AI is making physical stores more important, not less

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The customer’s always journeying: Retail, like life, is about the journey—the customer journey, that is. In our State of Stores report, we dive into how retailers need to use every tool in their kit (including the POS) to meet the ever-expanding expectations of today’s shoppers. Read it here.

Physical stores aren’t just shopping destinations anymore, but are actually transforming into fulfillment hubs and support systems for both digital and physical commerce. Or at least that’s what Collier’s new report on how AI is redefining retail and real estate in 2026 found.

Per the report, about 50% of consumers looked to AI for product recommendations while 75% said AI “significantly influences” their shopping decisions.

Moreover, the share of consumers using AI agents is expected to surge from 19% today to 46% by the end of 2026.

At the same time, 1 in 4 online orders are being fulfilled by a physical store, and 85.1% of US retail sales are coming via stores, with 71% of retailers saying they’ll expand their brick-and-mortar footprint this year.

Retailers that embraced in-store AI early are seeing store sales grow 79% faster and BOPIS performance rise 34% more than competitors that have been slower to adopt the technology.

“One of the biggest misconceptions around AI is that it reduces the importance of physical retail,” Nicole Larson, senior manager of National Retail Research at Colliers, said in a statement. “In reality, retailers are expanding footprints and redesigning stores as physical locations are becoming even more critical to fulfillment, customer engagement, and operational efficiency.”

Some retailers are already clued into these insights. A recent Retail Brew report, for instance, highlighted how brands like The Vitamin Shoppe and Tecovas have introduced AI-powered touchscreens and apps to make their in-store experience better.

Meanwhile, another report by McKinsey and ICSC found that by 2030, AI-driven shopping experiences could fuel as much as $1 trillion in retail spending in the US.