From the Industrial Revolution to digital

For some time now companies have been devoting a large part of their strategy to the consumer experience, and online retailers have decided to expand their points of contact with customers, for example by opening temporary shops, creating pick-up points and focusing on the experience of buying.

Retail leaders have to imagine new generations of stores for new generations of consumers.

The consumer 2.0 regularly interacts with computers and mobile phones, browses websites and downloads apps to find out about the latest products, staying very active throughout the buying process. As a result, the most innovative stores become not only the physical meeting point between the brand and its customers, but also the most important part of the company’s strategy for reaching the consumer.

The consumer experience is therefore at the heart of phygital (the combination of physical and digital processes). Today there is no longer a straight path to buying a product, and consumers no longer separate online from offline. They buy on the internet, receive at home and easily go back to the store. So it has become essential for a brand to create connections between the digital world and the physical world, to respond to an ever greater and more demanding request from customers. The brand has to move away from following a single technology trend in which the medium matters more than the experience.

Amazon has understood this digital revolution perfectly and has rethought the identity of its new retail spaces, which become the continuation of its virtual ones.

In the United States, the e-commerce leader is opening a new pop-up store every week inside shopping centres across the country, with the aim of opening 100 stores by 2017. In these small spaces, services and devices are entirely digital; they build customer loyalty and multiply the points of contact.

This year Amazon decided to continue innovating in retail and is launching 43 pick-up lockers in Italy (points for collecting a product ordered online), specifically in Lombardy, Piedmont and Veneto, in U2 and Unes supermarkets and at Repsol petrol stations. Amazon customers will be able to choose a pick-up point during the online purchase and receive a code to use offline.

This loop between the virtual world and the physical world creates new entry points for both digital and traditional retailers, bringing attractive, useful and effective services into the store.

According to Retail Week, in the UK click-and-collect accounts for more than 50% of online sales for department stores, and the trend is expected to grow by 82%.

For this reason, successful companies do not compete with digital brands. They join forces with them to create a shared, universal experience. Today 50% of local searches are made on mobile devices, and this trend keeps growing. This means that searching for products and buying them no longer happens only at home but anywhere, on the move. Stores with a physical space therefore have a big advantage over those that have focused exclusively on the digital market.

Digital will continue to be one distribution channel, no longer the only one. Successful retailers learn to operate online with a multichannel or omnichannel offer, and not only physically in the store, in an increasingly competitive market. Companies have to respond to new problems and find ever more effective solutions, such as selling products in store at prices closer to those online and getting closer to consumers through different sales channels, communicating discounts and offers by text message, email, Twitter and other social media. Innovative retail (online included) experiments with these new formats, uses location data to make sure it has suitable and attractive outlets and spaces, and applies digital technology strategies and solutions in store to improve service, increase productivity and reduce costs.

There is still a long way to go in Italy before the digital market matures, even though we expect rapid growth in the coming years. The country’s problem is that consumers have not yet got into the habit of buying online, few use credit cards, the quality of postal and delivery services is unpredictable, and most retailers build websites to promote their products and present collections to customers who want to buy in store.

For this reason many Italian brands prefer to attract the online consumer through the offline experience, directly in the store. OVS, for example, has launched the Magic Fitting Room in its Milan store, which lets customers share live on social media and ask for a different size from the fitting room. It has also set up click-and-collect and ridden the trend of shopping on the go, with the option to find an item in the store from your phone. To bring these experiences to life both digitally and in store, OVS works with Google.

In any case, it is important to keep an eye on the evolution of phygital retail. People thought digital innovation would put an end to the world of retail; instead it offers a new era and new ways of developing both the consumer experience and customer loyalty. We are now seen as the new smart consumers.