With no groceries at home and limited time to get to work, you open the app for your favorite breakfast place, select your saved typical order, pay online with your saved credit card and pick up your order via the drive-through en route to work.
While shopping for new running shoes, you find the pair you want but aren’t sure if they offer the right support for your feet. Besides, this location doesn’t seem to have your size. The store clerks are busy, so you scan the QR code near the shoes to get product information and search the inventory at another nearby store.
These are examples of the shopping conveniences today’s consumers enjoy. Neither e-commerce nor in-person shopping is losing ground; they’re simply changing. According to a January 2026 Forrester report, U.S. e-commerce sales will reach $1.8 trillion by 2030, accounting for 29% of total retail sales.
As for physical shopping, 71% of consumers shop in-person as often or more often than they did before the pandemic, and 65% of consumers prefer to be in-store when actively considering a purchase, according to a March 2023 report by Alvarez & Marsal Consumer Retail Group.
Customer expectations have evolved to encompass not only the need for both digital and in-person options (often called omnichannel retail), but an integration of the two worlds and an ability to easily switch between the two without disrupting their buying experience.
It’s called phygital retail, and Ashley Taylor, product manager for Cleverence, a global mobile automation company, describes it this way in a February 2026 blog: “It’s about orchestrating a single, continuous shopping experience that spans apps, sites, social, stores, call centers, and even last mile delivery.”
The phygital advantage
PwC’s 2025 Customer Experience survey illustrates the importance of developing phygital commerce strategies. In it, 53% of respondents listed a seamless customer experience as a minimum expectation—one of the top minimum expectations among product quality, fair pricing, quality customer service and clear communication.
“Today, phygital retail has transitioned from an ‘extra nice-to-have’ feature to a baseline expectation,” said Chip West, director of category strategy for RRD, a firm that serves retailers with marketing, packaging, print and business services.
But beyond meeting customer expectations, phygital initiatives yield many other operational and financial benefits for retailers. The first is the opportunity to improve customer relationships by collecting meaningful data.
Digital inventory management, in-store digital tools, saved app preferences, interactive in-store kiosks and touchpoints, and other phygital tools offer opportunities to collect and analyze data to improve customer experiences.
Effective phygital strategies also enable retailers to cast a wider net, capturing sales through multiple channels and in wider geographic areas. Victoria Veda, vice president of communications for the Michigan Retailers Association, detailed some ways retailers can capture customer loyalty and increase sales through phygital strategies.
QR codes on store shelves so customers can read reviews, order online or check another location’s inventory allow retailers to secure sales and enhance customer loyalty, Veda said. Retailers may also sell online subscription boxes that offer an incentive to visit the store, which can expand in-store sales, she said.
Customers who shop across multiple channels are not only more loyal to the brand, but they tend to spend more. Taylor put it this way: “Cross channel customers typically spend more, convert at higher rates, and demonstrate greater loyalty when they encounter consistent information and reliable fulfillment.”
Finally, retailers realize operational efficiencies by employing phygital strategies. Buy Online Pick Up In Store, also known as BOPIS, reduces shipping costs. In-store touchpoints, app use and automated checkouts reduce staffing needs. What’s more, accurate customer data helps reduce operational costs from merchandise returns.
Increasing revenue, expanding product access
Simply Good Kitchen in Birmingham, Mich., illustrates how companies can increase revenue and expand customers’ access to products with the right technology. The physical store is open limited hours, so Co-owner Danny Wasmund uses Radio Frequency Identification and inventory management to sell the business’s chef-cooked, individually packaged food anytime customers want it.
“Say it’s 1 a.m. and you just have to have chicken marsala,” said Wasmund. Instead of waiting until the store opens at 10 the next morning, you can check the website to find out what’s available in the store’s cooler, and then use the 24/7 kiosk to make purchases.
“You swipe a credit card to unlock the door, and it charges you $1 to verify it works,” he said. “You take the meals and side dishes you want and bag them up. Once you close the door, you’re charged for all your items.” At that point, the store inventory updates.
Simply Good’s technology integrates in-store and online product inventory, making it easy for customers to purchase food 24/7. As long as staff tags all products with RFID stickers and updates the inventory system, customers are properly charged and online inventory stays accurate.
“It really is un-manned,” said Wasmund. “It runs its own website, so you can see in real time what’s in there with quantities.”
The system not only enables customers to make late-night purchases—as in the case of a shift worker seeking healthy meal options instead of fast food—but to buy when the store is closed Sunday through Tuesday. Simply Good also benefits from less inventory waste this way, and lower staffing costs, since no one has to operate the kiosk on off days.
Frequency of use for the 24/7 kiosk depends on weather and other conditions, but Wasmund said it’s popular with customers. “We get at least 25 to 30 people using it each week,” he said.
“It’s 98% accurate,” Wasmund noted, explaining that occasionally there’s a small issue like a covered-up RFID tag or mistaken charge that needs correction.
Wasmund noted that he’s hoping to purchase more coolers equipped with RFID and inventory management technology so that customers can purchase Simply Good’s pre-made meals in hospitals, office buildings and other locations.
Five trends shaping retail today
Mandi Mankvitz, president of Sphere Trending, a Michigan-based trend forecasting firm, detailed five current trends that are changing in-person and online shopping, and shaping phygital commerce:
1. New access points for digital sales. “In the past, you had two options when you wanted to buy online — Google or the retailer’s site,” Mankvitz said. “Now, you might search on ChatGPT.”
These days, artificial intelligence is often the first access point for a retail sale. According to Bain Consumer Lab’s Generative AI Survey, 30% to 45% of U.S. consumers use AI for product research and comparison. In Bain’s 2025 Holiday Survey, 17% of unique online shoppers said they would begin their holiday shopping with an AI platform like ChatGPT or Perplexity, and 30% said they would start with a Google search, which is now also AI-enabled.
It makes sense, said Mankvitz, because AI is easy to try, and it’s better at curating products than Amazon. “That upends a lot of industries,” she said. “You have to adapt to the fact that people start with AI.”
2. Social commerce. Speaking of access points, social platforms like Roblox and TikTok are becoming sales engines too. Emarketer’s 2026 social commerce forecast indicates that more than half (51%) of social buyers will shop on TikTok this year.
“Social commerce is the integration of e-commerce directly within social media platforms, allowing users to discover, evaluate and purchase products without leaving the app,” according to a recent whitepaper by VML Enterprise Solutions.
The whitepaper notes that 50% of the 5.4 billion social media users are already making in-app purchases, and the social commerce market is expanding more than twice as fast as digital commerce overall, accounting for 6% to 7% of total e-commerce revenue in mature markets.
For example, IKEA recently opened a pop-up shop within the gaming platform Roblox, enabling users to furnish their virtual homes with IKEA products. Alo Yoga allows Roblox gamers to do a yoga class within the game, and they can also scan a window sticker to access their Roblox accounts in-store and get a jacket for their gaming avatars.
Mankvitz’s advice to retailers? “Be present in the digital world,” whether it’s through livestream presentations, exclusive lines for Instagram users or other social media efforts.
3. A return to in-person shopping. It may seem contradictory, but Generation Z is seeking more in-person experiences in addition to the expanding digital ones. In a recent Harris Poll, 76% of consumers—and 83% of Gen Z and Millennial consumers—said physical retail experiences help them connect more deeply with people and brands, and 88% said it’s easy to remember physical store experiences that go out of their way to engage customers.
“People want that experience,” said Mankvitz. “They want that connection. Younger generations are going back to watching movies in cinemas.” Malls might even make a comeback, she added.
The lesson: don’t forget the importance of in-person experiences as you develop digital strategies.
4. High-tech engagement is on the rise. To take advantage of that desire for connection and in-person experiences, digital companies are starting to create in-person venues. “You’re seeing digital things go in-person,” said Mankvitz.
Some examples: Netflix is piloting in-person shops featuring interactive games and other entertainment to keep younger generations engaged. The tm:rw store in New York is part tech and part immersive exhibit, enabling customers to try out the newest products and technology across multiple industries.
5. Low-tech experiences and independent retailers are valued. “Independent retailers have a lot of cache,” said Mankvitz, noting that independent bookstores are gaining traction. “You see the big chains trying to imitate independent stores,” she said.
One example is the large coffee chain Starbucks, which plans to phase out its drive-through and mobile-only order stores in 2006. The company will also unveil ceramic mugs and a newly designed “big chair” to encourage customers to linger in stores.
Another example is Coach, which plans to roll out Coach Coffee shops to encourage in-person connections.
Key phygital technology
Here are some technical tools retailers are using to create phygital experiences:
• QR codes: “The simplest and one of the most popular strategies is incorporating QR codes on shelf-edge labels to give customers access to information on a specific product or store’s entire inventory,” said West. “If a shopper finds a shoe they like but their size is missing, they scan the QR code to instantly see if it’s available at another store or online and order it for home delivery.”
West noted that retailers are using QR codes in advertisements to link consumers to websites, digital coupons, store apps and more.
• “Just walk out” technology: Popularized by Amazon at Amazon Go convenience stores, “just walk out” allows customers to automatically charge their accounts upon exiting a store or stadium through the use of sensors. “Building on that capability, some retailers today are using software point of sale. This empowers associates to turn any smartphone or tablet into a payment terminal” so shoppers don’t have to wait in line to pay at a register, West explained.
• Augmented reality: “Retailers are using Augmented Reality to bridge the ‘imagination gap’—the uncertainty of how a product will look or fit,” said West. “AR is now the standard for home-related purchases like furniture.”
Other applications for AR include online and in-store functionality for trying on products like makeup or glasses.
• Virtual customer service: This AI-powered technology has been around for a while but is gaining traction as a way to help customers select products or solve problems. West noted that shopping assistants are often embedded into store applications.
“With this technology, when consumers enter a geofenced store area, the retailer’s app switches to ‘in-store’ mode using mapping to guide shoppers to items on their digital ‘favorites’ list and sends hyper-local notifications on where to find them,” he said.
Bringing phygital strategies to life
Phygital commerce requires advanced technology, accurate inventory management, secure data and integrated systems. To create seamless in-person and digital customer experiences, technology must be reliable, and the process must work. “If the website promises same day pickup but the store can’t locate items within 10 minutes, hard won digital traffic turns into disappointment at the curb,” warned Taylor.
Most importantly, phygital strategies must solve a common customer problem and improve the shopping experience. A piece of technology may be high-tech, but if it’s not useful or relevant to the customer experience, it’s not effective.
“It’s taking the time to focus on the customer and thinking through their online and in-store experience,” said Veda. “Look at pain points in your customer experience.”
Mankvitz advised employing technology to solve one customer problem at a time. “Let people use digital tools in-store to solve a particular problem,” she said.
One example is ExtraMile convenience stores, which are piloting “Sam the Sommelier” via an in-store kiosk. Customers can use the AI assistant to receive recommendations for wine and food pairings based on personal preferences and the store’s inventory.
Another is Calgary Co-op, a Canadian grocery store that recently rolled out its charcuterie sommelier, an in-store kiosk that generates a charcuterie board shopping list based on personalized preferences and integrated with real-time store inventory.
“Make it bite-sized,” said Mankvitz—pun intended. “There’s more value in that than trying to be all things to all people in ChatGPT.”
