Phygital: what it is and why it is a winning format in Fashion

REDAZIONE
07/05/2021
In brief
The typical customer is hyper-connected, technology lover and used to find his way through different channels, especially when it comes to sectors such as fashion and luxury. The concept of Phygital evolves from the needs of new customers and as a direct consequence of the massive and uncontrolled increase in marketplaces, digital touchpoints, omnichannel events and front-end and back-end platforms.

The disruption introduced by the pandemic has given rise to a new type of consumer, characterized by high standards and very strong expectations in terms of customer experience.

The typical customer is hyper-connected, technology lover and used to find his way through different channels, especially when it comes to sectors such as fashion and luxury. The concept of Phygital evolves from the needs of new customers and as a direct consequence of the massive and uncontrolled increase in marketplaces, digital touchpoints, omnichannel events and front-end and back-end platforms, as a new way to build a customer journey with hi-tech solutions combined with an omnichannel approach to create a continuity between the physical and digital channels and optimize the business network.

Let’s get Phygital!

The redesigned flow that embraces Omnichannel and Phygital retail has come about suddenly and has remained as an innovative pillar of the new normality. Conceived to combine the specific needs from the end consumer and the limitations imposed by COVID-19 response measures, this hybrid business has forced companies to review their supply chain, delivery services, rethink new transaction solutions, as for example via WhatsApp and Instagram, and reconsider their network of physical and digital stores.

For the Fashion and Luxury sector this is a big leap forward in terms of innovation that in the absence of the situation created by the pandemic would have taken several years. In fact, in the last 12 months the companies in this sector have been increasingly turning to the web to cope with the crisis. We only need to look at what happened to the biggest ones: Kering recorded a +67.5% in online sales (13% of total sales), and the LVMH Group has seen its e-commerce sales grow significantly, thanks to which it was able to partially offset the impact of store closures. But not only the big names have adopted these strategies. The Inditex Group recorded a 77% growth in online sales, and H&M an increase of 38% on an annual basis with a + 50% in the last quarter. A double-digit growth also for fashion marketplaces such as Farfetch and Zalando, which recorded an increase in online purchases of 49% and 30% respectively.

Now that technological solutions – built to allow companies to evolve, keep up with changes and consumer needs and, in many cases, survive – have become the main pillars of business management, it is essential to look for ways not to lose the human touch in the contact with the customer and in all aspects of the relation with him, fundamental for building a good relationship and trying to restore those moments of the customer journey typical of a live experience such as the sales ceremony, customer care and related services, where human contribution is essential.

To show how Omnichannel and Phygital are the new norms for this sector, it will suffice to think of the Milan Fashion Week held last September. The event, a catalyst for worldwide attention, saw in fact the blending of physical catwalks and digital events.

But what are the fundamental assets of a Phygital retail strategy?

  • Immediacy: assuring a precise and timely response to the consumer
  • Immersion: making the user an integral part of the experience
  • Interaction: generating an exchange to re-establish the human touch and stimulate the most physical and emotional part of the purchasing process

What tools to use? Implement digital touchpoints, focusing on those preferred by the customer and that refer to the human relationship with sales assistants to make everything more flexible, easy and accessible anytime and anywhere. Other keywords are personalization and empathy: customize as much as possible the sales experience and accommodate the needs of the customer, also taking advantage of the huge amount of data offered today to profile customers and keeping a memory of their purchases and preferences, and finally, maintaining contact also in the delicate post-sales moment, useful for strengthening the relationship with the customer. Tools such as CRM become the backbone of the brands’ multichannel strategies as, thanks to advanced technologies such as artificial intelligence and machine learning, also the efficiency of communication channels between warehouse and store can be improved with the aim of reducing returns and inventories. The ultimate goal remains the optimization of the workflow through a perfect coordination of communication channels.

Customer engagement and retention in fashion? A matter of... omnicanality

Customer engagement and retention in fashion? A matter of... omnicanality