More than ever, the retail sector is evolving. “Phygital” experiences are becoming more popular. These are experiences that mix the fun of shopping in person with the simplicity and personalization of shopping online. As a digital marketing expert, I’ve noticed that this convergence has sped up a lot in 2025. It has revolutionized how businesses speak to customers and how people look for products completely.
The Death of Channel Separation
Traditional retail operated on a simple premise: customers were either online or in-store. That binary thinking is obsolete. Currently, approximately 73% of retail consumers engage multiple channels during their shopping experience, and 95% research products online before making a purchase. Gen Z and Gen Alpha buyers don’t see the lines we used to draw between the digital and physical worlds. They discover products on Instagram or reels, research them via search engines, test them in physical stores, and complete their purchase online—often within the same shopping journey.
According to Shopify’s 2024 Holiday Retail Report, 55% of Gen Z shoppers make purchases on Instagram, and 51% do so on TikTok. Yet these digital natives still value in-store discovery. This isn’t contradictory behaviour—it’s the new normal. Marketers don’t have to choose between physical and digital channels anymore; they have to make sure that experiences flow smoothly between the two.
The Bridge of Technology
The technologies that are making this revolution possible are no longer just ideas; they are working and growing quickly. Gartner says that by 2025, 80% of businesses that sell things in stores will have some kind of digital commerce platform. But what does this actually look like on the ground?
Take a look at Sephora’s Virtual Artist tool, which has changed the way beauty stores work. This tool uses augmented reality and artificial intelligence to make it look like makeup is being applied to a person’s face in real time using their phone or computer camera. Customers can look through and try on thousands of lipsticks, eyeshadow palettes, and foundations without having to go to a store. Since it came out, the Sephora Virtual Artist feature has gotten more than 8.5 million visits.
What makes this particularly powerful from a marketing perspective is the conversion impact. When customers can virtually try products before purchasing, purchase confidence skyrockets. The technology doesn’t just bridge online and offline—it eliminates the uncertainty that has historically plagued e-commerce beauty sales.
Nike’s Masterclass in Phygital Integration
Nike’s approach is a gold standard of phygital retail execution. Nike’s flagship store in New York City has 55,000 square feet of innovative experiences, such as a shoe bar where consumers may totally customise their Air Force 1 sneakers. The true innovation, though, is how well the physical and digital experiences work together.
Customers can use the Nike mobile app to scan items in the store, get additional information, see what sizes are available and get personalized suggestions. Smart mirrors in fitting rooms suggest goods that go well with the ones you’re trying on, and the app lets you buy things right away and make appointments for in-store trials. Nike’s Training Club app and SNKRS app, on the other hand, let customers experience the brand outside of the store, keeping them interested no matter where they are.
This is phygital marketing at its finest: using data to personalize experiences, employing technology to reduce friction, and creating value at every touchpoint.
The Amazon Pivot: Learning from Failure
Not all phygital experiments succeed, and there’s valuable insight in examining what doesn’t work. Amazon’s Just Walk Out technology—once heralded as revolutionary—has faced significant challenges. Amazon is removing its Just Walk Out cashier-less checkout system from Amazon Fresh stores in the U.S. and instead relying more heavily on Dash Carts.
The Seattle-based store said that customers liked being able to skip the checkout line with Just Walk Out, but they also wanted to see their receipt while they shopped. The company’s Dash Carts will let them do that. This teaches us an important lesson: technology needs to really make the customer experience better, not just show off new ideas. Customers wanted transparency and control over their spending in real-time, something the original technology didn’t provide.
Retail Media’s Phygital Opportunity
One of the most interesting things I’m keeping an eye on is how retail media is changing in phygital venues. Retail media will become a key part of the retail business, giving stores a big chance to make more money by using their captive audiences in both physical and digital environments. Picture this: you walk into a store, and the digital displays know you’re a loyalty member and give you special deals based on what you’ve looked at before. Or getting a text message about a sale on something you’ve been looking at online, just as you walk by it at a store. This isn’t a story from the future; it’s the future of retail marketing.
The Path Forward for Marketers
Retailers’ success now depends on how successfully they come up with new ways to suit customers’ needs for speed, convenience, and personalization. We need to think beyond campaigns and channels as marketers to design whole consumer journeys. In other words:
Unified data infrastructure: Your CRM has to connect online behaviour with in-store interactions without any problems. Customer identification can’t be siloed.
Content for every touchpoint: Marketing materials need to work across mobile apps, in-store displays, AR experiences and traditional channels maintaining brand consistency while optimizing for each medium.
Measurement reimagined: Attribution models must account for complex, multi-channel paths to purchase. The last click is meaningless when customers research online, visit stores and buy through apps.
Conclusion
The phygital revolution is not coming; it is here. 43% of shoppers of all ages think they are more inclined to spend more money at stores that offer meaningful experiences in-store. But such experiences need to be improved by technology, have personal meaning, and be easy to link to digital touchpoints.
This is both a problem and an opportunity for digital marketers. The brands that do well will be the ones that stop thinking about “digital marketing” and “in-store marketing” as two separate things and start creating really integrated phygital experiences. The convergence is over; our plans need to catch up.
