For all the negative headlines about its apparent demise, physical retail remains a cornerstone of the UK economy. According to Mintel, £7 out of every £10 spent in the retail sector in 2025 has gone through a store. And there have been encouraging signs from major names expanding their brick-and-mortar footprint this year.
None of this will surprise experienced retail insiders. Consumer habits, technology and economic circumstances might change. But shops endure because they are able to adapt. Plus, let’s be honest – does anyone want a world where every purchase is made through a smartphone, and you never get the pleasures of seeing goods in all their 3D glory, trying them out for size, and simply enjoying shopping as an activity? The numbers suggest, if anyone does, they’re very much in the minority.
Still, physical retail’s ability to change is critical to it staying relevant and popular as times and shoppers change. Here are five ways we foresee stores evolving in 2026.
Continued ‘Phygital’ Integration
One of the big myths that took hold as online shopping developed was that online and offline retail were in direct competition with one another, or even more misleadingly, that shoppers had a preference for one or the other. Both are untrue. Used the right way, online and offline channels complement rather than cannibalize each other. And customers appreciate both for their different strengths. Horses for courses and all that.
What customers really like is when the complementary benefits of online and offline are blended together, and they get the flexibility to choose and switch from one to another. This has led to the emergence of ‘phygital retail’ – the blurring of the lines between physical and digital – and we can only expect to two to become more and more integrated.
Think on-shelf QR codes linking to customer reviews and price comparisons; digital screens displaying ‘endless aisle’ product selections far beyond the limitations of physical merchandising space; activations using immersive technologies like AR (virtual try-outs, fittings etc); and services that fluidly integrate online and offline into one journey, like Buy Online, Pick Up In-Store (BOPIS).
Hyper-Personalization at Scale
Another aspect of the phygital revolution that deserves its own spotlight is the way that it is opening the door to delivering highly personalized customer experiences in store. AI is the game-changer here; thanks to its speed, scale and sophistication, AI data analysis can now do things like read browsing patterns and dwell time as a customer moves around a store, cross-reference that to past purchase data and use predictive modelling to suggest recommendations, tailored promotions or even simply offers of assistance that have a high probability of leading to a purchase. They can be delivered in the moment via digital screens or mobile pushes to a customer’s phone. And this all ties in closely with the evolution of in-store retail media, or digital advertising via screens, signage etc.
Experiential and Community Focus
Store owners aren’t blind to the fact that online shopping has distinct advantages in terms of sheer convenience. If it’s a choice between traipsing out of the house several miles in filthy weather just to buy a non-essential item you can wait a day or two for, or clicking a button on your phone to have it delivered to your door, there’s only one winner.
But physical retail is battling back by giving people reasons to make that journey beyond simply making a purchase. Shops can offer things ecommerce can’t – immersive, entertaining and social experiences. According to Salesforce, 59% of physical retailers now offer in-store services like customization and repairs, while 46% provide dedicated spaces for events and community gatherings. Whether it’s personal styling or cookery classes, celebrity meet and greets or simply offering local community groups a place to meet, giving shoppers something more than just shopping is an important way to build connection, reputation and encourage people to hang around for longer.
Flexible and Modular Design
Tied in with the trend for retail stores being used for more than just retail, we’re also seeing the decline of fixed, static shop fits. If you do want to host a special event, you don’t want to have to call the fitters in to spend a day dismantling shelving and moving all your POS tech around. You want flexible, modular designs that allow for quick, easy rearrangement.
Modular store design benefits the main business of selling things, too. It makes it easier to freshen up and get inventive with visual merchandising, not just moving stock around the shelves to suit different seasons, promotions and events, but creating whole new layouts that focus attention in different ways.
Sustainability and Transparency
Finally, sustainability is moving from being a nice-to-have to a baseline expectation among consumers. Despite ongoing concerns around the cost of living, shoppers are on average prepared to pay a 9.7% premium for sustainably sourced or produced goods. At the same time, tolerance for ‘greenwashing’ or making hollow claims on environmental matters is wearing thin, with 53% of UK consumers saying they’d stop buying from any company found to be making unsubstantiated claims on sustainability.
Honesty and transparency are the names of the game. People expect straight answers on things like carbon footprint, packaging and the provenance of products. Clued-up retailers shouldn’t just rely on whatever level of detail has to be shared by law on labelling. They should be proactive about providing detailed information to customers, and use those trusty ‘phygital’ resources like digital signage, screens, kiosks and more to do so.
Ultimately, the most successful physical retail spaces heading into 2026 and beyond will be those that thoughtfully balance technology with human-centric design, creating relevant, engaging, and efficient environments that give customers a compelling reason to visit beyond just the transaction. Get those things right, and our shops will continue to be the cornerstone of our retail economy well into the future.