What does a “retail apocalypse” look like? What is the future of retail? If the predictions are correct, about 145 Malls of America.
That’s how many combined stores are projected to close between now and 2026 — 75,000, according to Coresight Research. The advisory firm counts 5,994 announced shutterings just in 2019 so far, beating all of 2018.
That much retail real estate, if equated to the Mall of America’s 2.5 million square feet of 520 stores, translates to more than 700 million square feet, or 25 square miles — larger than the city of Manhattan. It’s a troubling image, but instead of wishing this fate away, perhaps we should learn from how retail got to this point, and think about how to better manage its metamorphosis.
It’s accurate to blame online shopping as a key culprit. But it is also ineffective, and overly simple, to place the blame on what is, to many shoppers, a welcome solution to changing lifestyles. The fact is that while some stores are closing, the physical real estate that remains (or is added) is changing shape, driven in large part by online retail. Physical and online retail will coexist, even blend, as technology molds them into easier, more personalized experiences with a distinctly different emphasis and value chain.
Which simply means the scale and footprint of retail and how it operates will look entirely different. Like healthcare and manufacturing, the industry will continue to serve an integral role in everyday lives, but technology is reshaping its physical footprint and experience.
Which leads us to the more pertinent question: What will online retail look like in 2026?
Co-Existence, 4 Ways
For starters, online retail will continue to expand as a favored option, but it won’t exist alone. Physical retail will continue to co-exist with digital, but it will transform into different formats, designed to accommodate whatever immediate needs shoppers have at the time. Retail technology will enable this, guided by the human hand (read: the consumer).
Here are four the ways online and offline will meld.
1. Touchscreen town squares.
Retail centers will take different forms and be anchored by destination hubs lined with fitness centers, office buildings and townhouse complexes — anything that will generate reliable and regular traffic. Retail’s footprint within this mix will be smaller, but it also will be more highly functional per square foot. While there will still be storefronts, the experience will be enhanced via a blending of digital and physical retail. Window shopping will take on a new dimension: Customers could shop all the stores online from home, customize their orders and then pick them up at central mall locations once they have reviewed what they want to buy. Further, one membership program would collate shoppers’ browsing, spending and payment activities across merchants, to accurately alert them to upcoming specials and to-do items.
2. If you build, they will come.
By 2026, swiping will become soBiometric technology, including facial recognition, is being ambitiously tested in foreign markets and will take root in the U.S. China-based Alibaba launched its facial-recognition ordering systems at KFC stores in 2017, and many U.S. retailers, including Walmart, have tested or are testing it as well — some to gauge consumer sentiment. Walgreens is experimenting with camera-equipped coolers that scan shoppers’ faces for age and gender, to inform better-targeted advertisements. By 2026, those ads may come to roost: Samsung’s new Family Hub suite of smart appliances includes touchscreen refrigerators through which shoppers can order groceries, stream music and control other devices. Issues will arise regarding what should be allowed from a privacy perspective, but it’s likely that as consumers derive value from these kinds of interactions, they will become more commonplace.
3. I’m sorry, Dave, but that size won’t fit you.
Retailers already use data from artificial intelligence and machine learning to locate inventory, customize prices and query customers to make more realistic (and welcome) product recommendations. In seven or so years, artificial intelligence will advance personalization so finely that the technology will be able to fuel in-the-moment conversations about a shopper’s immediate needs, such as what to wear to a dinner date that night. This will be carried out on digital devices, on physical smart mirrors (within stores or at home), or through streaming online portals through which shoppers can connect directly to a store’s inventory. And yes, this technology will be honest, but polite, about sizing and age-appropriate style choices.
4. Amazon will do something.
Amazon, or the offspring of Amazon, will play a major role in shaping retail formats in 2026, likely from the fulfillment end. Think of small-format, Amazon-anchored shopping centers — The Mall of Amazon — populated largely by merchants that fulfill the online giant’s orders, restaurants that cater to its staff and experiential services that make it a destination. Amazon itself wouldn’t need much of a physical retail footprint (anchors don’t have to be big), just some ordering kiosks and a regular rotation of hot new products that will draw a crowd. It may, for example, follow the shopper’s desire for entertainment and specialize in events that invite customers to test and play with featured products, from ski hoverboards to human-carrying drones.
In the year 2026, the Mall of America may in fact be anchored by Amazon’s Midwest headquarters and a small drone-port (with a delivery distribution center, of course). But between those anchors there will be retail, in some form, even if it is set up to support all those online sales.
Bryan Pearson a Featured Contributor to The Wise Marketer and is the President of LoyaltyOne, where he has been leveraging the knowledge of 120 million customer relationships over 20 years to create relevant communications and enhanced shopper experiences.