Brick-and-Mortar or E-Commerce? The Retail Balancing Act
Adapting to Unexpected Changes
This article is featured in our 2026 Global Asset Insights Report. Access the full report to get insights across sectors on the outlook for 2026 and themes impacting the ways companies do business. Read the report >
Retail remains one of the most dynamic parts of the global economy. The COVID-19 pandemic accelerated the shift from physical stores to online shopping. However, e-commerce’s rapid growth slowed in the years after the pandemic as retailers gradually returned to brick-and-mortar stores. In 2020, e-commerce grew across geographies, with a total global increase of nearly 20%, demonstrating a dramatic shift to e-commerce businesses in a very short amount of time.1
Comparatively, from 2022 to 2030, the global e-commerce market is growing at a CAGR of 12.22%.2 While e-commerce is still growing, today, companies have realized that these pandemic-era overcorrections hurt their businesses, and a more conservative balance is necessary.
How brick-and-mortar and e-commerce presences combine to create value and protect assets
Recognizing the benefits and drawbacks of both strategies, we expect that throughout 2026, retailers will continue adopting a hybrid approach that captures the benefits of both and addresses the inefficiencies of each. Creating the right mix between brick-and-mortar and e-commerce will be crucial for success in the year ahead.
New uses for artificial intelligence in the retail sector could dramatically change how some companies operate, but it’s too early to tell which use cases might have the greatest benefit. Overreliance on AI recommendations and outputs could create an imbalance between the brick-and-mortar and e-commerce sides of the business if left unchecked.For example, AI improvements in inventory tracking can help with merchandise planning, but companies need to be careful. AI may prioritize high-turnover products or focus so much on efficiency that it neglects customer experience, creating empty shelves that detract from the in-person shopping experience and the benefits of visiting a brick-and-mortar location.
Brick-and-mortar stores help anchor customers while simultaneously driving them back to the store’s online platform. Stores offer consumers the opportunity to see and feel the product, try it on and provide a return option that is often more convenient than the added shipping fee for some online returns. Even as consumers rely heavily on technology, in-person shopping remains a mainstay social experience.
Healthy retailers, from big-box stores to high-end brand houses, are increasingly expanding their in-person presence to strengthen customers’ connection to their brand. Recent data projects a 4% increase in store openings this year and a 4% decrease in store closings.3 However, where these retailers are showing up has changed—malls are out, and lifestyle centers and off-mall leases near restaurants, entertainment and other commercial enterprises are increasingly attractive.
Still, internet-focused strategies provide necessary flexibility and lower overhead costs, which conserve retailers’ resources. E-commerce ensures that retailers are not bound by consumers only in their physical locations, opening the doors to more markets and audiences. Additionally, as younger generations become target audiences, e-commerce presents new opportunities to reach them. Roughly 80% of Gen Z’s (ages 13-28) shopping occurs online, compared to 75% of Millennials (ages 29-44) who prefer online shopping, and 65% of Gen Xers (ages 45-60) who shop online regularly.4
Retail will continue to evolve, and the winners will be those who can strike a balance amid these and other unexpected changes.
What Will the Cost of Tariffs Be?
The retail industry is facing a number of challenges that require retailers to adapt and innovate. As political and trade dynamics continue to shift, another major question for retailers is how they may handle increased costs from tariffs. The current state of tariffs can turn on a dime, and businesses are left adapting as quickly as they can to the ongoing political whiplash. The ability to evolve and react quickly will separate those retailers who can weather the tariff storm versus those who cannot.
Want to read more insights like this? This article is featured in our 2026 Global Asset Insights Report. Access the full report to get insights across sectors on the outlook for 2026 and themes impacting the ways companies do business. Read the report >
- International Trade Administration, Impact of COVID Pandemic on eCommerce.
- Research & Markets, Global E-Commerce Market Forecast Report 2023-2030: Digitalization and Technology Drive the Multi-Trillion Market’s Meteoric Rise.
- CoStar, US store openings are expected to see an uptick this year.
- PGM, Consumer Shopping Trends and Statistics by the Generation: Gen Z, Millennials, Gen X, and Boomers.