TL;DR
In 2026, AI technology is enabling retailers to expand physical stores by transforming them into fulfillment hubs and personalized experience centers. Early adopters report significant sales growth, highlighting a shift in retail strategy driven by AI-driven logistics and customer engagement.
Retailers are expanding their physical store footprints in 2026, driven by the integration of artificial intelligence that enhances logistics, customer engagement, and sales performance, according to a new report from Colliers.
The Colliers report states that despite continued growth in digital commerce, 85.1 percent of U.S. retail sales still flow through brick-and-mortar stores, prompting 71 percent of retailers to expand their physical presence this year. The modern store now functions as a fulfillment hub and a key component of omnichannel retail, with one in four online orders being fulfilled directly through physical stores—a figure expected to exceed 35 percent by 2030. Retailers investing heavily in AI—such as real-time inventory tracking and personalized shopping assistants—are seeing measurable benefits. For example, Macy’s reports that customers using AI-powered shopping tools spend approximately 400 percent more than average shoppers, and early adopters of in-store AI are experiencing 79 percent higher sales growth compared to delayed adopters.
Why It Matters
This shift signifies a fundamental change in retail strategy, where physical stores are no longer just showrooms but vital logistics and customer experience centers. The integration of AI is creating new infrastructure demands for landlords and developers, emphasizing the importance of modern, fulfillment-ready real estate. Retailers that fail to upgrade risk falling behind in a competitive landscape increasingly driven by data and technology. The rise of AI-powered personalization and streamlined BOPIS (Buy Online Pickup In Store) processes offers significant opportunities for market share and profitability, making AI adoption a critical factor for future success.
AI-powered inventory management system
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Background
Historically, the retail industry has faced predictions of decline due to digital commerce growth. However, recent trends show a renaissance fueled by AI, which is transforming physical stores into multifunctional spaces. The Colliers report highlights that over the past five years, retailers increasing their IT budgets by 52 percent are seeing nearly three times faster profit growth. The move towards “phygital” experiences—blending physical and digital—has become central to retail innovation, with AI tools influencing nearly half of all shoppers’ purchasing decisions.
“The infrastructure required for modern AI, such as real-time inventory tracking and integrated data systems, cannot be easily retrofitted. Brands must invest in fulfillment-grade real estate.”
— Anjee Solanki, Colliers national director
“Retailers who prioritize AI and digital infrastructure are seeing significant sales and profit growth, transforming physical stores into high-yield engines for omnichannel success.”
— The report’s authors
in-store customer engagement kiosk
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What Remains Unclear
It is still unclear how widespread the adoption of AI will become across different retail sectors and geographic regions. Specific impacts on smaller retailers versus large chains are still evolving, and the long-term ROI of extensive AI infrastructure investments remains to be fully validated.
fulfillment center shelving units
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What’s Next
Next steps include further integration of AI tools into store operations, with a focus on optimizing last-mile delivery, enhancing personalized shopping experiences, and expanding AI-driven fulfillment capabilities. Monitoring how these strategies influence sales and customer loyalty will be key in the coming years.
personalized shopping assistant device
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Key Questions
How is AI changing the physical retail store layout?
AI enables stores to redesign layouts to balance aesthetic appeal with back-of-house fulfillment efficiency, integrating features like real-time inventory displays and dedicated fulfillment zones.
What are the main benefits of AI for retailers in 2026?
Benefits include increased sales through personalized shopping, higher efficiency in fulfillment and last-mile delivery, and improved customer satisfaction via seamless omnichannel experiences.
Are smaller retailers able to adopt AI at the same rate as large chains?
Adoption rates vary; larger retailers with more resources are leading, while smaller retailers may face challenges due to costs and infrastructure requirements, though opportunities remain for scalable AI solutions.
