Navigating Space and Strategy: The Role of Physical Stores in Omnichannel Retail

The role of physical stores in omnichannel retailing is changing, potentially becoming more central compared to multichannel retailing. While online shopping is growing, the role of physical stores needs further research given the increasingly blurred lines between offline and online.

The aim of this study is to explore what kind of roles physical stores have. Previous studies cover traditional retailing, while retailers themselves require more flexible arrangements for their physical stores. Pop up phenomena is one example of these requirements. Still, an emerging research topic of phygital stores lacks empirical evidence. A phygital store means that the physical retail environment is seamlessly connected to digital one. Moreover, results of this study are described from the retailers' perspective, revealing their experiences and potential barriers operating in omnichannel context.

The case study conducted at Helsinki Outlet discovers the potential of an omnichannel retail approach in creating a seamless retail environment that leverages both physical and digital touchpoints. Helsinki Outlet's adoption of a platform, provided by the real estate owner, which facilitates trade from both physical stores and online, serves as an example of how digital interventions can bridge the gap between traditional and contemporary retail.

Employing a case study methodology, semi-structured interviews are conducted with omnichannel retailers operating in Helsinki Outlet. The findings underscore the strategic benefits that arise from such a real estate owner-led omnichannel model aimed at delivering a seamless shopping experience. From retailers’ perspective, the digital solutions in addition to their physical location in Helsinki Outlet enable to implement omnichannel strategies recognized from literature such as the buy online pick-up in store (BOPS) strategy. The omnichannel approach mitigated the disadvantages of physical stores, such as limited geographic reach and time-bound operations like store opening hours, by ensuring that customers could engage with the brand at their convenience, regardless of location or time constraints.

In conclusion, the Helsinki Outlet case study provides results on the premise that digital solutions, when integrated into a traditional retail environment, can strengthen the competitive position of physical stores against online counterparts. The role of the physical store is thus evolving into a phygital one.