Retail in 2026 is still strong, but it’s changing shape. Communities will see more demand for value-driven retail, smaller store footprints, experiential tenants, and grocery-anchored growth—while many legacy big-box and oversized pharmacy formats continue to shrink or turn over. The communities that win will be the ones that can prove demand with credible market data, present “ready” sites, and speak the language of landlords, brokers, and retailers.
Table of contents
- What’s driving retail in 2026
- The big trends communities should track
- Why brick-and-mortar is still the main event
- Where openings and backfills are happening
- What this means for economic development leaders
- FAQs
- Sources, assumptions, and methods
What’s driving retail in 2026
In the 2026 Retail Trends & Outlook webinar, Retail Strategies President Lacy Beasley and Director of Real Estate Elliot Cook framed retail trends through three forces that influence each other:
- Consumer behavior (where spending is going)
- Retail operations (how brands change formats, delivery, and experience)
- Real estate (site supply, vacancy, cost, and deal flow)
For communities, the practical takeaway is simple: you can’t control national consumer behavior, and you don’t run a retailer’s operations—but you can control how prepared your sites are, how clear your story is, and how easy it is to do business with you.
The big trends communities should track
1) Limited retail supply is still real
Retail space hasn’t expanded at the same pace as sales, GDP, or population over the long run. ICSC reported that between 2008 and the end of 2023, shopping center gross leasable area grew by 6.8%, while retail sales (excluding auto/gas/food & beverage in their stat set) grew by 88.8%.
That imbalance helps explain why:
- Quality space stays tight
- Well-located second-generation boxes backfill faster
- Rents can keep creeping up where space is scarce
2) Value wins—because consumers are trading down
The webinar described “trading down” patterns that show up across categories (mass → value, premium grocery → discount grocery, etc.). This is consistent with broader consumer signals ICSC has been publishing: shoppers still want experiences, but they’re watching price closely.
What to watch locally:
- Which categories are gaining trips (value, discount, off-price)
- Which categories are losing trips (mid-market “meh” positioning)
- Whether your tenant mix is balanced for both everyday needs and treat-yourself spending
3) Smaller footprints continue to beat bigger prototypes
Brands are sizing stores to match labor costs, construction costs, and customer expectations for convenience. The webinar’s examples ranged from smaller-format grocery stores to coffee and QSR prototypes built for throughput and speed.
Community implication:
- “Big box or nothing” strategies leave deals on the table
- Your site inventory needs to include small-pad and in-line options, not just large tracts
4) Secondary and tertiary markets are in the conversation
ICSC’s 2026 outlook content points to continued store growth with off-price, beauty, and discount categories leading openings.
That’s good news for many communities Retail Strategies serves—especially where land availability and “right-sized” sites make deals pencil.
Why brick-and-mortar is still the main event
E-commerce is meaningful, but it’s not “everything.” The U.S. Census Bureau reported e-commerce at 15.8% of total retail sales in Q3 2025 (not seasonally adjusted).
That means the bulk of retail dollars still flow through physical locations—especially in categories that depend on:
- Immediate access (grocery, pharmacy pickup, convenience)
- Service delivery (fitness, salon, medical)
- Experience (dining, entertainment, family activities)
So when you plan your recruitment strategy, it’s less about competing with online shopping and more about:
- Getting the right tenants for your trade area
- Making trips and dwell time worthwhile
- Reducing friction in site selection and approvals
Where openings and backfills are happening
The webinar discussion pointed to a familiar pattern: closures create opportunity—especially when the box is well-located, and the building can be reused quickly.
Common backfill and growth categories
Based on the webinar examples and ICSC’s forward-looking coverage, communities should keep an eye on:
- Discount + off-price (strong demand, flexible boxes)
- Grocery anchored deals (investor interest and long-term stability)
- Food and beverage (especially concepts tied to convenience and repeat visits)
- Experience-driven tenants (activities that increase cross-shopping)
A practical note: this is where being able to answer landlord and broker questions fast matters. Retail Strategies’ “Speak Their Language” guidance is a solid internal checklist for what to gather (restrictions/exclusives, TI expectations, how space is delivered, and more). Speak-Their-Language-Doc
What this means for economic development leaders
If you’re prioritizing economic development searches, the blog should not end at trends. It should end with actions.
Here are the moves that consistently show up in effective recruitment programs:
1) Know your numbers (and make them easy to share)
Your ideal municipal buyer profile cares most about credible market data, leakage, ready sites, and a repeatable program—not one-off outreach. Retail Strategies Ideal Custome…
Minimum set:
- Trade area + demographic summary
- Retail leakage/surplus (where dollars leave)
- Property inventory (size, condition, ownership, asking rent)
2) Build a recruitment toolkit (then keep it current)
A practical checklist-style program (phased work, timelines, and staffing) is spelled out in the Downtown Retail Recruitment Checklist—use the same structure even if you’re recruiting outside downtown. Downtown Retail Recruitment Che…
3) Treat churn as a chance to upgrade your tenant mix
When a legacy box closes, the goal isn’t just “fill it.” It’s:
- Match the box to today’s expanding categories
- Reposition the center corridor
- Coordinate with owners on what uses are realistic
4) Tighten the “retail-ready” basics
Speed matters. Communities that can answer site questions quickly and reduce uncertainty get more serious looks.
FAQs
What retail categories should communities recruit in 2026?
In general, discount/off-price, grocery-anchored, food-and-beverage, and experience-driven tenants account for much of the activity.
Is e-commerce taking over retail?
No. E-commerce is growing, but it was 15.8% of total retail sales in Q3 2025 (Census).
Why is it so hard to get new retail built right now?
New construction has been constrained by higher construction and financing costs, and by rent levels that don’t always make projects work. Long-run supply growth has also lagged demand indicators.
