This chapter examines the transformation of traditional brick-and-mortar shopping into an immersive, digitally enhanced experience. Physical stores have evolved beyond transactional spaces, becoming “phygital” environments where sensory engagement meets interactive technology. AR and smart technologies—such as virtual mirrors—are reshaping in-store experiences, enabling customers to visualize products, try them on virtually, and receive personalized information, all while remaining within physical retail settings. These innovations not only enhance convenience and emotional engagement but also collect behavioral data to optimize retail strategies. Through detailed analysis and real-world case studies, the chapter explores how brands like Nike, Gucci, and Zara are using AR to create experiential and shareable moments that drive customer interaction and loyalty. However, this technological integration also raises challenges—ranging from high implementation costs to concerns about privacy and data ethics. As digital and physical boundaries blur, new questions arise about customer behavior, social presence, and the future of in-store touch and interaction. The chapter concludes by outlining critical research directions and managerial implications, urging a balance between innovation and responsibility. In doing so, it positions XR technologies not just as tools, but as strategic drivers of change in fashion retail.