News, Retail, Technology

Phygital: How Digital Is Shaping Physical Retail Experiences

Siim Pettai

Siim Pettai, Writer

E-commerce is growing rapidly – by 2023, the global online sales market is expected to double to more than $6.5 billion.

Yet, despite the growth of online shopping, physical stores remain the preferred purchase method among consumers. To put it into perspective, in 2019, the e-commerce share of global retail sales was 14.1%. The figure is expected to grow to 16% by 2023.

Still, looking at online and offline channels separately isn’t going to cut it. Digital opens up a variety of opportunities for brands to improve their in-store experiences, and thus, gain a competitive advantage. A study by Synchrony found that 75% of Gen-Zers prefer shopping in stores with engaging experiences. Furthermore, almost half (45%) of the generation claim the experience of buying something is as important as the product itself. 

Phygital (physical + digital) is an emerging strategy adopted by more retailers. It involves merging technology with physical stores, creating a whole new experience for the consumer. Below are three examples of how retailers are using technology to enhance the offline experience.

SK-II Future X Smart Store


In 2018, Japanese cosmetics brand SK-II introduced the Future X Smart Store. Since its launch, the store has been gaining traction as the beauty store of the future. 

The store explores new ways of retail through the “phygital” environment. Consumers are invited to take part in immersive media experiences that combine physical and digital retail. For example, the store features a smart mirror which consumers can use to scan their skin with. Consumers simply have to sit in front of the mirror, which then analyses their skin and recommends a tailored product routine. The process can be done remotely with no help needed.

Another feature of the store is a Smart Product Scan, which leverages image recognition technology to guide users to the product. Using the tool, consumers can get directions to a specific product by scanning images on their smartphone. If visitors wish to purchase the product, they can do so with a simple hand wave using a unique projection mapping table installed with motion sensors that allow the shopper to add items to their digital shopping cart.

The Future X Smart Store first launched in Tokyo back in 2018. It has since expanded to Shanghai and Singapore.

Uniqlo’s Self-Checkout Stores In Japan

Apparel retailer Uniqlo has introduced a self-checkout system at select stores in Japan. The way it works is simple: the retailer has installed connected smart tags to its clothes. This way, instead of scanning barcodes at the checkout, all garments are automatically recognised when placed in a basket. This speeds up the payment process, letting customers check out almost immediately.

Walgreens Digital Cooler Screens

© Walgreens

American pharmacy store chain Walgreens recently partnered with IoT start-up Cooler Screens to install cooler doors that are capable of delivering targeted ads in real time. Equipped with motion sensors and face-detection software, the cooler screens collect demographic data such as shoppers’ age and gender, as well as the weather, to deliver targeted ads to customers. 

The screens don’t store any data, and rather use the information in real time to show promotions. For example, if a man in his twenty-somethings stands in front of the cooler, the technology might show him a Red Bull ad. On the other hand, an older male might be shown a Gatorade ad, because of the age difference. 

Walgreens discovered that the cooler doors boosted sales more than traditional displays. The retailer also recently announced its plans to expand the digital cooler screens to over 2,500 outlets in the U.S.

All of these innovations show how technology can make physical stores more attractive for consumers. As the e-commerce boom continues, more retailers are likely to adopt the phygital strategy in the future.

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