Phygitalization

Urban retail ecosystems have always been shaped by change, driven by the evolving needs and desires of consumers. To thrive in a highly competitive environment, retailers and consumer services providers must adapt, investing in new business concepts and shopping environments, and providing diverse goods and services. In recent decades, this has led to the internationalization of shoppingscapes, the concentration of business in large economic groups, and changes in the spatial organization of shops. However, the rise of digitalization, Internet, and mobile technologies has sparked a new wave of changes, blurring the lines between physical and digital retail channels. This transformation has turned urban retail systems into hybrid platforms and turned shopping practices into “phygital” experiences for consumers. In this study, we explore the phenomenon of phygitalization in retail ecosystems and its challenges for the competitiveness of neighborhood retail based on convenience and proximity. Phygitalization involves the integration of physical and digital realities, undermining the importance of physical location and distance in retail supply and shopping practices. The impacts of this phenomenon are ambiguous, as digitalization can both reduce and expand the market for convenience retail in urban residential areas. As a result, the future of neighborhood retailing hinges on the ability of retailers and consumer service providers to embrace digital technologies and reinvent proximity. This entails utilizing the geographical dimension associated with physical distance and time, as well as the relational (social and cognitive) and psychological dimensions connected to emotions and affect. These factors play a crucial role in fostering customer loyalty and turning individuals into devoted shoppers.