Consumers continue to shop at businesses with physical sites — 5 out of 6 retail dollars are being spent at brick and mortar stores, research indicates.

Here's some insight from retail analysts and others in the industry about the landscape for physical stores, and why brick and mortar locations remain relevant despite retail ecommerce.

Brick-and-Mortar Stores Still Lead Retail Sales

Physical sites are the dominant retail sales channel in the U.S., representing the majority of consumer spending, according to commerce data and industry analysts.

“While e-commerce continues to grow, physical stores still capture roughly 84 percent of retail sales, driven by grocery, restaurants, services, and experiential retail,” says a post by Retail Strategies, a Birmingham-based advisory firm that specializes in retail economic development.

Smaller Store Formats Reduce Costs and Improve Efficiency

Rather than replacing physical stores, e-commerce has pushed retailers to rethink how shops operate, with some entrepreneurs opting for smaller spaces.

Smaller stores offer new business owners lower rent and staffing costs and the opportunity to focus on more targeted inventory.

“Retailers are experimenting with smaller prototypes that focus on efficiency and convenience,” says the Retail Strategy post, citing compact grocery stores and smaller quick-service restaurant formats as examples.

Why Experiential Retail Depends on Physical Stores

The recent trend of experiential retail businesses bolsters the persistence of brick and mortar sites. 

These are businesses that demand a physical venue by their very nature — they depend on customers spending time and money inside a physical space. Examples include sports and recreation venues, hospitality retail, and community-themed businesses, from yoga studios and coffee shops to food halls.

“Shops are looking to give customers things that can’t be easily replicated online, and creating tactile, engaging experiences has become top of the list,” explains a post by Lightspeed Commerce, which provides an omnichannel platform for retail, golf and hospitality businesses.

Why Major Retailers Continue Investing in Physical Stores

Big retailers like Target and Walmart are investing in the renovation of their brick-and-mortar locations, pointing to the important role of in-store shopping. 

“The nation’s biggest retailers are pouring billions of dollars back into their stores, even as more sales move online, in an effort to lure more shoppers and raise employee efficiency at brick-and-mortar locations,” writes New York Times business reporter Kim Bhasin in May.

Increasing numbers of consumers are buying online but ecommerce sales account for only 18 percent of all retail sales, the article reports, citing Commerce Department data.

When physical stores are attractive, it can help boost online sales, Bhasin writes. 

“The in-store experience is still important for shaping the e-commerce brand,” said David Marcotte, an analyst at the research firm Kantar Retail IQ, in the story. “Remodels are almost always the best way to go.”

Nearly 78 percent of retailers report moderate or significant in-store investment, with more than 5,000 store openings forecast for 2026, according to the “State of Stores” report from Retail Brew, citing Coresight Research data.

“This isn’t a boom. It’s a recalibration,” says the post by Retail Brew. “Stores aren’t transaction hubs anymore—they’re brand stages.”

In a Retail Brew survey, 62 percent of retailers said they’re investing to strengthen brand perception, and 58 percent said their investments in brick and mortar locations was to drive loyalty.

“Experience is the new currency, and physical retail is where you spend it,” adds the post by Retail Brew.

How Brick-and-Mortar Locations Benefit Ecommerce Retailers

Brand-building and increased online sales are two of the key benefits that ecommerce retailers experience after opening a physical location.

A new brick-and-mortar location increased traffic to their website by an average of 37 percent, according to the National Retail Federation, and that often translates into more online sales, explains a post by the Small Business Development Center (SBDC) at the University of Houston-Bauer.

Also, a physical site provides ecommerce retailers the opportunity to enhance the customer experience, which like more website visits, can fuel more sales.

“With a physical location, people can see, touch, and try your products before purchasing them. A storefront also allows you to offer in-person customer service, which can help build a relationship between you and your customers.”