The phygital retail revolution: Building balance in India’s omnichannel era

India’s retail sector is in the middle of a decisive transformation. From neighbourhood kiranas to national chains and digital marketplaces, retailers are using artificial intelligence, data analytics and omnichannel strategies to meet the needs of a connected, mobile-first customer. This shift builds on India’s deep digital foundations—high smartphone penetration, affordable data and near-universal access to digital payments—yet it also exposes persistent gaps in data quality, legacy infrastructure, and uneven digital adoption.

AI is not a shortcut to transformation; it is an amplifier of discipline. Its effectiveness depends entirely on the quality of data and the consistency of processes. As retailers navigate this transition, finding equilibrium between technology, people, and purpose will determine the resilience of India’s omnichannel retail ecosystem.

A unified view of the customer

The starting point for balance is understanding the customer across every touchpoint. In a true omnichannel model, a shopper’s interactions—whether online, on an app, or in-store—should feed into a single, consented profile. This continuity enables relevant engagement without repetition, supports service recovery, and improves trust. Without a unified customer view, even the best technology can fragment experiences rather than connect them.

Integrated inventory and fulfilment

Physical and digital supply chains can no longer operate in silos. A balanced ecosystem depends on real-time inventory visibility and flexible fulfilment models that treat stores, warehouses, and partner networks as one grid. When retailers integrate systems to enable “buy online, pick up in store” or “ship from store,” they not only improve convenience but also optimise working capital and reduce waste. Predictive analytics can further help position stock closer to where demand will emerge.

Radio-frequency identification (RFID) strengthens this integration by bringing precision and immediacy to stock management. By embedding tags into products and pallets, retailers gain real-time visibility of inventory as it moves across stores, warehouses and transit routes. RFID reduces manual counting, minimises shrinkage and enables faster replenishment. When linked with analytics platforms, it can trigger automated re-ordering, locate misplaced items instantly and support “smart shelves” that update inventory the moment a product is picked up. This level of traceability enhances both operational efficiency and customer confidence through accurate availability and quicker fulfilment.

Data discipline and interoperability

AI is only as effective as the data it receives. Reliable insights require clean, structured, and timely data. Retailers must invest in governance frameworks that define how data is captured, stored, and shared across systems. Interoperability is just as vital. Standardised formats and open APIs allow retailers to connect easily with logistics providers, marketplaces, and digital networks like ONDC. Data discipline is not a technical issue—it is a cultural one that underpins trust and long-term scalability.

Technology that connects rather than replaces

Technology should serve as connective tissue, not as a replacement for human insight. A modular, open architecture allows retailers to adapt quickly, plug into new networks, and scale innovation without discarding what works. The most successful retailers view digital transformation as continuous integration, not constant reinvention.

Empowered people in a digital ecosystem

Retail transformation will fail without human readiness. Store associates, supply chain managers and service teams must be empowered with digital tools that enhance their decision-making. Mobile dashboards, real-time stock visibility, and AI-assisted recommendations can make the workforce more effective and confident. Investing in upskilling ensures that employees evolve alongside technology rather than being displaced by it.

Infrastructure that includes everyone

A balanced omnichannel system cannot be exclusive. India’s retail ecosystem is vast and diverse, and the benefits of digitisation must reach small retailers and manufacturers as much as organised players. Public digital infrastructure such as UPI, ONDC and the Account Aggregator framework creates opportunities for smaller participants to connect, transact and grow without prohibitive costs. This inclusivity strengthens the entire ecosystem.

Digital payments: The glue of omnichannel commerce

Digital payments are the connective thread that binds India’s retail landscape. The success of UPI has made cashless transactions ubiquitous, bridging the gap between physical and digital commerce. Customers can pay seamlessly across channels, and retailers benefit from faster settlements and lower transaction costs. As embedded finance evolves, these same payment trails can enable credit scoring, microloans and working capital access for small merchants. The next phase lies in using these digital rails not only to transact but to build financial empowerment. For this to scale safely, reliability, transparency and data protection must remain central.

ONDC and the open retail economy

The Open Network for Digital Commerce (ONDC) is redefining how India thinks about digital marketplaces. As a protocol-based, government-backed network, it aims to make commerce interoperable—allowing buyers, sellers and logistics providers to connect freely without platform dependence.

But inclusion through openness requires maturity. Success will depend on governance, accountability and service consistency as much as on technology. ONDC’s challenge is to balance innovation with reliability, and openness with trust.

Ethics, sustainability and collaboration

A balanced omnichannel future must also be ethical and sustainable. Consumers increasingly expect transparency in pricing, privacy in data, and responsibility in logistics. AI and automation can reduce inefficiencies, but they must also help lower carbon footprints, manage returns responsibly and support local employment. Collaboration among policymakers, industry associations and retailers will be essential to set standards that preserve both competitiveness and conscience.

The way forward

India’s retail industry stands at an inflection point. The goal is not to replicate global templates but to create an inclusive, efficient, and trusted ecosystem suited to Indian realities. Technology will remain central, but its true value will come from integration, not isolation.

If retailers modernise their systems, uphold data integrity, empower their people, and engage with open networks like ONDC, India can set a global benchmark for balanced digital retail, one that combines innovation with inclusion, and growth with responsibility.

The next phase of retail will not be defined by the technology we adopt, but by how intelligently and ethically we use it.

(The author is CEO, Retailers Association of India. Views are personal.)