Phygital retail experiences need to combine technology with customer research

It’s time for UK high streets to embrace their phygital futures. 

It’s the only way for retailers to successfully combine online and offline sales. While omnichannel and unified retail solutions have been mainstream for several years, the growth of phygital retail (physical + digital) will allow brands to maximise the strengths of technology to transform retail experiences. 

Through phygital retail, shoppers will stop seeing brands as quintessentially online or offline. Instead, shoppers will benefit from the best of both worlds. 

Three years ago, our own research paper, “Bricks and mortar vs. online retail. How to combine online and offline experiences to improve shopping for your customers”, identified what customers wanted to see from retailers. Since then, many of our predictions have come true. 

For example, we’ve seen the growth in the use of QR codes to transform retail shelves, with typical usage including stock availability, product usage, and customer account integration. We’ve seen traditional online payment options (such as PayPal, Klarna and Clear Pay) become integrated into physical outlets. We predicted that shoppers would want to combine in-store purchases with home delivery options, and we identified that customers wanted to be able to manage purchases from multiple online retailers in one transaction. 

The time is now to push this further.

Today’s technology is ramping up the digitisation of the physical retail outlet. 

Thanks to augmented reality and smart mirrors, it’s now easier than ever to virtually try on an item of clothing or visualise a big-ticket item inside your home. Receipts can easily be sent to a mobile phone, and returns can be handled instantly just by scanning the barcode. Personalised promotions are available via push notifications while real-time stock checks and digital signage solutions allow customers to find what they are looking for quickly and easily. Product offers can be advertised and highlighted at the push of a button, with automation enabling real-time sales offers which can be highly targeted and geo-specific.  

But for any digital foundations to succeed, retailers must invest in heavy audience behaviour analytics and customer research. 

That way, brands can ensure that their phygital retail experiences match expectations and do not inadvertently create unnecessary barriers. 

When technology fails, where is the contingency planning?

One of the biggest phygital trends right now is the implementation of cashier less outlets. This is where a customer can simply scan a card upon entry and be monitored by sensors which identify which products they pick up. 

These outlets may work in theory, but there is seemingly no backup or contingency solutions for technical outages or user issues. If there are payment issues at the entry barrier, customers will be physically denied entry and forced to shop elsewhere. Similarly, with many retailers recently impacted by cybersecurity breaches and forced to take themselves offline, having a cashier less outlet could result in a significant loss of sales if cash is not able to be used as an alternative. 

The rise in cashier less checkouts and self-service solutions also fails to recognise that humans crave social interactions. Before investing in immersive experiences and digital integrations, we advocate for investing in detailed audience research and behaviour tracking. Doing so will ensure that any digital investment is spent in the right places. 

These customer insights will provide the data you need to blend phygital solutions with hyper-personalised experiences. 

For example, different generations may react differently to phygital experiences. While younger, digital native generations may welcome the seamless transition between mobile apps, eCommerce and physical stores, this could be overwhelming to older customer bases. Similarly, phygital stores and self-service solutions may be inaccessible to those who are physically disabled or neurodiverse. 

Digitalising the retail sector should always be focused on improving the customer experience and giving them the exact solutions that they are looking for, every single time. Failing to understand what your core customer base wants and needs (as well as how their shopping behaviours might continue to change) could result in phygital outlets that could be seen as a novelty or a gimmick.

Phygital retail isn’t just about tech—it’s about translating data into customer-centric experiences. 

Ultimately, phygital retail will only succeed if it’s guided by real human wants and needs. There’s no doubt that digital tools can transform the shopping experience for the better. But those tools must be paired with deep audience understanding.

By anchoring every digital investment in robust audience research, retailers can ensure their blended experiences are providing positive ROIs and sustainable business growth, not technology-driven gimmicks. 

In our opinion, retailers should prioritise the following steps to truly embrace their phygital futures. 

• Invest in continuous audience behaviour analytics to uncover real needs.

• Design phygital journeys that seamlessly switch between in-store, mobile and online touchpoints.

• Build resilience with contingency plans for tech outages and diverse payment options.

• Balance automation with human interaction—mix smart mirrors and self-service with in-person assistance.

• Prioritise accessibility and inclusivity so all generations and abilities feel welcome.

By committing to insight-led phygital design, retailers will have the opportunity to redefine what the high street can be.