UK retail in 2026 is changing quickly. Shoppers expect physical and digital shopping to work together without gaps. They want to check stock on their phone, see tailored offers while in store, and pay in seconds at the till. Phygital retail makes this possible by combining the best of both settings into one experience.
For retailers, this is not a passing idea. It is now central to staying competitive. Shops are investing in digital tools, new store formats, and data systems that can respond to how people actually shop today.
Market Growth Shows Phygital Is Essential
Forecasts suggest e-commerce will account for around 24% of retail sales by 2026, with in-store shopping making up the rest. In the UK, click-and-collect already makes up nearly 40% of online orders, showing just how strongly customers rely on hybrid options.
Retailers are responding with investment. Supermarkets are testing smart pricing systems that react in real time. Fashion and beauty chains are adding interactive tools in stores. At the same time, global brands like Nike and Sephora continue to influence the UK market with AR-based try-ons and app-linked loyalty offers.
Even outside traditional retail, other sectors have adopted similar tools. For example, casinos not registered with gamstop have relied heavily on AI-driven features to personalise the experience for their players. These casino platforms are licensed and regulated in other jurisdictions, so they do not fall under the country’s self-exclusion program, nor are they limited to the regulations under the UKGC. This means they are far more innovative, using technology to analyse behaviour, recommend games, and improve payment options based on player preference. So, if a player prefers only table card games like Texas Hold’em poker, AI systems will recommend a similar variant or a casino game that has the same pace, strategy, and bonuses tailored to the recommendation.
UK retailers are applying these same methods to shopping, using data and smart systems to predict demand and deliver a smoother experience both in-store and online. Retailers worldwide are providing hyper-personalised shopping experiences with AI analysing customer behaviour and preferences to offer tailored product recommendations, dynamic pricing, and customised loyalty offers. They are also integrating digital touchpoints such as QR codes to meet evolving consumer expectations for convenience, personalisation, and interaction.
UK Consumers Want Experience as Well as Convenience
UK shoppers consistently show that speed and price alone are not enough. They look for brands that provide engaging contact points and rewards. Data from major retailers confirms this: Tesco uses AI to adjust Clubcard offers, while Zara listens to social trends to stock in-demand products faster.
Gen Z and young adults are especially focused on phygital experience. They want to feel a stronger link with the brands they support. Stores that combine product trials, interactive displays, and mobile rewards build loyalty that extends beyond a single transaction. Phygital helps create this link, giving customers reasons to return.
Technologies Driving Phygital Growth in the UK
Several technologies now form the backbone of phygital retail in the UK.
- Augmented reality (AR): Furniture chains such as Made.com and Dunelm allow shoppers to view sofas or tables in their homes through smartphone AR tools. In fashion, virtual fitting rooms reduce uncertainty and cut down returns.
- Smart mirrors: Boots and Space NK use mirrors that let customers try on makeup virtually. This improves hygiene and allows shoppers to test more products without extra effort.
- Mobile apps and loyalty programmes: Marks & Spencer and John Lewis link apps directly to loyalty points and rewards, ensuring customers stay in touch with the brand beyond their store visits.
- Contactless payments: NFC cards and mobile wallets have become standard, speeding up the checkout process and reducing queues.
Sales and Efficiency Gains for UK Retailers
Retailers using phygital methods are seeing better sales results. Personalised promotions are more likely to be acted on, leading to higher conversion rates. Targeted messages sent through apps or displayed in store guide customers toward products they actually want.
Phygital also improves store efficiency. Real-time purchase data helps managers adjust stock and avoid shortages. This makes supply chains more responsive and reduces waste. At times of high demand, such as Christmas, these systems help balance stock levels across locations. The result is a smoother operation that saves money and improves service.
Barriers to Adoption Remain
While interest is high, UK retailers face challenges. Technology requires investment in both hardware and staff training. Larger chains can absorb these costs more easily, but smaller shops may struggle.
Data privacy is another area of concern. Collecting and analysing customer information means retailers must stay compliant with UK and EU data rules. Building trust is vital if shoppers are to share details that help deliver personalisation. Despite these barriers, the momentum behind phygital is strong because consumer demand leaves few alternatives.
What Comes Next in 2026
Looking ahead, UK retailers are already preparing the next stage of phygital. AI personalisation will grow even sharper, with product suggestions tailored to individual preferences. Stores will use more interactive displays, virtual product trials, and digital events to hold attention.
Sustainability is also moving centre stage. Digital receipts, eco-labelling via QR codes, and apps that track recycling or product origin are being introduced. These tools allow customers to make choices aligned with environmental concerns, while also linking them more closely to brands.
With high competition and changing expectations, 2026 is set to be the year when phygital becomes a standard across the UK retail market.
Conclusion
Phygital retail is no longer a concept in discussion; it is the reality of UK shopping in 2026. With consumers expecting seamless movement between store and online, retailers that act now will remain competitive, efficient, and connected to their customers. Those who delay risk being left behind in a market that is moving forward quickly.
