Going Phygital: A Flexible Omnichannel Approach to Customer Loyalty

In the retail industry, much of the last decade has been about the rise of online shopping and Amazon has emerged as the world’s biggest online retailer. In 2016, however, Amazon did what many considered impossible—it launched a brick-and-mortar store. Reports suggest that the trend is likely to continue, with more “Amazon Go” outlets expected to open in the United States.

Amazon’s expansion into physical stores reflects the diverse needs of customers today. An omnichannel retail strategy is an approach to sales and marketing that provides customers with a fully-integrated shopping experience. It aims at uniting user experiences from brick-and-mortar to mobile-browsing and everything in between. Hence the use of the portmanteau, phygital—an amalgamation of the worlds physical and digital.

Rather than a strategy to boost sales, an omnichannel approach looks to provide customers with a fulfilling, vibrant and engaging experience of the brand or product. Such an experience would be built around a series of interactions.

For instance, a customer browsing a product in a physical store may be unsure of whether to make the purchase. Does she possess the ability to scan the product on the retailer’s app, and make the decision to purchase it later, at home, in a different size?

If a customer has made an in-store purchase, does she get notified on her phone, when a similar product is released, either online, or in a physical store?

These are just few examples of how an omnichannel model provides a seamless experience, built around a series of interactions.

According to a study on retail trends this year, deep retail will cause hyper-personalization and people are becoming more comfortable with robots; happy to interact with chat bots and smart speakers. An omnichannel approach factors in both of these elements.

Some of the biggest brands in the retail business have taken the omnichannel approach quite seriously. Reports suggest that Walmart is making a flurry of organizational changes aimed at more tightly integrating its conventional retail and e-commerce operations and management. Walmart is an APCO client.

Integrated systems simultaneously give consumers research insights across various platforms. Every employee of the organization who interacts with a customer, online or offline, has access to this information. Therefore, at each customer touchpoint, an omnichannel approach allows a more engaging and holistic customer experience.

Confusion often exists around the terms multichannel and omnichannel. To put it simply, all omnichannel approaches are multichannel but the reverse does not hold true. The key quality of an omnichannel model is to anticipate and account for every single customer touchpoint, and to provide a good customer experience.

A good omnichannel plan, however, ultimately depends on being able to supply a product at the right time. This is where lean supply chain models become inadequate. Agility in an omnichannel approach does not sit well with lean supply chains. A fundamental dimension of an agile company is active leadership, which requires leaning into technological advancements and operating with flexibility. Proper technology and systems are essential to move goods seamlessly and quickly across the supply chain.

Clearly, organizations that sell experiences, rather than just products, have an advantage here. Disney Inc. is a prime example of a company that has successfully leveraged the omnichannel model to deliver genuine customer satisfaction. However, examples of a successful omnichannel approach exist among more conventional product brands as well. Disney is an APCO client.

The beauty giant Sephora is one such example. It has built an omnichannel model where online purchases made by customers, are linked to in-store visits. This gives them the option of accessing beauty workshops and complimentary makeovers. Each customer has her own unique Sephora account, called a “Beauty Bag.” Customers can use tablets available in stores to access their account while shopping. They can virtually try on products using digital software.  If they like a product, they can add it to a wish list. They also have the option of making a purchase using the app.

One question that remains is, how do the small and medium retailers cope with omnichannel models? Can they scale up their own range of experiences and offerings to provide a seamless shopping experience? Can they team up with some of the bigger players in the field? Can they exhibit greater agility, and compete with larger competitors? These are some of the questions that will be answered by future innovations in the omnichannel design.