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Generation 'Phygital' - what does this mean for brands?

Like our other Launch Lessons e.g Augmented Reality, we have created an audio version of this blog post so that you can listen to whilst moving along if you don’t have the capacity to read it.

As elements of our world become digitally connected through the ‘internet of things’ and kids spend 67% of their free time looking at screens, you’d be forgiven for imagining a pixelated future of accelerated myopia and life lived out between slack, Instagram stories, Deliveroo and Amazon. I recently read a story about ‘transient blindness’ caused by looking at your phone in bed for too long. a cautionary tale I chose to dismiss for personal reasons.

But as digital products and services promise efficiencies; the counter-trend is a push back in search of physical objects and spaces which create experiences in the ‘here and now’.

The tip of this iceberg is the revival of nostalgia-spiked analogue media. Sales of vinyl rose 37.6% in the UK in the first half of 2017 whilst cassette tape sales rose by 35% in the US. Hardback books have had a good year, analogue camera equipment is fully in vogue and popularity of board game cafes and screen free holidays suggest a desire to engage with ‘real world’ experiences. Newsstand sales might be in crisis but a Zine subculture thrives as students cut and stick to create dynamic DIY editorial sold on hand to hand by young people who might spend 3 hours a day consuming digital media. Draughts Cafe in fashion-forward Haggerston offers a choice of over 600 games from nostalgic classics like Kerplunk, to the more esoteric Drunk Quest: The 90 Seas (less in demand…). Hell, Sainsbury’s have launched its own vinyl record label, now accounting for 70% of the vinyl market in the UK.

We seem to want more not just from our physical but our digital experiences too, from the involved feeling of ‘being there in the moment’ at a cat cafe (a little too sensory for me I have to admit), to a seamless digital user experience when shopping online. Businesses that succeed offer excellence at both ends of the spectrum, with the most successful innovations showing seamless combinations of the two.

Digital brands are moving into physical spaces and vice versa

Digital-first providers have done just that in turning to pop-ups and concept stores to add a hyper-physical experience to a digital-only one. Birchbox, the beauty in a box subscription startup have set up stores and pop-ups in key cities; Amazon has set up cashier-less retail spaces and even bookstores with their ‘Amazon-Go’ concept (purchases are billed automatically on leaving the store). Manchester-born fashion e-retailer Pretty Little Thing launched an exclusive state of the art gifting lounge to entertain influencers earlier this year in LA. Nike have invested considerably in creating flagship experiential stores in key cities, whilst paying equal attention to its’ website and app to drive direct sales. Excellence at either end of the spectrum has become more than desirable, it’s expected.

Best in class ‘phygital’ experiences

Great success has been seen for brands who combine the physical with the digital; giving rise to the concept of ‘phygital’, a product or service which seamlessly combines the two. Disney’s massive six year $1 billion innovation project, the MagicBand and MyMagic+ app replace tickets, maps, and queue lines with its wristbands and Fastpass entry points helping grow revenue in US parks by 6% this spring. In a similar investment, Carnival Cruise ships have developed the ‘Ocean Medallion’, an app helping guide the wearer through the enormous space of the ship whilst facilitating the ability for staff to deliver drinks and services right to hand.

Nike’s flagship stores offer running analysis and opportunities to design your own trainers whilst it’s running app has been dubbed as ‘the largest running club in the world’. Disney and Carnival have been savvy to pander to ‘uber’s children’ with the ability to be there with ‘what I want’ in the ‘here and now’ through phygital experiences, whilst Nike has created value at either end of the physical-digital extreme.

What must brands do if considering a ‘phygital’ extension?

Understand the purpose

When moving into an alternative physical or digital space, it’s important we understand the value of what we create – a QR code on a cereal packet may seem like a good way to enhance the breakfast experience but does anyone want extra information in between bleary-eyed mouthfuls of Crunchy Nut? On the other hand, the DIY cardboard cutouts available to buy with the Nintendo Labo turns a two-dimensional digital game into a tangible interactive make-believe world – an innovative ‘phygital’ extension appealing to both kids and their discerning parents.

Physical additions need good reasons for being there – an upmarket gifting lounge for influencers works for Pretty Little Thing because it plays into their existing presence on social platforms elsewhere, but the investment required to build up a broad network of retail spaces seems unimportant given Pretty Little Thing’s ability to create a powerful online experience, providing thousands of styles at affordable prices at the click of a button.

Invest in integration

Brands who have the will to succeed long term must take the phygital, no compromise generation seriously, providing the best of both worlds. With demands and competition in both spaces higher than ever before, seamless integration needs to be a priority, with each looking to seamlessly enhance the other.

 

Consider both ends of the physical-digital spectrum

Those that have failed to invest in either are already bringing up the rear, joining the likes of Mothercare and House of Fraser who lacked the sensory zest of forward-thinking retail spaces which have become destinations in themselves, whilst failing to provide the interest of online retailers which have become both alluring standalone platforms for content discovery which provide exemplary digital user experience.

For those who take the plunge, the pot of gold is considerable. Pretty Little Thing has seen 228% growth, whilst Amazon intends to have 7 cashier-less stores up and running by the end of 2018. Whilst many will hope it doesn’t cost $1 billion to get there, the importance of avoiding dangerous mediocrity is more pressing than ever before. Cue the turntables, please.

Image Credits
  • Shutterbox
  • https://disneyworld.disney.go.com/en-eu/plan/my-disney-experience/bands-cards/

By Constance Meath-Baker
Strategy Planner

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