Phygital Solutions Market Size, Share, and Industry Analysis By Offering (Solutions and Services), By Technology (Augmented Reality (AR), Virtual Reality (VR), Internet of Things (IoT), and Artificial Intelligence (AI)), By Application (Telemedicine, Medical Imaging, and Diagnostics), By End-User (Hospitals & Clinics, Pharma & Biotech Companies, and Others), and Regional Forecast, 2025-2032

The global phygital solutions market value is surging due to the rising integration of digital and physical experiences into multiple industries. Phygital solutions enabled by new experiences are expected to improve customer engagement, streamline operations, and make decisions possible by intervening in people's lives.

• The Centre for International Governance Innovation states that the global market for such tools and solutions in Identity and Access Management will reach USD 29.79 billion by 2027, and the global market for identity verification will exceed USD 17.8 billion by 2026, indicating wider adoption of secure digital identity solutions.

The American Hospital Association has reported that nearly 400 AI algorithms have been approved by the FDA for radiology, and the increasing incorporation of artificial intelligence in healthcare has a major impact on the market. Improvements in diagnostics and outcomes for patients are made possible with these algorithms.

Phygital Solutions Market Driver

Hybrid Shopping, AI, and Omnichannel Strategies Drive Market Growth

The rise of hybrid shopping experiences is the major driver of the phygital solutions market as consumers increasingly demand seamless integration between physical and online shopping. With 73% of Gen Zers considering customer experience as the "deciding factor" in brand preference (World Economic Forum), businesses favorably use phygital solutions to build on engagement.

Technological advancements in IoT, AR, and VR invite further stimulation to the market by allowing interactivity and immersive experiences. The shift to omnichannel strategies in retail has also accelerated the acceptance of these solutions, with the intent to aid brands in driving customer retention and loyalty.

Phygital Solutions Market Restraint

High Costs, Integration Challenges, And Privacy Concerns Hinder Market Growth

The high costs associated with the implementation are hindering phygital solutions' widespread acceptance, especially for small and medium enterprises. The integration of multiple digital technologies with existing physical infrastructure poses another set of challenges for deployment. Data privacy and security concerns are considerably important, with 41% of physicians worried about AI's impact on patient privacy (American Medical Association), thus amplifying fears in broader sectors with sensitive data. This slow adoption is also fueled by a reluctance to change among traditional retailers; retail companies are unwilling to disrupt well-established routines.

Phygital Solutions Market Opportunity

Omnichannel Retail and AI-Driven Personalization Drive Market Growth

It is a major growth opportunity for the expansion of omnichannel retail models since organizations create seamless experiences between online and offline. AI-fueled personalization is indeed beginning to expand; according to 72% of doctors, artificial intelligence will enhance their ability to diagnose (American Medical Association) representing the broader possibilities of using artificial intelligence for customization.

Smart stores are emerging, combining IoT and AI technologies to use optimized inventory while permitting personalized marketing. Finally, new opportunities are brought in with virtual events and more interactive digital showrooms as they expand on the grounds of customer experience across industries.

Segmentation

Key Insights

The report covers the following key insights:

• Adoption of AI, IoT, and AR/VR in Healthcare, By Key Regions
• Drivers, Restraints, Trends, and Opportunities
• Investment and Expansion Strategies of Key Players
• Consolidated SWOT Analysis of Key Players
• Key Industry Developments (Mergers, Acquisitions, Partnerships)
• Regulatory and Data Privacy Landscape

Analysis by Offering

By offering, the market is divided into solutions and services.

The leading position of the solutions segment can be attributed to different AI applications for identity verification, IoT smart stores, and AR/VR-based customer engagement creating bumps in the Phygital Solutions Market. AI is projected to save at least USD 150 billion annually by 2026 from the healthcare economy in the U.S. (IEEE Computer Society). In doing so, companies take integrated digital-physical platforms for rapid efficiency.

The service segment is sure to be impacted largely when businesses start asking for consulting services, system integration, or managed services regarding their phygital easy inclusion. The increasing concern over the security of the patients causes doctors to have a 39% fear of what AI would do to their relationship with patients (American Medical Association), requiring much more protective and compliant data services.

Analysis by Technology

By technology, the market is divided into augmented reality (AR), virtual reality (VR), internet of things (IoT), and artificial intelligence (AI).

The Augmented Reality (AR) applications leads the phygital solutions market and helps enhance the customer experience with interactive product visualizations or virtual try-on capabilities. This segment is also being driven by the increasing adoption of smart stores and marketing campaigns.

AI is likely to see significant growth, as industries now take advantage of AI for personalization and automation. In the field of healthcare, AI-driven analytics and recommendation engines have also recorded acceptance.

Analysis by Application

By application, the market is divided into telemedicine, medical imaging, and diagnostics.

Hospitals and clinics are expected to hold a majority share in the market, augmented by AI-based diagnostics and predictive analytics. According to the American Hospital Association, there are around 3.6 billion imaging procedures every year, with digital twins optimizing data use and maximizing clinical workflows.

This segment is expected to surge due to AI-powered drug discovery. The U.S. Government Accountability Office cites approximately 70 drugs have been in clinical trials with the use of generative AI as of December 2023, accentuating the role of digital twins in accelerating the pace of drug testing and precision medicine.

Analysis by End-User

By end-user, the market is divided into hospitals & clinics, pharma & biotech companies, and others

The hospitals and clinics segment is likely to lead the market where such attributes are bound to be realistic, especially with regard to their use of AI-powered diagnostics and digital identity solutions. The pharma and biotech segment is likely to be one of the fastest-growing segments due to rising number of AI-based drug discovery and clinical trials.

Regional Analysis

Based on geography, the market has been studied across Asia Pacific, North America, and Europe.

The phygital solutions market is expected to thrive in North America, where rapid advancement and acceptance of AR, VR, and IoT technologies across industries dominate. The regional market is set to dominate owing to  the retail atmosphere, aiming at consumer experience, continuously presses for the development of personalized and immersive phygital solutions, where AI integration from commercial players further enhances engagement.

The Phygital solutions market in Europe is witnessing a boom due to retail digital transformations and tech-retail integration. European retailers record an increasing inclination toward digitalization of their in-store experiences and sustainability.

The Asia Pacific market is expected to grow with a strong impetus by the rapidly increasing e-commerce market together with escalating investments in the digital realm. Enabling the accelerating phygital adoption in the region, 72% of Gen Zers are using neobank apps for budgeting purposes (World Economic Forum) as an avenue to power the change for technology-based consumer experiences.

Key Players Covered

The report includes the profiles of the following key players:

• Mocero Health (India)
• Telit Cinterion (U.K.)
• Thales (France)
• Google (U.S.)
• Microsoft (U.S.)
• Fundamental Surgery (U.K.)
• Augmedics (U.S.)
• OxfordVR (U.K.)
• EchoPixel (U.S.)
• Vicarious Surgical (U.S.)

Key Industry Developments

In April 2024, Tata Power Community Development Trust and the National Institute for the Empowerment of Persons with Intellectual Disabilities joined forces to develop TEcare, a phygital neurodiversity platform. The move would help revolutionize neurodiversity diagnosis, screening, disease management, and render care to people with special needs.