increasingly demanding more exciting in-store experience

creativity. Dark stores are like distribution hubs of physical stores, said Sharma. These physical stores turned into dark stores, which are not open to customers but are used as store inventory and for brands to send out orders.

Online grocery store, HappyFresh, increased its dark stores in Singapore to allow an efficient shopping experience, bringing high-quality products to customers.

Since its launch, the online grocery’s users increased by 300%, month-on-month, to address growing demand.

To gather and use data analysis and insights, retailers should utilise vaideo-powered retail

When borders reopened and travelling was revived, businesses figured that they needed to revive their physical stores—but they must be different from the pre-pandemic times. In a 2022 Singapore Retail Report study, consumers said that they now demand excitement and pleasure from their instore experience, because if they cannot get that, they would rather buy online.

According to Varun Sharma, Vice President of the unified CX platform , Emplifi, in the Asia Pacific and Japan, one way for retailers to create this excitement is to be “phygital.” They need to mix physical and digital strategies for a unified experience for consumers using digital datadriven customer insights and technologies.

To gather and use data analysis and insights, Sharma suggested utilising video-powered retail that involves video software that uses data to connect callers to an in-store expert to handle their queries.

“Video technology helps humanise digital communication between consumers and brands via their website—leveraging data insights such as how, when, and why customers are interacting,” he explained.

For example, Marks & Spencer has a “call the expert” video button, enabling their experts to pair with customers for a stronger chance of a sale. This live video service accommodated 28,000 one-on-one consultations of customers browsing furniture, menswear, and lingerie in the store, according to Marks & Spencer’s statement on 28 January 2022.

“This helps brands understand the customer journey better and provide a more personalised experience. With customer data, retailers can give shoppers exactly what they are looking for, boosting their sales potential, and cutting costs, too,” Sharma explained.

Dark stores

Another strategy retailers are using is called the dark stores. Despite the name, it can illuminate brick-and-mortar stores’

Video technology helps humanise digital communication between consumers and brand BNPL schemes

The Buy Now, Pay Later (BNPL) schemes also received popularity in Singapore from 2020 to 2021 due to convenience and prudent economic climate, Quan Yao Peh, a Senior Research Analyst at Euromonitor International, said.

Based on Euromonitor’s 2021 data, credit cards account for 61% of personal transactions.

“BNPL has been positioned as increasing the immediate affordability of goods and services, whilst allowing customers greater repayment flexibility compared to one-off spending,” Quan Yao said in an interview with Singapore Business Review.

To avoid turning BNPL to buy now, don’t pay later, businesses should consider the profile of their consumers.

“A millennial and Generation Z, someone who has just started working, is perhaps still in university and may not have that much disposable income at this point. The retailer needs to consider whether or not the BNPL implementation will allow them to better reach and capture the wallets of their target consumer,” said Quan Yao.

An example of a brand adopting BNPL is clothing brand, Pomelo’s, partnership with Atome, a BNPL mobile app, to allow customers to pay one-third of the total bill first. After their check out of items, their orders will be shipped and customers will get the items and pay other payments later with zero interest, 30 days apart.

Pomelo is currently operating three physical stores in Singapore which are in Nex, Jem, and 313@Somerset.

Cashier-less checkouts, AR zones

Smart technology can also create seamless experiences for customers when they visit physical stores such as through cashier-less checkouts, voice-activated instore robotic assistants, dynamic merchandising tools, and shelf-monitoring solutions, explained Guillaume Sachet, Partner of Advisory Practice at KPMG, a professional services firm.

He added that these technologies can combat consumers’ frustrations such as long queues, insufficient stock of popular products, and navigating physical stores.

A brand that does this is Singapore’s Pick&GO, an AI convenience store, which resorted to AI technology to help customers walk and complete their payments in a matter of seconds.

Quan Yao said these cashier-less options are better suited for grocery retailers, which focus on convenience. It could be different for other retailers such as department stores and beauty specialists that need human expertise to entertain customer concerns.

KPMG expert Sachet also suggested AR zones within stores to elevate customers’ interactivity with products that may be on static display.

In JLL’s 2022 Singapore retail property report, furniture retailer, Castlery, established an AR-enabled store that featured modern living spaces via mobile applications. This helped customers visualise the furniture in their homes and improved customer experience at physical stores.

Since 2019, Castlery’s posted a six-fold increase in its revenue. Further, its modern pieces were sold in 300,000 houses globally.

Mitigating inflationary pressures

Brick-and-mortar stores must also leverage customer experience as Singaporean consumers are bearing the brunt of rising inflation, which changes their way of spending.

These factors should push physical retail stores to “make adjustments” which will attract customers and generate sales, Sachet said.

Retailers can consider introducing or stepping up experiential components for shoppers. For grocery and food and beverage retailers, this could be in the form of sampling stations, self-serve bars, and demonstration stations. For clothing and apparel brands, leveraging AR to enable virtual product trials can refresh the experience whilst decreasing the hassle of physically trying on products, Sachet said.

“More than just a platform for showcasing products, physical stores are a community hub, which allows connections to be built between brand and customer,” the KPMG expert added.

Consumers are bound to spend more consciously with the rising inflation. In fact, a DBS survey showed that 42% of consumers said they will save more and spend less whilst 32% will look for cheaper alternatives.

“Retailers need to make the most of their brick-andmortar assets. One of the ways to do so is by integrating the ‘phygital’ concept as consumers turn into hybrid shoppers,” said Emplifi’s Sharma.

Sharma said businesses should tap omnichannel retailing, which allows customers to receive a unified experience of shopping through a mobile device, computer, or at a physical store.

This is due to the evolving demands of shoppers, who 67% of them in the Asia Pacific seek new products in-store whilst 66% seek new products on their mobile phones, as shown in Meta’s Seasonal Holidays Report.

“Setting up an omnichannel buying journey is no longer a nice to have option for businesses. Customers now want the flexibility to choose which channel suits them at a particular moment and expect to be able to contact businesses via multiple touchpoints,” said Sharma.

Consumers’ flexibility is also shown in Adyen’s 2022 Retail Report which found that 61% of consumers said they will be more loyal to a business that allows buying things online and returning in-store.

One way to do this omnichannel approach is to elevate the customer experience by speaking to a live customer

Varun Sharma

Quan Yao Peh

Guillaume Sachet

service agent on social media, logging an order online, and heading to the physical store to get the product.

UK cycle retailer, Ribble Cycles, does this by partnering with Emplifi Shopstream by Go Instore, which is a oneto-many video-streaming service. This service will allow customers access to a Ribble physical store, a Ribble expert, and its range of products online.

When live events were cancelled during the pandemic, Ribble used ShopStream to feature new products. The broadcast on their website, which was also live streamed on Facebook and Youtube, reached 10 times more attendees than launching these new products on a personal event.

One in four engaged visitors add products to their basket during a live stream on Emplifi’s ShopStream, with purchase rates rising to as much as 50% when moving to a one-on-one discussion with an associate.

Locally, an omnichannel approach is being done by Singapore Airlines (SIA) which uses the KrisShop offering, which allows customers to buy from the brand’s website or mobile app.

“Products on sale range from cosmetics to fragrance and electronics, and items can be delivered to the customer’s seat on their next SIA flight or directly to their doorstep in any part of the world,” said Sharma.

Sportswear firm, Decathlon Singapore’s omnichannel approach is Click and Collect, which uses its e-commerce and retail stores.

Through this setup, customers can purchase goods online and collect them at the nearest brick-and-mortar stores within two hours but only for general goods. For items like bikes, they can be collected within seven days.

Using retail technologies is also one of the strategies for brick-and-mortar stores, Quan Yao said.

He cited electrical and furniture retailer, Courts Singapore, as an example of this marketing strategy after the store set up quick response codes that activate a virtual mascot, Bitty the Mascot, which will help in virtual shopping.

“Generally, we see key themes around meeting consumers’ demands for product availability and a positive experience in-store trying the product. Stores should also be strategically located and easily accessible to their target consumer,” said Quan Yao.

For more on this story, go to https://sbr.com.sg/

Customers now expect to be able to contact businesses via multiple touchpoints