Topic: Phygital Retailing of

Luxury Goods
Group 11:

Gitanshu M Gandekar (21P019)

Manu Tiwari (21P024)
Lokesh Agarwal (21P150)
Shahbaaz Sheikh (21P168)
Shrey Beriwal (21P171)
 Agenda
Introduction

How to define “Phygital”

Initiatives

Methodology Followed

Strategies based on Phygital Retailing

Primary Research Analysis

Hypothesis & their Inferences

Challenges in Phygital delivery of Luxury Goods
Recommendations & Conclusion
Introduction
How to maintain traditions is one of
the key concerns facing the world of
luxury companies today
Retailers have been boombazled by
the crippling effects of lockdowns on
the formerly thriving global retail
sector
Due to this, several brands have been
constantly transitioning to "phygital" in
recent years
 How to define “Phygital”

Three Necessary objectives to

define the experience as Phygital:
Tangibility
Highly Engaging and
Personalised
Application of innovative
technologies
 Initiatives
Influential Marketing
Employ influencers in order
to target the millennials
Offline to Online (O2O)
Crate an online environment
that replicates the luxurious
offline experience to support
the purchase of luxury goods
Engagement
Engagement with associated
stakeholders in order to reach the final
consumers in a phased manner
Social Media
Develop a customised social
media plan that will help your
brand become more relevant in
the current digital era
 Secondary Primary
Analysis
Research Research
They help identify: - It is done by Analyzing the data
Various channels for conducting a survey from the primary
luxury goods now in prepared through research to
use questionnaire confirm the
Underlying problems The survey gathers Hypotheses
Potential opportunities information for
with the physical selling checking & validating
of luxury goods the hypotheses
 Strategies based on
Phygital Retailing

It entails the customer making any purchase in
an online/digital ecosystem through a mobile
application or through the company's website
and picking up their product from a physical
location, like a nearby store or warehouse
The customers can browse the products
in a physical set-up and consequently
order the desirable products on through
the Mobile application or the Webpage
 Making the Online Collecting from a Physical
Purchase Location

Benefits:
Improves client interactions
Low-cost, convenient, and fulfilling experience
for the customer
Advantages of an in-store visit
The optimized delivery network and inventory
management
Costs:
Operational Challenges: Faster turnaround,
Inventory Management
Customer Expectations: Product Readiness,
Hassle free experience
Speed to Market: Providing a better
experience from the peers
 ZARA NIKE APPLE

Collection Points Incorporated messaging and Express Store opened in

created across store app based services for online California for improving
Products can be ordering order fulfillment
ordered by scanning a Allocated designated space for Customers get entry only
QR code, while the pick-up and hassle-free if they had an order or
product is delivered at experience appointment for tech
the collection points support
 Browsing in physical setup Making Purchase Online

Benefits: Costs:
Fulfilling the desirability of touch and feel, Time and Resource heavy

experimentation and in-store experience for the customer as well as

The convenience of ordering anywhere, anytime at a seller

later stage
More immersive and fulfilling engagement
Assists in making a more educated purchasing decision
 AUDI LUSH

Integrated VR for exploring interior/exterior Created #LushLabsApp that acted as the

features, and configuring and customizing primary source of in-store customer
your own dream car engagement and product information

 Primary Research Analysis

Our primary research was done via an Online Survey Form and for 50 respondents across a gamete of
ages and income levels we gained an understanding of the consumer purchase behaviour across
online and physical channels

Approximately 90% of all responders were salaried professionals or students. The others are largely
company proprietors
 Hypothesis & their Inferences
For evaluating our case we developed the following hypotheses to understand the customer purchasing
behaviour across the online and physical channels

Hypotheses 1 (H1): In the online scenario, people are prepared to spend more on luxury products
Hypotheses 2 (H2): People prefer phygital over physical/online stores
Hypotheses 3 (H3): The use of phygital platforms is influenced by income groups
Now for the first hypothesis we tested the null hypothesis by asking respondents the mark up % they
would spend in case they agreed to purchase a premium product and calculated the p-value

The P - value was determined to be 0.207 (>0.05), hence we cannot reject the null hypothesis.
As a result, consumers' willingness to spend more for a luxury commodity does not fluctuate.
 Hypothesis & their Inferences
Now for the second hypothesis the null hypothesis i.e. H0 - Consumers are uninterested in testing out
premium things online was created in order to check H2

Respondents were asked if they were willing to buy luxury goods online and obtained we obtained "yes,"
"no," and "maybe" responses. Basis the null hypothesis we proposed that the mix was supposed to be
distributed evenly among the three buckets, i.e., 33% each.
The p-value was calculated by comparing the answers to the hypothesized combination.

The P - value was determined to be 0.278 (>0.05), hence we cannot reject the null hypothesis.
As a result, consumers are apathetic about purchasing luxury goods online vs offline.
Hypothesis & their Inferences
For the final hypothesis the null hypothesis i.e. H0 - H0 - There is no bias for or against phygital
adoption among income groups beneath was created in order to check H3. Since there were
multiple income groups hence for each income group the answers were checked against the
expected values

Respondents were asked if they would prefer the retail stores basis the income group they
belonged to and we obtained "yes," "no," and "maybe" responses. For 0-6 Lakhs, The P value was
determined to be 0.034 < (0.05), allowing us to reject the null hypothesis. Hence, The 0-6 LPA
income bracket prefers physical adoption.

The p-value was calculated by comparing the answers to the hypothesized combination.

However for the remaining income groups i.e. 6-12, 12-18 and 18+ lakhs the amount p value was
more than 0.05 and hence the null hypothesis could not be rejected. Hence these income groups
did not choose physical adoption which is in line with general consumer trend that with income
increase there is no lesser inclination towards only retail channel as consumers are more aware
about online purchases and can readily pay premium amounts for a luxury good if they have the
higher levels of disposable income
 Challenges in Phygital delivery of
Luxury Goods

Channel Security and Supply Chain &

Friction Privacy Inventory
Management
 Channel Friction as a Challenge
As of now, luxury brands and businesses are responsible for the majority of technical
advancements, which they use in their physical stores and online.
Examples: Audi, Lush, Loreal, and Channel.

Frictionless channel is one of the pillars of phygital offerings. For eg: It is extremely difficult for

businesses with massive distribution networks, like Loreal, to guarantee a flawless user experience

across all available channels.

The distribution of margins across various channels is another problem.

Customers may begin their shopping adventure online, make their in-store purchase, and then
request delivery of the item to a location where it is unavailable.

Determining whether the transaction took place at the point of sale or when the product was
delivered by a different warehouse or retail outlet becomes challenging in such circumstances
Who owns this transaction, and if everyone engaged owns it, how are margins to be
distributed?
 Security and Privacy as a Challenge
Important decision points to look upon for brands include: -
They must gather a lot of data in order to offer a better experience. For instance: The AI-based
software must gather data about your face, your photos, etc. to demonstrate how a certain
beauty brand's new product will seem on your face
How far a brand may encroach into its customers' lives is another critical factor to consider.
Numerous businesses are attempting to improve their customers' overall experience via
location-based push notifications. They can notify the user by informing them about newer
products at their store if they are in close vicinity to one of their stores

More and more transactions are happening online, and more and more data is accessed and
analyzed by companies, thereby increasing the threat of cyber cheat and data leak

The potential risk and worries about internet buying had a negative impact on the percentage
of people who made purchases online
If luxury brands do not offer security and privacy safety, they will lose clients and their overall
worth to them will fall, which will lower the value of the brand
 Supply Chain Management as a Challenge
For luxury brands, ensuring that the product is available on the channels while the cost of inventory
shouldn’t be the major reason for higher prices also becomes important

Good supply chains need to use AI and ML in the integrated supply chain to manage the inventory
and deliver a seamless experience. Businesses can utilize IoT to track orders and complete them,
robots for packaging, and drones for delivery

By adopting clever inventory management techniques and making investments in cutting-edge

technology such as AR/VR, it is possible to address both the issues of customers wanting to
experience the product anywhere and their desire to do so

In order to assist you in choosing the best product for your needs: -
Loreal has acquired businesses that use virtual reality on your face via mobile & laptop devices
Chanel uses augmented reality in their physical outlets to assist customers in finding the best
product for them
 Recommendation
As evident consumers are indifferent in buying luxury goods from offline or offline retail :
To increase the overall probability of users going for digital medium the comapnies need to
provide following offline features to the customers:
First hand experience of the product
Availability of similar products
Measure the satisfaction in respect of price demanded for the product
This can be done by integration of AR which is being used in numerous online furniture and house
decor companies to replicate the offline experience to online users.
 Conclusion
Through the onset of this research, we were able to discern the changing needs of brands and
consumers alike to keep up with the online medium
The primary research data gives a clear indication of the importance of phygital by comparing
and contrasting certain heterogenous points of view
Certain secondary research literature has also provided us with varying results with respect to
these brand initiatives and how this notion of “phygital” is successful in some industries and not as
successful in some others
One thing is clear, that if brands are to survive, they in some form need to adopt these initiatives by
gaining an online presence
While there are certain challenges as outlined above, how a brand maneuvers through these is
what is going to test out their mettle in this ever changing dynamic environment
Thank You !!