For years, the retail industry was told that the future would be screen-first. Shoppers would move online, stores would shrink, and expensive physical locations would become liabilities.
Yet the opposite is happening in some of the world’s biggest retail businesses. Amazon is planning more than 100 new Whole Foods stores, Walmart is using thousands of stores to fulfil online orders, and Inditex continues investing in its global store network while expanding digital sales.
The numbers reveal why. E-commerce is growing rapidly, but physical retail still accounts for roughly three-quarters of global retail spending. The store has not become irrelevant; its job has changed.
The new question for retailers is no longer whether customers shop online or offline. It is how much economic value one physical location can create across both.
The Store Was Supposed To Disappear
For more than a decade, the retail industry treated the physical store as a problem to be solved. E-commerce offered wider selection, lower search costs and the convenience of shopping without visiting a store. Yet the numbers tell a more complicated story.
Global retail sales are estimated at $18.9 trillion in 2025, with offline retail accounting for about $14.4 trillion, or roughly 77% of total retail sales. E-commerce is growing faster, but it still represents only a minority of global retail spending. EY, citing Euromonitor, expects offline retail’s share to decline to 73% by 2028, rather than disappear.
At the same time, global e-commerce sales are forecast at $6.42 trillion in 2025, rising to $6.88 trillion in 2026 and $7.89 trillion by 2028. Its share of retail is expected to increase from 20.5% in 2025 to 22.5% in 2028.
That creates the central contradiction: digital commerce continues to expand, but retailers have not stopped investing in physical locations.
The explanation is that the store is no longer being designed simply as a place where a transaction happens.
It is becoming part of the retailer’s entire economic infrastructure.
Retailers Are Not Choosing Stores Over E-Commerce
The biggest mistake in the physical-retail comeback story is treating online and offline as competing channels.
Large retailers increasingly operate them as one system.
Walmart is a useful example. In fiscal 2026, its global e-commerce sales grew 24%, while Walmart U.S. comparable sales increased 4.3%. Importantly, Walmart says its e-commerce growth was driven primarily by store-fulfilled pickup and delivery.
That changes the economics of a store.
A traditional store might have been evaluated primarily through sales per square foot. An omnichannel store can generate value through several routes:
in-store purchases + online orders fulfilled from the store + pickup orders + returns + customer acquisition + inventory availability
Walmart’s international business illustrates the scale of this infrastructure. As of January 2025, Walmart International had 5,566 stores across 18 countries and approximately 2,900 pickup and delivery locations. Its international segment generated $121.9 billion of net sales in fiscal 2025.
The physical network therefore does something an online marketplace cannot do by itself: it puts inventory geographically closer to customers.
The store is increasingly becoming a node in the digital network, not an alternative to it.
Amazon’s Store Strategy Reveals What Changed
Amazon provides perhaps the clearest example of why the physical-store story is more complicated than a simple comeback.
In 2026, Amazon announced that it would close its Amazon Go and Amazon Fresh physical stores because those formats had not yet produced the distinctive customer experience and economics needed for large-scale expansion.
But at the same time, Amazon announced plans to open more than 100 additional Whole Foods stores over the next several years.
Whole Foods already has more than 550 locations, and Amazon says the business has generated more than 40% sales growth since Amazon acquired it in 2017. Amazon also said Whole Foods was seeing record customer traffic and comparable-store growth ahead of the broader industry.
The important point is not that Amazon is “returning” to stores.
It never really left physical retail.
Instead, Amazon is reallocating physical-retail investment toward a format with an established customer proposition and economics it believes can scale.
That distinction matters for investors.
The question is no longer whether stores work. The question is which store formats generate sufficient returns on capital.
Amazon’s decision to close one format while expanding another is evidence that physical retail is becoming more selective, not simply larger.
The Most Valuable Store May Be the One That Does More Than Sell
A store’s economics become more interesting when its revenue is no longer limited to customers who physically walk through its doors.
Consider fulfilment.
If an online customer lives five kilometres from a retailer’s store and the product is already sitting on that store’s shelf, the retailer can potentially fulfil the order without moving inventory from a distant warehouse. The store therefore becomes part of the last-mile network.
Walmart explicitly says its e-commerce sales contribution to comparable sales includes digitally initiated transactions, including omnichannel transactions fulfilled through stores and clubs.
This creates a different way to think about retail productivity.
A store selling $10 million directly to customers is one business.
A store generating $10 million of in-store sales while also helping fulfil another $5 million of digital orders is economically different, even if the second $5 million does not appear as traditional “store sales.”
This is why retailers increasingly need to evaluate stores using total customer economics, rather than only four-wall sales.
The physical location can influence online conversion, delivery speed, returns, inventory availability and customer retention.
The store is becoming both a retail asset and a logistics asset.
Physical Retail Still Wins Where the Product Needs to Be Experienced
There is another reason stores remain relevant: some purchases benefit from physical interaction.
Fashion, beauty, furniture, sporting goods and premium products are not purely information problems.
Customers may want to touch a material, try a garment, test a product, compare sizes or speak with an employee before buying.
Inditex demonstrates how physical and digital can reinforce each other. The company generated €39.9 billion of revenue in 2025, up 3.2%, with net profit reaching €6.2 billion, up 6%. During the year it carried out more than 400 store openings, extensions or full refurbishments, while also investing in its e-commerce platforms and logistics infrastructure.
At the end of the year, Inditex had 5,460 stores across 97 markets.
That is important because Inditex is not treating digitalisation as an argument for shrinking the physical network.
Instead, it is upgrading both.
The store becomes part of the brand experience, while the digital channel provides convenience, discovery and additional assortment.
For retailers selling products where experience affects conversion, a store can therefore create value that a product listing cannot fully replicate.
Retailers Are Also Making Stores Smaller and More Focused
The comeback does not mean retailers are simply rebuilding the giant stores of the past.
The format itself is changing.
Amazon’s Whole Foods Market Daily Shop is an example. Amazon says the smaller format currently has five locations, with another five planned by the end of 2026. The concept focuses on grab-and-go meals, coffee and everyday essentials rather than replicating the full supermarket footprint.
Smaller stores can potentially address a different economic equation:
lower footprint + closer customer proximity + narrower assortment + faster shopping + easier fulfilment
That matters because retail real estate is expensive and consumer behaviour is becoming more fragmented.
McKinsey’s 2026 analysis argues that stores will remain important even as AI changes how consumers discover and purchase products. Its conclusion is that store visits may become less frequent but more valuable, forcing retailers to define a specific “mission” for each location.
That could mean one store is designed for convenience, another for discovery and another primarily for fulfilment.
The future physical network may therefore contain fewer generic stores and more specialised formats.
The Numbers Show That Physical Retail Is Still a Massive Business
The scale of existing physical retail makes its disappearance economically unrealistic.
Costco ended fiscal 2025 with 914 warehouses worldwide, up from 890 a year earlier. It generated $269.9 billion of net sales and $8.1 billion of net income during the year.
Its physical footprint is not a leftover from the pre-internet era. It remains central to a business model built around membership, large-format stores and high inventory turnover.
Lululemon provides another example from a completely different category. In fiscal 2025, revenue increased 5% to $11.1 billion, while the company added 44 net new company-operated stores, ending the year with 811 stores. International revenue increased 22%, while comparable sales increased 2%.
Nike’s results show why the relationship between channels is becoming more nuanced. In fiscal 2025, Nike Direct generated $18.8 billion, down 13%, while Nike-owned store revenue was flat and Nike Brand Digital declined 20%.
These examples point in the same direction for different reasons: physical stores remain economically relevant even as digital channels expand.
The question is increasingly about productivity, format and integration, rather than physical presence itself.
The New Retail Metric Is Not Store Sales
This is ultimately why physical stores are making a comeback.
The store has acquired additional jobs.
It can acquire customers, display products, hold inventory, fulfil online orders, process returns, provide services and reinforce brand identity.
That makes the old retail equation incomplete.
Old model:
- Store → customer → transaction
New model:
- Store → customer → transaction
- Store → online order → fulfilment
- Store → product discovery → online purchase
- Store → return → repeat purchase
- Store → inventory → faster delivery
This does not mean every store will be profitable. Rent, labour, inventory and capital expenditure still make physical retail expensive. Amazon’s decision to close its Go and Fresh stores is a reminder that a physical footprint without a compelling economic model can destroy value.
But the opposite is also true.
A well-located store can create value across multiple channels.
That is why retailers are increasingly investing in better stores rather than simply more stores.
Physical Retail Is Not Coming Back. It Is Being Rebuilt.
The biggest misconception about the retail industry is that e-commerce and physical stores represent two competing futures.
The numbers suggest something else.
Global e-commerce sales are expected to rise from $6.42 trillion in 2025 to $7.89 trillion by 2028. Yet offline retail is still expected to account for approximately 73% of global retail sales in 2028.
The physical store therefore isn’t disappearing as digital commerce grows.
Its purpose is changing.
The retailers investing most aggressively in stores are increasingly treating them as part of a larger system: sales channel, showroom, inventory pool, fulfilment centre, service point and customer-acquisition engine.
Amazon’s decision to close one physical format while opening more than 100 Whole Foods stores shows that retailers are becoming more selective about where physical capital goes.
Walmart’s store-fulfilled e-commerce growth shows that physical infrastructure can directly support digital growth.
Inditex’s simultaneous investment in stores, e-commerce and logistics shows that the strongest retail models may not be choosing between the two channels at all.
The real comeback, then, is not of the old-fashioned store.
It is of the economically productive store.
In the next phase of retail, the winning question may not be “How much did this store sell?”
It may be:
“How much business did this store make possible?”
