Data You Can Use: How To Unlock The Potential Of First-Party Data To Win In A Phygital World

Shobhit Khandelwal, cofounder of Minoan Experience.

As the retail sector continues to evolve, Shopify’s Harley Finkelstein recently shared some predictions for where he sees physical retail heading in the next five to 10 years. His predictions highlight the emergence of a blended environment in which physical in-store experiences are complemented by digital elements that allow shoppers to immerse themselves in a brand.

However, this hybrid between the physical and the digital, which has taken on the name “phygital,” isn’t exactly a prediction for where retail will be headed in five to 10 years—it’s already a reality for many businesses. Take H&M, for example—the company recently opened a new concept store that includes smart mirrors in fitting rooms where shoppers can request a range of styles, looks and sizes to customize their experience. They can also choose to checkout at the register or use mobile checkout anywhere in-store, right from the palm of their hand.

Phygital retail allows brands to reach shoppers more holistically while giving them a more dynamic and personalized shopping experience. It’s been found that people who purchase items through omnichannel methods shop 1.7 times more than single-channel shoppers and spend more too. A study of shoppers in the U.K. found that one-third believe online shopping doesn’t adequately provide the “overall shopping experience” you get while shopping in-store. Meanwhile, 63% of those aged 16 to 24 “would actively improve their purchasing in-store if QR codes became mainstream.” People prefer in-person shopping over online while simultaneously craving digital integrations.

But although omnichannel shopping offers ways to shop from a variety of channels, the shopping experience is often inconsistent across platforms. Phygital retail helps close that gap as a hybrid environment in which the physical in-store experience is fully integrated with the flexibility and convenience of online shopping.

As demand for phygital retail grows, retailers will need to create spaces, products and services that allow customers to experience the brand, not just buy from it. One way to do this is for businesses to unlock the potential of first-party data.

First-party data is collected directly from people who have interacted with the brand in some capacity in the past. It gives businesses unique information about customers that allow them to offer immersive, personalized shopping experiences that are authentic in nature. So, what first-party data can brands use to optimize their business and win in phygital?

• Demographic Data: Understanding your customers is the undeniable first step in building authentic experiences. It’s not just knowing who they are, but where they’re located, their age range and gender, for example. This is data you can use to distinguish your customers’ unique preferences for products and to determine how and what you offer as a brand.

• Website, App And Social Media Data: Information from your business’ website, app and social media channels is valuable first-party data you can use too. It reveals how your customers and target audience interact with your brand and allows you to get insight into what’s landing and what’s not. For example, you can see who has items sitting in their virtual shopping cart or if a social media post about a certain product has been shared with friends and family. This sort of data can help you understand a customer’s purchase intentions, allowing you to use that information to follow up directly or provide individualized recommendations in-store.

• CRM Data: Data from CRM software allows you to truly understand how your customers spend—including how much, how often and what channels they used to find and purchase your products. It gives you valuable information to help make sales and marketing decisions, and it’s an incredibly powerful tool to understand how your customers engage with your brand so you can provide customer experiences that are exceptional and seamless in the future.

• Survey Data: Another method to take advantage of is surveying your customers. Whether it’s about the brand’s products or their shopping experience, getting voluntary information directly from your customers is an effective way to get a true sense of what your customers enjoy and what they don’t.

First-party data can help unlock the full potential of phygital retail, such as using a collection of social media, CRM and demographic data to curate in-store product displays that promote popular items in line with local trends or offer bespoke, dynamic in-person encounters. Using first-party data, a store can become an exciting space that isn’t just a place to stock and sell inventory—it has the potential to become a home for product demos, a showroom or an event space. Brands can truly optimize and elevate their in-store experiences with first-party data.

What’s important to keep in mind is that businesses need to stay vigilant and remain compliant as well. As global data regulations shift and the use of third-party data phases out, taking advantage of first-party data is a great way for brands to build trust with their customers. First-party data allows customers to have more control over their data and privacy because the data isn’t coming from an external source.

The true value of first-party data is its ability to inform your business on how to provide personalized and immersive experiences and help customers understand how, when and where they interact with the company is being translated to improve their overall brand experience.

With the future of retail being phygital, first-party data helps brands understand how they can offer encounters that are practical while touching on a customer’s emotions. Unlocking that data can drive brands to win as consumers become accustomed to shopping in a phygital world.

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