As consumer habits evolve, the retail landscape is undergoing an exciting transformation. While online shopping continues to grow, physical stores aren’t disappearing; rather, they’re adapting to create immersive, tech-driven experiences. The new trend, dubbed “phygital retail,” combines the best of both worlds: traditional brick-and-mortar stores and digital convenience. This approach appeals across generations, from Gen Z’s love of digital interactivity to baby boomers’ preference for tactile, in-person shopping. In 2024, phygital retail is shaping how brands attract and engage customers, providing a personalized, engaging shopping journey that aligns with modern expectations.

Phygital Retail: Bridging the Gap Between Physical and Digital Shopping

Phygital retail brings together the benefits of in-store shopping and online convenience. Customers can start their shopping journey online—browsing products, reading reviews, checking availability—and then head to a physical store for a more hands-on experience. This seamless integration not only creates a richer shopping experience but also allows brands to offer something for everyone, whether they prefer to shop online, in-store, or both.

What makes phygital retail so effective is its ability to adapt to individual preferences. For example, augmented reality (AR) allows customers to virtually “try on” products, while QR codes make product information instantly accessible. Many brands also use real-time data collection to understand customer preferences better, which allows them to deliver personalized recommendations and unique experiences. According to a 2024 study by McKinsey, personalization can increase revenue by 15% and significantly reduce customer acquisition costs, making phygital retail an appealing strategy for brands aiming to boost both sales and customer loyalty.

Generation-Based Shopping Habits: Understanding What Each Age Group Values

Navigating the phygital retail world means understanding generational differences. For instance, Gen Z shoppers are digital natives who value convenience and personalization; they’ll research online, compare prices, and explore AR experiences before deciding what to buy. However, many still appreciate the experience of visiting a physical store to interact with products in real life. Meanwhile, baby boomers often favor in-store shopping for the tactile experience but are also increasingly open to online shopping for its convenience.

Retailers that can merge these preferences into a unified experience are likely to win customer loyalty across age groups. According to CBRE Research, the global retail market is seeing a steady rise in e-commerce, especially in markets like China, the U.S., Australia, and South Korea. Social commerce is especially popular with Gen Z, who enjoy discovering and shopping for products through social media channels. Despite the rise of e-commerce, however, a recent survey by eMarketer found that even younger shoppers like Gen Z often prefer in-store shopping when trying out new products. This blend of digital convenience and physical presence defines the essence of phygital retail, allowing brands to reach a broad customer base.

Creating Engaging Shopping Experiences Through Phygital Strategies

To succeed in today’s competitive retail environment, shopping centers and stores need to offer more than just products—they need to provide experiences. Phygital retail is about enhancing the shopping journey through interactive, immersive elements that capture customers’ attention. Some key strategies include:

1. Experiential Retail: Hosting unique events, pop-up stores, and interactive workshops can create memorable moments that encourage people to visit stores. For instance, a cooking workshop in a kitchenware store or an AR-powered beauty station where customers can “try on” makeup can make shopping more engaging and fun.
2. Tenant Collaboration: Shopping centers can boost appeal by fostering collaboration among tenants. Imagine a fitness store partnering with a smoothie bar or a bookstore teaming up with a coffee shop. These partnerships help create a cohesive, engaging environment that attracts a broader range of shoppers.
3. Flexible Leasing and Support: Malls and retail spaces can adapt to changing retailer needs by offering flexible leasing options, such as short-term leases for seasonal or pop-up stores. Shared services can also reduce operational costs, making it easier for smaller brands to establish a presence in prime retail spaces.

In the coming years, we can expect to see more retail developers focusing on creating these multifaceted environments, blending retail, dining, entertainment, and other experiences. Additionally, partnerships between different types of retailers will be essential in designing a well-rounded and engaging shopping destination.

Future Outlook: Investing in Phygital and Embracing Technology

Phygital retail is more than a passing trend—it represents the future of shopping. As brands invest in digital capabilities like mobile-friendly websites, AR, and artificial intelligence (AI), they’re finding innovative ways to connect with customers on a deeper level. AI, for instance, can analyze customer preferences and recommend products or store locations tailored to individual shoppers. These tools allow brands to engage with customers in real time, providing a seamless blend of online and in-store experiences.

Moreover, social commerce is gaining traction, especially among younger consumers who enjoy discovering products on social media. By investing in digital tools and fostering collaborations across retail categories, brands can enhance the shopping journey, making it more personalized and efficient. The retail market of the future will prioritize immersive, frictionless shopping experiences, aiming to meet the needs of consumers across generations.

Final Thoughts

In today’s evolving retail world, phygital is the way forward. By seamlessly integrating physical and digital experiences, retailers can meet customers where they are—both online and in-store. As the lines between digital and in-person shopping blur, retail brands and developers must focus on creating spaces that provide both convenience and memorable experiences. Whether through tech-driven personalization, immersive displays, or collaborative environments, phygital retail allows brands to engage with customers in a way that resonates across generations, fostering loyalty and enhancing the overall shopping experience.