The future of retail is \u201cphygital,\u201d as every retail and ecommerce publication on the internet is screaming right now. If you\u2019ve never heard the term before, it\u2019s a portmanteau of \u201cphysical\u201d and \u201cdigital\u201d \u2013 and represents the merging of the two forms of retail and shopping.\n\nPhysical retail and ecommerce are increasingly blending together \u2013 and becoming indistinguishable in many cases. Worldwide ecommerce sales are at 20% of total retail sales, while the figure is 15% for the US. And yet, physical sales show no signs of letting down, for reasons of experience and convenience.\n\nIf you wanted to quickly pick up a couple of beers or a pack of gum, you wouldn\u2019t fire up the Amazon app on your phone, would you? But having the ability to place an order online and pick it up down the block? Or the opportunity to log in to your store loyalty account using a smart cart touchscreen so you can receive personalized discount offers while you traverse the supermarket aisles?\n\nThese examples highlight the customer experience promise of phygital, and today\u2019s retailers are keen to connect the dots. How do they do that? With data of course.\n\nData means more satisfaction for customers, more sales for retailers\n\nSay you\u2019re buying a rucksack for a short trip from Amazon. You look through a few options and add one you like to the cart. You also buy a few other items for your trip. Amazon is constantly tracking and updating your digital footprint, learning more and more about your preferences so that it can recommend more useful items every time you come back.\n\nWhat if a physical retailer could replicate this learning and recommendation process? It would make for an infinitely better shopping experience for the consumer as well as significantly increase sales for the store.\n\nUnfortunately, physical retailers are quite some time away from recording and understanding shopping preferences in real time. More importantly, they haven\u2019t even solved long-standing issues in demand forecasting, product stocking, and inventory management yet. A McKinsey study showed that physical stores\u2019 inventory accuracy hovers around 70 to 90% compared to 99.5% for distribution centers of online stores.\n\nHow do physical retailers bridge the gap in data and analytics, and use it to improve customer experience? What technologies exist that help them understand buyer behavior and track inventory and sales in real time? Can AI help?\n\nTurns out that the answers to these questions lie in the shopping process itself.\n\nBringing digital convenience to physical experience\n\nThe shopping cart and the payment method are the two fundamental building blocks of an ecommerce store. Its real-world equivalents are, you guessed it \u2013 the cart and the checkout. The faster and simpler stores can make these two processes, the better the experience they\u2019ll be able to provide.\n\n\u201cBoth consumers and retailers are pushing for tech-driven hybrid experiences that mimic an online experience,\u201d says Raz Golan, CEO of Shopic, makers of a smart cart solution that aims to speed up and personalize physical shopping experiences.\n\nShopic\u2019s product is a clip-on device that shoppers take off the charging shelf and place on top of the shopping cart when they enter a supermarket. The device uses cameras and AI to identify products that are placed in or removed from the cart, total up the prices, promote and adjust for in-store deals and accept payment via a variety of methods.\n\nA combination of AI and store robotics is giving retailers access to breakthrough technologies as well as data that help them optimize stocking and inventory, reduce operational costs, and deliver conveniences that shoppers have come to expect from ecommerce. For instance, Walmart used AI-powered \u201cmachine vision\u201d technology and real-time analytics to increase stocking speed by 90% and sales by 30% in its store in Long Island.\n\nFurther, data from returning shoppers can be channelled into optimizing brand messaging, offers, customer service, and continuous communication throughout the customer journey. \u201cThe retail floor was a black hole for retailer-shopper communication until now,\u201d says Golan. \u201cRetailers didn\u2019t even know a given customer was in their store until the time of payment. The ability to talk to them from the moment they enter, while they walk through the aisles, and right through checkout, opens up new possibilities.\u201d\n\nThe future is hybrid\n\nRetailers would ideally want more customers to shop in-store because of critical advantages such as savings on shipping fees and in-person engagement leading to more loyalty.\n\nMost consumers today are used to shopping both online and in-store but integrating data from both of these channels is key to effective analysis and value addition. However, there is a conundrum here that retailers face.\n\nWhile innovation serves younger shoppers\u2019 need to avoid hassle and lines, too much technology can overwhelm older consumers used to visiting stores and picking up products by hand. The answer is to make changes in incremental steps, wrote Christian Reichenbach in an earlier article on CIO about digital transformation in retail.\n\nCustomers are already using mobile apps to supplement the in-store shopping experience. Therefore, retailers need to shore up their multichannel strategy and tactics to incentivize more mobile app users to visit their physical stores. Here are few game-changing examples from leading retailers:\n\nRetailers must constantly think about how their customers\u2019 online or mobile experience can be integrated with an in-store one. This could be anything from AR overlays that lead to product information to offering coupons, from location-based push notifications to cashier-free checkouts.\n\nA consistent phygital experience will enable multichannel retailers to deliver unforgettable experiences across online and offline touchpoints in an increasingly competitive environment. It all depends on how they use technology and data to deliver value to every customer segment.