Physical retail stores are not disappearing — they are evolving.
Despite the growth of e-commerce, approximately 80% of retail transactions still occur in physical stores, and many retailers are expanding locations while modernizing formats to support omnichannel shopping.
Brick-and-mortar retail is adapting — not dying.
Why Are Physical Stores Still Important?
Even with rapid digital growth, physical stores remain the preferred shopping channel for many consumers.
Key Reasons Brick-and-Mortar Persists:
- Immediate product access
- Tangible, sensory experience
- In-person service
- Easier returns
- Impulse purchases
- Social and experiential engagement
Physical retail offers immersive elements that online platforms cannot fully replicate — including tactile interaction and instant gratification.
Are Retail Stores Closing or Expanding?
Both — But Expansion Is Outpacing Closures
While high-profile closures have reshaped parts of the commercial real estate (CRE) landscape, store openings in 2023 outnumbered closures.
Notable Retail Closures:
- Bed Bath & Beyond
- Tuesday Morning
- Five Below — Hundreds of planned new stores
- Dollar Tree — Aggressive national expansion
Major Retail Expansion Plans:
This indicates strategic recalibration — not systemic collapse.
How Are Retail Store Formats Changing?
Modern retail spaces are being redesigned to reflect shifting consumer preferences and new operational models.
Examples of Retail Format Evolution
1. Store Remodeling & Product Repositioning
- Dollar General is expanding grocery offerings to meet demand for low-cost essentials.
- Walgreens is integrating primary care clinics into select locations.
2. Market Fulfillment Centers & Automation
- Increase daily order capacity
- Improve online order accuracy
- Reduce fulfillment time
- Integrate digital and physical retail
These changes reflect retailers maximizing foot traffic and increasing service value per square foot.
Walmart has introduced in-store market fulfillment centers powered by its proprietary Alphabot system.
These centers:
This shift signals a move toward a customer-centric omnichannel model.
What Role Do Anchor Tenants Play in Retail Real Estate?
Anchor Tenants Drive Traffic and Investment Stability
Anchor tenants are major retailers that:
- Attract high customer volume
- Increase visibility for surrounding tenants
- Stabilize retail strip centers and malls
In commercial real estate investing, anchor tenants are critical for:
- REIT performance
- Single-tenant net lease (NNN) investments
- Income stability
- Risk mitigation
Strong anchor tenants enhance both consumer traffic and investor confidence.
How Are Consumer Preferences Changing?
Sustainability and Secondhand Retail Growth
Modern consumers are increasingly sustainability-driven.
A large percentage of U.S. consumers participate in secondhand retail annually, reflecting:
- Budget consciousness
- Environmental awareness
- Changing brand loyalty patterns
Retailers that integrate resale, recycling, and circular economy strategies are better positioned for long-term relevance.
What Is Omnichannel Retail — and Why Does It Matter?
Omnichannel retail integrates digital and physical shopping experiences into one seamless customer journey.
Instead of separating online and in-store experiences, retailers now blend them.
Example:
J.Crew launched a virtual store in partnership with Obsess, creating:
- Interactive digital experiences
- Expanded brand reach
- Cross-channel engagement
It is fully integrated.
Retail is no longer “online vs. offline.”
What Does This Mean for Commercial Real Estate Investors?
For investors in:
- Net lease properties (NNN)
- Retail-focused REITs
- Strip centers
- Mixed-use developments
Understanding retail evolution is essential.
Key Investment Implications:
- Properties with adaptive retailers outperform static formats
- Anchor-backed centers offer stability
- Omnichannel-enabled retailers reduce long-term vacancy risk
- Experiential and service-based retail drives sustained foot traffic
Retail evolution creates opportunity — especially for informed CRE investors.
Frequently Asked Questions
Is brick-and-mortar retail dying?
No. While certain retailers are closing underperforming stores, overall physical retail remains dominant and continues expanding in strategic formats.
Why are some retailers thriving while others close?
Retailers that adapt to omnichannel, automation, sustainability, and experiential retail models are outperforming legacy operators.
Are retail REITs still a good investment?
Retail REITs tied to high-quality tenants, essential goods, or adaptive formats can remain resilient, particularly when backed by strong anchor tenants.
Final Takeaway
The retail narrative is not one of decline — it is one of evolution.
Brick-and-mortar retail is:
- Integrating technology
- Adapting store formats
- Embracing sustainability
- Expanding strategically
For commercial real estate stakeholders, especially those invested in net lease properties or REITs, this evolution represents a dynamic opportunity — not a retreat.
Retail is not fading.
It is transforming.