1. INTRODUCTION:

Fashion industry is leveraging the digital technologies to add value to their customers and brands. For instance, many companies have conducted trials virtually in the form of virtual fashion shows to display their collections and implementation of digital story telling. (Hemanth, 2020 and Chung et al., 2020). Industry 4.0-enabled technology namely Artificial Intelligence (AI), the Internet of Things (IoT), Augmented Reality and 3D helped luxury fashion companies with an array of digital tools to create a convergence between the physical and the digital mode.

This led to phygital phenomenon which is evident from luxury retailers and increasing investments in hybrid system and expected that overall luxury market to reach 50-percent by 2025 consisting of Gen Y and Gen Z. In 2024, the Luxury Fashion is projected to make a profit of US$115 and Compound Annual Growth rate of 3.24-percent i.e., 2024- 2028). From global outlook, France continue to dominate the global market (https://www.statista.com/outlook/cmo/luxury-goods/luxury-fashion/worldwide) It is understood that several benefits from hybrid model resulted in company consumer relationship which has transformed the business by collaborating, consuming and co-creating value with business (Aral et al., 2013). especially in the luxury business, research appears to concentrate on users’ experiences in relation to websites (Kusumasondjaja, 2020), focusing on the digital aspects of the interface but overlooking the potential synergy arising from integrating both physical and digital elements that can enhance customers’ engagement and involvement with brands. Luxury fashion companies are conducting several trails in hybrid settings in virtual dimension which involves virtual fashion shows, virtual stores, fitting rooms and try on App and thereby creating brand-driven phygital system. In fact, hybrid settings are build based on the convergence of the physical and the digital realms and pertaining to retail shopping and consumption (Pangarkar et al., 2022). They are designed to host the company activity and interactions with their customers. Brand-driven phygital system generate exchanges that create memorable experiences and convey brand narratives along-with helping consumer buying patterns (Hyun et al., 2022). Hence, they provide an opportunity for companies to express their values from both physical and digital touchpoints, which allow people to immersively interact with brands (Alexander and Kent, 2022). Despite brands’ numerous experiments with phygital systems, the marketing and brand literature on these settings is still limited. Further research is needed to understand how effective they are drafting their strategies (Klaus, 2021) and how companies can leverage the integration of the physical and the digital realms to strengthen their connections with consumers (Banik, 2021)

Given this gap in the literature, this study aims to understand the insights of phygital system and in particular luxury brands in terms of consumer brand relationship. The study incorporates the theoretical implications and various dimensions which can guide businesses, especially luxury ones, in designing and implementing brand-driven phygital settings.

1.1. Research problem:

As phygital system is adapted by luxury companies, the point is that how they are able to build a connection with luxe consumers. In this context, the luxury brands have to put in their efforts to identify how they can draft their strategy to get connected with luxe consumers. Besides, the challenges they face in hybrid settings i.e., phygital system. This study addresses the reasons for luxury companies adapting phygital settings in luxury landscape.

1.2 Research Objectives:

#1 To identify the challenges faced by luxury fashion brands in navigating phygital landscape and opportunities in brand consumer relationship.

#2 To elicit the factors required for luxury brand connection in phygital system.

#3 To open new vista for further research

2. REVIEW OF RELATED LITERATURE:

2.1. Phygital system:

Phygital refers to the adoption of digital communication to facilitate front-end innovations in physical retail stores, such as augmented reality, virtual fitting rooms, tablets, digital signals, QR codes, mobile apps, and automatic checkouts, allowing consumers to become active users during their buying experience (El-Seoud & Taj-Eddin, 2019; Pusceddu et al., 2023). The study by Belghiti et al, 2018 indicate that phygital stores are the most complete form of omnichannel experience; defined as a hybrid of physical and digital in one context, the point of sale. Phygital Customer Experience is transforming the function of physical stores in tandem with the growing expectations of ‘hyper connected’ consumers (Pusceddu et al., 2023). The term Phygital is commonly heard in retail research and academia. In business sense, it means any retail businesses operating in both physical and digital settings. This is often found in marketing literatures in which authors have indicated that there is strong connectivity with the consumers. One such study by Gaggioli, 2017 indicate that in phygital systems, there is integration of digital technology in physical space, humans’ natural exchanges along with technology. To elaborate, in phygital setting, digital technology enters the physical space by providing enhanced feature to the customers to provide interactive user experience. It is holistic ecosystem comprising of humans, digital platform, technology and content which offers unique experiences that should guarantee a coherent continuum in the customer value delivery process (Batat,2022). In the same line, it is emphasized by Lawry, 2022 that there is significance between physical and virtual experiences which becomes constituent feature of phygital spaces. Phygital settings helps an individual connect with their product and services which helps the brands showcase their advertising and customer related aspects (Pangarkar et al., 2022) where in experience, aesthetic and entertainment has positive impact in consumers’ mind (Banik and Gao, 2023). The study by Belghiti et al., 2017 indicate that human experience is vital element to uphold the consumers experience and drives socialization and engagement (Pangarkar et al., 2022)

Phygital systems in luxury industry enhances the intimacy level and high level experience by consumers (Lawry, 2022) though the existing studies have examined physical brand environment there is sort of gap in addressing phygital systems pertaining to retail settings and omnichannel experiences and fundamental components in luxury fashion (Pangarkar et al., 2022). Moreover, recent studies have acknowledged the ability of phygital settings to intensify the consumer experience in terms of emotional, behavioral, and social interaction during the shopping experience (Banik and Gao, 2023); drives brand engagement (Pangarkar et al., 2022), brand patronage (Banik, 2021) and foster consumer loyalty (Mishra et al., 2021 , Hyun et al., 2022) still, the dynamics of the relationship between consumers and brands created via Phygital brand system remain underexplored.

2.2 Consumer–brand Connection:

Author opine that the connect between company and customers in phygital system is relatively new phenomenon adopted by luxury retailers operating in both physical and online mode though physical mode is at galore. The study by Bartoli et al., 2023 reveals that there are 3 constituent elements of Phygital system in connecting brands to consumers consists of 3 layers namely brand, environment and consumer outcomes. So, there is relevance of establishing brand connect using phygital system (Banik and Gao, 2023; Hyun et al., 2022); they have also noted that there are still several aspects to be considered for further study. At present, phygital, system is most challenging thing is that brands get connected with customers by identifying the elements and dynamics that shape consumer brand relations which end up being positive or negative (Alvarez et al., 2023). Studies show that positive consumer brand connect facilitates higher sales in business, lower price susceptibility, superior loyalty resulting in higher profits. In present times, e-commerce model along with the physical store format is becoming the norm in luxury business practices in contrast with earlier functioning of physical stores and traditional advertising live events etc., (Aquilani & Nosi, 2017). Due to the high penetration of digitization, new stores are coming up to enable consumer brand relations (Bartoli et al., 2022) but its becoming a new practice adopted by luxury brands in phygital system. The study by Banik and Gao, 2023; Hyun et al., 2022 have emphasized the relevance of building consumer brand relationship in phygital mode but there are several aspects needs to be investigated. Digital technologies have led to multiple benefits when it comes to consumer brand relationship. In this line, luxury brands are focusing on better consumer experience, incorporating newer features required to establish positive relationship with luxe consumers otherwise, negative consumer relations when brand doesn’t understand the consumer sentiments and interest towards the brand will tarnish the company’s brand image (Khatoon & Rehman, 2021). At present, one of the most significant challenges linked to the consumer relations is to identify the required elements and dynamics which shape up consumer brand relationship which may be either positive or negative (Alvarez et al., 2023). In continuation with luxury brands, the scholars that have investigated companies’ online efforts to craft the Consumer brand relationships have primarily focused on aesthetic appel and other elements that can enhance the consumer experience (Kusumasondjaja, 2020) and that can be augmented by integrating physical and digital cues. This is why further research is required especially in the luxury industry (Hyun et al., 2022).

4. ANALYSIS:

1. Are you aware of Phygital System in consumer brand relationship

51 responses

Figure 1 indicates the awareness level of phygital system in pie chart as well as in 2-D line.

As given in Figure 1, it indicates that more than 50-percent of the participants had an idea about phygital system and rest were unaware of it.

2. As a consumer to you have an idea about consumer brand relations

51 responses

As given in Figure 2, it indicates that 43.1-percent of the participants had an idea about consumer brand relationship through phygital settings about consumer brand relationship. This analysis was carried out through word cloud incorporating sentimental analysis and descriptive statistics that considered the factors such as percentile, Sample Median and Interquartile range.

3. Usually, which product category shown below you prefer to purchase?

51 responses

Figure 2 indicate product category of luxury fashion brands through Pie chart and word cloud

As indicated in Figure 2, majority of the purchasers were intending to buy either Ready to wear fashion besides, shoes category. The proper insights can be taken from word cloud via sentimental analysis.

4. Have you ever purchased menthioned luxuary product category both online and offline? (Note: Ready to wear, Lifestyle accessory, jewelry, Handbags/Sling bags, Shoes

51 responses

Figure 3 indicates purchasing patterns of luxury fashion brands

As shown in the figure 3, majority of respondents purchase the luxury fashion brands through online and offline mode and rest of the purchasers were not done their purchase neither online nor offline.

5. Have you done any impulse purchase through online mode in Luxury fashion products?

51 responses

Figure 4 indicates impulse purchase of luxury fashion products

As presented in figure 4, more than 50-percent of the respondents do impulse purchase through online mode and rest of them prefer to go for physical store.

6. Do you browse the luxuary fashion products for fun?

50 res[pmses

Figure 5 indicate the luxury fashion products for fun (Hedonism)

As presented in figure 5, majority of the respondents have had fun through browsing the luxury product purchasing and rest of them didn’t show interest in doing the same as indicated in pie chart.

7. Do you buy products visiting the physical store”

50 responses

Figure 6 indicates experience while luxury purchase

As indicated in figure 6, it clearly shows that majority of the respondents said that they visit physical stores for purchase and have sense of belonging, brand association, great appeal so on and so forth.

8. Does environment and sustainability affect your purchase decisions when purchasing luxury fasion products?

48 responses

Figure 7 indicates sustainable issues pertaining to luxury fashion brands

As indicated in figure 7, 35-percent of respondents doesn’t have idea about sustainable and environmental issues related to luxury fashion purchases and rest of them had an awareness

4. DISCUSSIONS:

4.1. Phygital system: Revisiting Objective 1, interesting findings were observed with patterned customers’ purchase habits which comprises of various consumers with different perspective towards luxury fashion brands Most importantly, sustainability parameter is the new dimension introduced in luxury landscape and brands namely ZARA, H&M have incorporated this in their retail stores. Going through the various luxury business practices, it is found that during the study in October 2020, The RealReal in collaboration with GUCCI launched online store with pre loved GUCCI merchandise which is part of circular business practice in this segment. Besides, Compound Annual Growth of 11-percent is witnessed during forecasted period of 2023-2028. In this study awareness of environmental issues let luxury businesses take sustainable ecosystem.

4.2. Factors affecting the consumer brand relations:

Revisiting Objective 2, the various factors were derived from the participants about their views on Phygital system in luxury landscape. Accordingly, viewpoints were noted from respondents which gives insights of the same and its associated responses. The study analysed phygital system in luxury space and how they build their connect with their consumers. By examining the 5 parameters which forms the basis for Phygital system in Luxury landscape. They are Phygital system, purchasing patterns, Authenticity, Hedonism, Sustainability.

9. Would you believe in environmental and sustainable issues related to luxury product?

50 responses

Figure 8: Environmental and Sustainable related

A. Phygital system:

Phygital system contains the aspects that have found to characterize the phygital customer experience with growing expectations of hyper connected consumers (Pusceddu et al., 2023) the results highlight that participants have mentioned that more than 50-percent had an idea about phygital system and rest of them were unaware of it. Besides, 70-percent of the respondents rated 3 and 4 in rating scale of 5 which comprises of luxury brands namely Chanel, Prada, Louis Vuitton, Bottega Venetta, GUCCI, Christian Dior, Hermes, Stella McCartney, Givenchy, Salvatore Ferragamo. These parameters were considered in the study to understand the participants who are aware of luxury brands purchase through phygital system and the knowledge about the business practices in luxury industry and luxury consumption among the consumers who are staying in Metro city of India for example, respondents were from Ahmedabad, Bangalore, Chennai.

B. Purchasing pattern- This parameter unveils that majority of the purchases were intending to buy either Ready to wear or luxury fashion accessories besides, shoe category. The insights were derived from word cloud via sentimental analysis. In this line, most of the respondents opined that their favorite product category and brand name such as GUCCI, Hoddie from H&M due to few significant reasons such as quality, price,aesthetic appeal, elegance, timeless, opulent and etc., In continuation, more than 50-percent of respondents do impulse purchase through online mode and rest of them prefer to go for physical store. Few of the respondents have mentioned quality, aesthetics, some brand values likewise . More specifically, this is done based on the luxury brand category, quality, price,aesthetic appeal and also some of them revealed their dislikeness towards luxury brands because of high price and non availablity of product.

C. Hedonism:

Majority of the respondents have had fun through browing the luxury product purchasing and rest of them didn’t show interest in doing the same. As clearly given in pie chart, word cloud and descriptive statistics. As shown in figure 18, maximum number of respondents liked to go for physical stores for luxury fashion purchase. As clearly indicated through pie chart and descriptive statistics.

D. Sustainability:

62-percent of the respondents had strong belief in enviromental and sustainable issues pertaining to luxury fashion purchase. As clearly shown by pie chart and descriptive statistics based on several parameters. More than 50-percent of respondents doesn’t have idea about sustainable and environmental issues related to luxury fashion purchases and rest of them had an awareness about it. As clearly shown in pie chart and descriptive statistics through different parameters

5. LIMITATIONS OF THE STUDY:

This study pertains to Apparel-Ready to Wear, Pret a porter and Fashion and Lifestyle accessory-Belts, Hats, Sling bags, caps and FOOTWEAR and resorts to this fashion segment.

6. CONCLUSION AND MANAGERIAL IMPLICATIONS:

This study contributes to the academic literature pertaining to Phygital system and consumer brand relationships and products and most importantly, the challenges faced by luxury companies and marketing strategy formulated by few Luxury brands. Analysis highlights that five dimension has been presented in the study. More importantly, sustainability is taken into consideration along with phygital system among the consumers in luxury landscape. This indicates the integral part of consumer brand relationship. The Phygtial system is the interactive systems for allowing consumers to get involved and show their desire to access the website and eventually gain unique experience over online allowing brands in luxury segment to satisfy consumers requirements. Through market reports, it is seen that there is growing interest in phygital and this study highlights the challenges faced by luxury companies to design their settings to convey their brand identity to consumer. Furthermore, the parameters of Phygital system and Consumer brand relationship requires increased investment by luxury companies in which first-hand information was collected through interview with store managers, executives and merchandisers to build hybrid settings for the brands in dealing with luxe consumers.

7. FURTHER RESEARCH:

Further studies can be examined with predictive analytics to know the future perspective of phygital systems among luxe consumers and brands perspective can be investigated through in depth interviews

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Received on 03.10.2025 Revised on 28.11.2025

Accepted on 01.01.2026 Published on 11.05.2026

Available online from May 14, 2026

Asian Journal of Management. 2026;17(2):141-147.

DOI: 10.52711/2321-5763.2026.00021

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. Creative Commons License.

Source	researched	Findings
Pusceddu et al., 2023	Customer experience	Phygital Customer Experience is transforming the function of physical stores in tandem with the growing expectations of ‘hyper connected’ consumers
Gaggioli, 2017	Phygital setting in providing interactive user experience	To elaborate, in phygital setting, digital technology enters the physical space by providing enhanced feature to the customers to provide interactive user experience
Batat,2022	Customer value delivery	It is holistic ecosystem comprising of humans, digital platform, technology and content which offers unique experiences that should guarantee a coherent continuum in the customer value delivery process
Lawry, 2022	Hybrid settings	emphasized the significance between physical and virtual experiences which becomes constituent feature of phygital spaces
Pangarkar et al., 2022	Advertising and customer relations	Phygital settings helps an individual connect with their product and services which helps the brands showcase their advertising and customer related aspects
Banik and Gao, 2023 Iannilli & Spagnoli, 2021; Lawry, 2022; Mele et al., 2021);	experience, aesthetic and entertainment	Discusses about the experience, aesthetic and entertainment has positive impact in consumers’ mind Study addresses about brand engagement
Belghiti et al., 2017 Pangarkar et al., 2022	Human experience Engagement	The study by both authors indicate that how human experience will uphold the consumers experience and drives the engagement
Banik and Gao, 2023	Emotional, behavioural and social meanings	This study acknowledged the ability of phygital settings to intensify the emotional, behavioral, and social meanings of the consumer experience
Banik, 2021; Pangarkar et al., 2022 Banik, 2021 Hyun et al., 2022; Mishra et al., 2021		Authors in the study addressed brand engagement Focuses on brand patronage This study addresses how phygital system helps in fostering consumer loyalty

Parameters	Semi structured Interview Schedule
A. Phygital System	1. Are you aware of Phygital system in consumer brand relationship 2. As a consumer, do you have idea about consumer brand relations 3. Rate the below luxury fashion brands on 1-5 scale Chanel, Prada, Louis Vuitton, Bottega Venetta, GUCCI, Christian Dior, Hermes, Stella McCartney, Givenchy, Salvatore Ferragamo 4. Are you familiar with Phygital system
B. Purchasing pattern	5. Usually, which product category shown below you prefer to purchase 6. Have you ever purchased mentioned luxury product category both online and offline (Note: Ready to wear. Lifestyle accessory, Jewelry, Handbags/sling bags, shoes) 7. Have you done any impulse purchase through online mode in luxury fashion products 8. In all your purchases which is your best luxury purchase? Specify the product category and brand name 9. What made you to purchase luxury fashion products in both online and offline ? Write few words
C. Authenticity	10. Did you find similar quality of luxury brands online as you buy in phygital stores
D. Hedonism	12. Do you browse the luxury fashion products for fun? 13. Do you buy products visiting the physical sstore? 14. What sort of experience do you feel when it comes to purchasing fashion products through online
E. Sustainability	15. Would you believe in environmental and sustainable issues related to luxury product Yes No Maybe 16. Does environmental and sustainability affect your purchase decisions when purchasing luxury fashion products Very much Much Not exactly No Idea