Augmented reality and other technologies make access to goods and services more interactive. The move towards QR menus and AR fitting rooms is called phygital. Trends have studied the present and future of this area
Phygital (phygital, from the English physical + digital – physical and digital) is a marketing term that describes the combination of digital and physical experiences, including augmented and virtual reality, which changes the way products are perceived and provides consumers with a new experience.
Associate of the LETA Capital venture fund Alexander Zemlyak told Trends that in the future all physical objects and phenomena will work on the basis of a whole range of breakthrough technologies, including the Internet of Things, augmented and virtual reality, and so on. According to him, social networks and e-commerce, which today exist only in digital form, will merge with physical objects “not just as an addition, but rather as an integral part of them.” This process will seriously affect the economy.
A simple example: with the development of e-commerce, retailers needed to lure people from physical stores to the Internet. Companies have begun creating virtual storefronts where you can view the product you like from all sides and even try it on using augmented reality. So, in the fall of 2017, IKEA presented its AR application for fitting furniture to the interior.
In 2012, clothing brand Benetton launched digital storefronts – LCD monitors, the content of which can be centrally managed in real time. As part of the Benetton Live Windows project, passers-by can become the face of the company. The cameras transmit images of people to storefronts installed in the chain’s stores instead of windows.
Already today, phygital is used in such areas as medicine, catering, construction, technology, telecommunications, real estate, and so on. According to Zemlyak, LETA Capital and DEVAR predict that from 2021 to 2030, the largest growth in the presence of digital will occur in telecommunications (five times: from $2 to $10 trillion), information technology (four times: from $5 to $21 trillion) and e-commerce (three times: from $9 to $25 trillion).
Examples of the use of phygital
A business can use different strategies to combine online and offline technologies. They have three main tasks:
Examples of phygital technologies can be:
- Digital kiosks are points in public places that allow users to quickly perform routine tasks using technology. For example, McDonald’s digital kiosks, where you can place an order yourself and pick it up at the pickup counter. Now the kiosks have been adapted for the blind. They can connect their headphones to the system and listen to the digital menu while selecting dishes using tactile buttons.
- Mobile applications and BOPIS (Buy Online, Pick-Up in Store, online shopping system and pick-up from the store). During the pandemic, many stores have introduced a pre-order pickup system to minimize the time shoppers have to spend choosing a purchase. And restaurants have implemented a system that allows you to scan a QR code right on your table and view menus or drinks from your smartphone. In addition, they can cancel and add dishes to the order without calling the waiter, and service time is reduced.
- Websites and customer portals with online services. A credit institution may offer customers self-pay bills, while a medical institution may offer to fill out prescription requests or use telemedicine services.
- Voice assistants for the Internet of things. Amazon Alexa, Google Assistant, Apple Siri, Yandex’s Alice are all examples of cloud-based voice services that are used to control smart devices from companies and third-party manufacturers, and are also equipped with human assistance functions. For example, Alexa can be asked to remind you to take medication, and with the help of Alice, you can call Yandex.Taxi.
- Digital offices. Customers no longer need to visit the bank to perform many routine tasks. They can make digital payments, take out loans and open accounts online. In addition, some banks are transforming their physical branches with digital technologies. Alfa-Bank is already opening branches where the client is recognized by his face right at the entrance and where he can communicate with the manager not at the counter, but in a comfortable negotiation zone.
- Toys-to-life is the production of figures of famous characters with digital elements that allow them to be used in an online game. Such toys are currently produced by Skylanders, Amiibo, Disney Infinity, Nintendo, Pokémon Rumble U, Lego Dimensions, and others.
Perspectives of phygital
LETA Capital Venture Fund and DEVAR have calculated that in the next 15-25 years the digital economy will reach at least 50% of global GDP, which will amount to $100-200 trillion. As of April 2021, 4,8 billion people worldwide, or more than 60% of the population, use the Internet. In the UK, 95% of the population are Internet users, in South Korea – 93%, in Germany and the Netherlands – 90%, in France – 86%, in North America – 78%.
A study by the State of Phygital companies predicts that augmented and mixed reality technologies, IoT, smart sensors, beacons (QR codes, NFC or short-range wireless data transmission technologies, RFID or a method for automatically identifying objects) will form the basis of phygital for the next two years. using radio signals, 5G, human-machine interfaces, wearable devices, cognitive computing, cyber-physical systems.
Analysts at LETA Capital and DEVAR predict that:
- in the coming years, Apple will introduce a visual search function and create 3D models from a single photo, as well as other augmented reality technologies;
- Facebook, Apple or Samsung will release a consumer AR device (most likely mass market augmented reality glasses;
- The spread of 5G will affect up to 1 billion users by the end of 2022.
Experts note that phygital technologies also meet the goals of the Russian national project “Digital Economy”. According to analysts, if you invest the funds allocated for the implementation of the project in the amount of ₽550 billion during 2021-2024 in accordance with the concept of figital, you can:
- increase the productivity of the staff by an average of 50-100%;
- increase revenue from digital services by 100-200%;
- reduce operating costs by 20–50%;
- increase the speed of launching new products and services with a digital shell by 100–150%;
- increase the average business margin by 5–10%.
Experts predict that thanks to the introduction of digital, by 2024 the share of certain industries in the overall structure of the gross value added of the economy (the difference between the production of goods and services and their intermediate consumption) may increase: construction – from 7% to 10%, electric power industry – from 3% to 5%, transport and communications – from 9% to 15%, education and healthcare – from 7% to 13%.