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Phygital products: Effects and boundaries of metaverse-first retail strategies

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  • Orazi, Davide C.
  • Nyilasy, Greg

Abstract

The metaverse offers unique opportunities to retail Phygital Products (PPs)—combined physical-digital offerings whose components are linked together using NFTs. Despite their rising popularity and operational efficiencies, PPs pose a number of distribution challenges likely to influence customer valuations of these products. This research investigates how different retail strategies (metaverse-first vs. physical store-first) influence willingness to pay for PPs. Five experimental studies, including one conducted in a simulated metaverse store, show that metaverse-first retail strategies decrease willingness to pay (Studies 1A-1C) due to decreased investment value (Study 2). This valuation penalty can be mitigated by manipulating arousal through in-store atmospherics. Specifically, increasing music tempo reverses the negative effect of metaverse-first retail strategies on investment value and willingness to pay (Study 3). Our findings inform actionable strategies on how to retail PPs in the metaverse to maximize distribution reach while reducing valuation penalties.

Suggested Citation

  • Orazi, Davide C. & Nyilasy, Greg, 2026. "Phygital products: Effects and boundaries of metaverse-first retail strategies," Journal of Retailing, Elsevier, vol. 102(2), pages 371-386.
    • Handle: RePEc:eee:jouret:v:102:y:2026:i:2:p:371-386
    DOI: 10.1016/j.jretai.2025.01.002
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