From podcasts to infomercials, glamping to motels, the retail world seems to love inventing new products, then describing them by mashing up terms. Get ready for the newest version: Describing a combination of physical and digital, “phygital” has arrived to describe a unified shopping experience that includes a mix of in-store and online retailing options. Since its recent introduction, the term has gained mainstream attention and acceptance, especially as more businesses work to make the transition between these two seemingly distinct retailing channels as seamless as possible.

In particular, the introduction of AI technology in stores has vastly transformed retail. Virtual fitting rooms and smart shopping suggestions have become the norm, in stores, as much as online. Amazon’s cashierless technology and H&M’s augmented reality screens represent two familiar examples, which we have discussed multiple times in these abstracts. Furthermore, other retailers are using different AI tools to help consumers interact with products digitally, in a trend that initially was necessitated by the coronavirus pandemic. Even still though, Walmart leverages substantial digital content to enhance shopping suggestions and improve brand loyalty.

Consumers in turn react mostly positively. Data confirm widespread consumer preferences for retailers that offer phygital shopping options, both in stores and online, which appears to reflect their strong desire for both convenience and customization.

The phygital landscape appears likely to keep evolving, especially as retailers continue to develop and test virtual reality features in stores. Still, some caution may be necessary; some retailer early adopters have struggled with operational efficiencies after implementing new, relatively untested technologies too early. In addition, as is always the case when it comes to digital technologies, managing consumer data and privacy remains a critical concern, and such ethical issues are intensified by the need for transparency with regard to any surveillance technology being used in phygital consumer interactions.

As retailers work to develop and enhance their own, proprietary phygital experiences, each of them should consider carefully which specific technology iterations and tools will actually serve to enhance the brand experience across channels, rather than simply implementing technology that they might have seen in other stores.

Discussion Questions

1. Will phygital features in stores and online promote sales long-term? Why or why not?
2. How does Amazon’s cashierless checkout technology lend itself to a more seamless shopping experience?
3. Which companies do you think are best suited to integrate phygital technologies?

Sources: Jordyn Holman, “Retailers Get ‘Phygital’,” The New York Times, n.d.; Emma Mak, “Retail Trends 2024: Let’s Get Phygital,” CompuCom, 2024; Fitch Solutions, “Consumer Demand Fuels Omnichannel 3.0 Adoption With Phygital Focus In 2024,” Fitch Solutions, November 9, 2023; MJV Team, “The Rise of Phygital Stores: 7 Ways Brick-and-Mortar is Changing,” MJV Innovation, February 7, 2024; OpenAI ChatGPT, “Assistance with Research on Phygital Retail Trends,” ChatGPT, July 28, 2024.