Innovate March 2019

Let’s Get Phygital: A Global Innovation’s Transformative Impact


Written By: David Whitney

The next transformative and evolutionary phase of digital innovation is well underway around the world. This transformation reflects how organizations, both large and small, interact and communicate with content-reliant consumers. Consumers, regardless of their demographic profile or their technological proficiency, aim to connect most aspects of their lives – spanning the spectrum from the routine to highly prized “look at what I do, who I connect with, and what I associate with” activities. This combination of the physical and the digital is described by the term “phygital.”

The exponential growth of phygital experiences is not surprising, due to an increase in the number of forever-on and always-connected electronic devices. Factor in the explosion in Internet of Things devices and pair that growth with the opportunities generated by augmented reality, virtual reality and 3D printers, and it is easy to see how the physical component of virtually every experience, event and action can be digitized.

The emergence of phygital experiences demands increasingly more connectivity between products (and services) and the customers (and clients) who use them. More and more the brands will evolve from the traditional and conventional business-to-consumer model and adopt digital-centric methods for communicating with customers using a business-to-human approach.

Integrating the physical with the digital results in an enhanced level of enrichment. This enrichment occurs when consumers personalize their experiences – and tell whomever is willing to listen or see how the interaction was meaningful and memorable.

In today’s digital age – often referred to as the Fourth Industrial Revolution – innovative technologies and personal touch points with humans have created a phygital landscape that expands across the globe virally.

To be effective, a phygital experience needs to be fully immersive and its content meaningful.

The technologies involved for delivering a digital and physical experience have been around for decades. For example, augmented reality was developed by the Air Force’s Armstrong Laboratory in the 1990s. An early commercial usage of virtual reality dates back to the 1960s in the form of an arcade-style cabinet called Sensorama. The device contained a stereoscopic 3D display, a vibrating seat and a mechanism that produced scents. These innovations, and others like them, led to technological advancements that were commercialized in the gaming and entertainment industries.

The key objective, even with these earlier applications of phygital innovation, is to offer consumers a seamless integration with their physical world. The goal is to blend both physical and digital worlds into one intensified experience.

We see this in how effortlessly consumers interact with their smartphones and computers. The experience harkens to the 2013 movie “Her” and the co-dependency that ensues between the human character and the operating system he falls in love with.

Humans want more, not just from our physical environments, but also from our digital experiences. That means feeling involved and included by “being in the moment” wherever and whatever we are and what we do – or have done.

People want not only to be present, but to be present in such a way that chronicles a seamless digitally enhanced user experience. We realize this experience when we’re shopping online or broadcasting our updates on social media.

Organizations that succeed in offering “in the moment” experiences across the commercial and personal spectrum are those that realize the importance of using technological innovations that allow for the seamless integration of both online and social media experiences contained in phygital environments.

The Phygital:
The digital revolution began with the transformation and transposition of as many “real life” activities and funtions as possible into a digital entity. Today, the reverse tendency is becoming ever more apparent; the virtual is beginning to reveal itself within the actual.

A May 2018 report concluded that 66 percent of shoppers want technologies that enhance their in-store experiences. The report concluded that 31 percent of shoppers want Electronic Shelf Labels (ESL) – small displays that update in real-time prices, promotions and detailed product information. The research, performed by Diplaydata and Planet Retail RNG, revealed that “inaccurate, inconsistent pricing – and a lack of in-store digital technology – is costing retailers in lost sales and consumer trust, as price-conscious shoppers seek out the best deal and better experiences online.”

The future of phygital innovations applies well beyond retail. Phygital advances allow for the creation of relevant, engaging, targeted communications that build customer loyalty, drive sales growth and increase profitability.

Phygital’s continued evolution is supported by a 2017 survey by Zebra that concluded “75 percent of stores will not only know when specific customers are in the store, but will also be able to customize the store visit for them by 2021.”

Machine learning/artificial intelligence technologies also factor into phygital’s future adoption. ML/AI technologies use analytical and predictive models to help personalize consumer experiences, forecast demand/supply alignment and mismatches, and anticipate how a product will perform in
the market based on its visibility on social media platforms.

Finally, technologies that impact and influence phygital environments include automation/robots, involving the packing and shipping of orders, tracking inventory (in-store, in-warehouse, and in-transit) and helping customers find items (both in-store and online).

The Zebra research report concluded with listing the top drivers for investments in technologies associated with phygital innovations. Those investments are intended to produce the following metrics:

  1. Increased gross revenues
  2. Reduced operating expenses
  3. Improved inventory management
  4. Enhanced customer experiences
  5. Competitive advantages vs. marketplace competition

Phygital content has both commercial and entertainment value. Social platforms like Instagram and Snapchat digitally capture and transmit the physical. The same thing occurs with QR codes on ads, concert tickets and boarding passes.

Phygital’s premise is robust, and its future promising for creating memorable and valuable experiences that blend the physical with the digital.  

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