This paper discusses innovation strategies of small rural grocery stores in northern Sweden – a sparsely populated area characterized by ongoing population decline and the widespread loss of services from smaller villages. After several decades of persistent village store closures, the number of rural shops has stabilised in recent years, with new shops emerging in often unexpected locations. We conducted a qualitative study with 25 village stores, which included interviews with shopkeepers, ethnographic observations, discussions with customers and village residents, as well as public documents and social media analysis. The aim was to understand their ownership/management structures, business motivations, and their resulting survival or innovation strategies when it comes to product diversification, target markets, customer engagement, and the use of new technological solutions. Our findings suggest the presence of shop innovations across four inter-related dimensions: digitalization, mobilization, co-location and translocalism. Digitalization included the use of unstaffed self-service models, online ordering and social media marketplaces. Mobilization included non-stationary services visiting villages on a temporary basis (delivery services, pop-up shops). Co-location involved the presence of multiple services within shared facilities, notably community venues and tourism attractions. Translocalism involved the mix of local and external networks (with producers, distribution partners and markets) to allow for business and market differentiation. While private entrepreneurs were often prioritising translocal market solutions to access more profitable external market niches, community-run shops were more focused on solutions around digitalization and co-location to retain important social community spaces, whilst seeking to overcome economic and staffing challenges. Mobile service solutions were less common and mostly disappeared after the pandemic (with the exception of government-funded delivery services for the elderly). Digital solutions, such as self-scanning or unstaffed/hybrid shops, are gaining interest among both shopkeepers and village residents. However, such models are perceived to reduce local social interactions and service quality, and sometimes marginalize older, vulnerable and non-resident populations. Co-location with social meeting and hospitality venues, as well as mentoring and digital training for marginal consumer groups, could reduce issues of social exclusion to some extent. Overall, village shop survival in northern Sweden continues to rely on government support funding, while major innovations in the digital transition have so far been limited to participants in public pilot projects. To survive, shopkeepers have to combine multiple service offerings and income streams beyond retail, whilst facing ongoing challenges to balance economic profitability with social community and personal lifestyle priorities.

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.

In recent times, it is digitalization in particular that is triggering innovative thrusts in retail beyond e-commerce. Phygital environments are emerging that blend the physical space of a traditional store with digital applications in the form of modern technologies and bring together online and offline worlds for a "hybrid customer journey". These developments manifest themselves in the form of unmanned stores and vending machine stores that use the full range of technological advances to continue to offer customers a personalized shopping experience, but one that is based on technical convenience and technical service and no longer (only) on personal service by employees. This stage of retail development is characterized as Retail 4.0, which includes the networking of devices via the internet, the collection and processing of big data, cloud computing, the use of artificial and augmented realities, e.g. in the form of artificial language and images. Unmanned stores have only been around for a few years. In Germany, only pilot stores of supermarkets and discounters exist so far in the form of so-called autonomous high-tech stores. The situation is different with so-called semi-autonomous low-tech stores and vending machines (regiomats) without sensors, which are expanding in rural regions of Germany and opening up new opportunities for the provision of basic services to the population in peripheral areas. What these facilities have in common is a continuous opening on a "small" sales area of up to a few 100 square meters, no staff, self checkout by the customer, cashless payment and prior customer registration via an app on private digital devices. This article aims to identify not only effective and potential consumers in a consolidating system of hybrid stores, but also reasons for rejection and reactance towards digital solutions among the test subjects. Theories of consumer and social psychology such as the Theory of Planned Behavior (TPB) or the Technology Acceptance Model (TAM) can help to reveal not only the entrenched attitudes of test subjects towards consumption or technical innovations, but also to explain visible and spatially varying behavioral and purchasing practices. It is investigated a) which customer clientele feels addressed by the tech-savvy concept of unmanned stores and in which spatial structures and competitive networks of other (food) providers the customers operate; b) which location considerations on the part of store developers, store operators and other stakeholders contribute to the opening of a 4.0 store; c) to what extent the village store 4.0 can fill a niche in competition with discounters and supermarkets via smart technology.