The Retail Sector: Designers’ Perspective: Experience is currency for brick-and-mortar retailers – Jan 2026
By Jessica Chevalier
The retail sector has been an evolving terrain for several years. 2025 was no exception, and 2026 is expected to bring additional alterations to the landscape. Amid these major transitions-which include significant brands shuttering, bottoming consumer sentiment and seemingly unrelenting price increases-what is the role of a brick-and-mortar store as part of a brand’s portfolio? It all comes down to the experience, say design experts.
“Customer experience has become the new currency for retailers,” says Robert Ruscio, president of Ruscio Studio, which specializes in retail work. “A certain level of experience must be created. A decade ago, there was a lot of concern about making online shopping seamless with physical stores. There was a battle between the two, with one cannibalizing the other, but today, many retailers have narrowed that gap with more integration between online and physical. They understand that it’s beneficial to have both channels working in sync. The pair can be a powerful tool.”
While some believe that online shopping is the way of the future, Ruscio points to one retail client brand, born online during Covid and having built a strong online presence, that is now expanding into physical stores. “This is a reverse from what we have seen,” says Ruscio. “The challenge is to make sure that whatever experience the shopper had online shows up in similar touchpoints within the store.”
In this effort, the flooring specified plays a significant role.
THE RETAIL LANDSCAPE
National Retail Federation (NRF) has forecasted that, when the year is tallied, retail sales during 2025 will have grown from 2.7% and 3.7% year over year to between $5.42 trillion and $5.48 trillion, with brick-and-mortar experiencing departures that felt consequential followed by expansions that filled some of those vacated spaces.
While the market saw some major retailers bite the dust in 2025, others were actively growing their footprints. According to The Wall Street Journal, in Q3 2025, retailers occupied more square footage than they vacated, reporting, “Retailers moved into 5.5 million more square feet than they vacated in the third quarter, according to real estate data firm CoStar. That marked a notable turnaround from the first half of the year, when demand for store space turned negative because of chain-store bankruptcies, a pullback by shoppers and tariff turmoil.
“Retailer bankruptcies have since slowed, and appetite for empty space was strong again in the third quarter, particularly from discount retailers such as Dollar General, Dollar Tree, Aldi, Burlington Stores and 7-Eleven.”
However, despite the strength of Q3, “the market is on pace to end 2025 with retailers having vacated more space than they occupied for the first time since 2020,” said the Journal. “CoStar sees this as a temporary blip and expects the number to turn positive again next year, forecasting that retailers will occupy 4.7 million more square feet than they vacate quarterly in 2026.”
In 2025, retail construction remained near historically low levels with the national vacancy rate at 4.3% in Q3, according to CoStar.
POCKETS OF OPPORTUNITY
As we have reported for several years, the middle of the retail market is struggling more than both value and high-end retailers. While this may speak to large-scale economic trends, like the shrinking of the middle class, it also speaks to a new breed of consumer, says Ruscio, noting, “Today’s consumer cross-shops between these two different types of stores. They may go to Walmart for groceries in the morning and buy the latest Nike Air Jordan sneakers in the afternoon. It used to be that consumers who shopped at the high-end stuck to that. Today, it’s what is in the middle that struggles. The retailers doing well are either offering value products and discounts or aspirational products that the consumer will save up to buy.”
Ryan Benson, senior designer in IA’s retail studio, reports that some contemporary brands are currently finding their footprint in the current market, and that can mean rolling out a new strategy. “A pattern we have seen for a while now is brands redeploying-implementing a new program or shrinking their footprints,” he says. “Projects are also more hospitality related today with some component that is pulling people in, maybe food and beverage or a showroom. The middle of retail has changed significantly, and those doing well in that space are brands that connect with consumers on a higher level, those that are not just transactional.”
With these new strategies come new spaces. Reports Melissa Gonzalez, principal with MG2 and founder of MG2 Advisory, which provides strategy and insights for DTC retail brands, national retailers and mixed-use developers, “A lot of specialty retailers are active right now, but also some really established brands are taking on second-generation spaces and asking, ‘What aspects can we affect to elevate the condition of the space and make it our own?’ Within our group of commercial experience, we have work with boutiques but also full-line department stores. It’s currently a healthy mix.”
Benson reports that the health and wellness space is experiencing strong growth and notes a lot of projects in traditional food and beverage lately. However, he explains that “retail banking is currently our bread and butter. Banks are trying to figure out how to evolve with the consumer. We all have a banking app, so what space do the physical banks need to hold for customers?”
“Higher-end shopping centers are doing very well,” Dallas Branch, principle with Perkins Eastman, notes. “Those are the A+ type projects. The others are going through typical renovation, and some are trying to figure out what to do. There is lots of work in well-located strip centers: some renovating to add more value, some ground up. Lots of developers are looking to add residential or hotel space. In addition, airports are adding a lot of retail.” Over the next couple of years, Branch expects more big box renovation/construction activity, as they develop new approaches to serving the customer.
EXPERIENCE & CONNECTION
Experience builds connection. It’s that simple.
“A big part of pulling people in starts with building a brand that resonates with the consumer emotionally through product or story that feels applicable to daily life,” says Benson. “The digital environment has to underpin the physical by getting people in the door and having them touch and feel to create memory and make people come back.”
“We build connection by creating emotional touchpoints through flooring,” says Eladio Victoria, senior project designer with MG2. “We are combining the floor and ceiling to create some hot spots or experiential locations within the retail space and also with a connection to the community, trying to evoke a presence with flooring using local materials so the consumers understand the space they are in.”
“All the stores have downsized so much,” says Branch. “They are not carrying the amount of product they used to, so it is about experience. Everyone can buy clothes online, but people want to go into a store and stay longer. Look at Dick’s stores, which are all about the experience. They have putting greens, batting cages, golf simulators. It’s all about getting people in.”
DESIGN TRENDS
“We had a presentation by our in-house futurist team about current trends,” says Benson. “I was really interested in how, with AI and technology changing so quickly, people are looking for more personal and less perfect experiences. What we see from a visual standpoint is a move from perfectly-put-together, minimalist and glossy towards patina, more human, more color and texture.” Rather than a stark box of restraint, retailers seek to create spaces that feel more comfortable and lived in.
“Flooring is a great storytelling tool,” says Gonzalez. “It guides consumers through the journey, and can be used to evoke different emotions-calm, energy, grit.”
Victoria notes that individuality is prized in retail environments, even among brands with multiple locations. “A lot of brands are wanting to express where they come from, from cultural aspects to locality, so we are referencing local activities to make the storytelling of each location different,” he says.
Biophilia is another aspect that designers’ clients request. Biophilic elements that help create a sensory-rich environment while also being easy to manage functionally are particularly desirable. Natural materials are preferable by many, unless they require a maintenance program that is untenable for the client.
Modularity is another important element in the retail space. As technology and AI catapult change, that impacts how stores merchandise. A location may, for instance, want to transform in response to a TikTok trend or create a display responding to a particular cultural touchstone. Because the frequency of these trends has sped up, creating storefronts that can easily respond is key, and having flooring that supports these changes is highly important.
Color-wise, the story is also changing. “I am seeing a lot of bright and vivid hues in the new concept stores that come from Asia or Europe,” says Ruscio. “There seems to be either a lot more color in the concepts or more muted color palettes with earth tones, dominated by beige, cream, avocado, terracotta. Sharp contrast is out.
“We were seeing retail environments made as neutral as possible to allow the merchandise to be the star. But today we are moving away from that-and with good reason: if the trend in store design today is about creating customer experience, then the merchandise is secondary and what we want is for there to be experience-first, whether a consumer is discovering a brand or buildings ties with it.”
THE EVOLVING THIRD SPACE
“The aspect of the store as a third place is not new. Coffee shops have been that, but today we are seeing it more integrated into the retail experience,” says Gonzalez. “Insights on Gen Z and Gen Alpha show that they are craving community, and culture is table-speak for those generations. They are yearning for wellbeing and also time to disconnect from technology, so we are seeing listening spaces and lounge spaces that achieve that within the flexible, modular, popup-ready environment.”
The “third space” is a location, neither home nor work, where people congregate and connect. What the quintessential local lunch spot was in days gone by, Starbucks was able to capitalize on as a brand.
However, the space and its use have to feel like a natural fit.
“[In 2017,] Capital One added cafes, and lots of companies went that way for a while,” explains Benson. “After the pandemic, consumers wanted something that felt comfortable but without striving too hard, something more authentic.” Striking the balance between orchestrated and authentic may be best achieved by staying true to what a brand is and what it offers. For example, a paint and sip event feels authentic for an art store but less so for an apparel purveyor.
“People are yearning for connection today,” notes Benson. “Locations that aren’t solely transaction-based are a great way of connecting. It has to be about more than buying. There has to be a plus on top of the transaction. You have to offer something different.”
Some of this desire for connection stems from the fact that we spend so much of our time online today, where there is an overwhelming amount of choice. The fatigue of choice both encourages a desire for real-world connection as well as, in some cases, more curated collections of products.
In addition, the logistics of online buying can be frustrating, “When you buy online, shipping is not as fast as it once was,” says Benson. “Return policies are not as good. There are more pain points and part of that is by design. It offers a good opportunity for brick-and-mortar brands to reassert themselves.”
This effort is likely to pay off if brands handle it properly. “It’s a continuum of storytelling,” explains Gonzalez. “Stores aren’t in isolation. Brands can leverage their online resources. Storytelling is outside-in: starting with the windows and appealing to passersby. The elements of the ceiling and floor have to draw shoppers not just to the windows but to the back of store.”
PRODUCT PREFERENCES
Several of the designers interviewed praised the larger flooring formats available today, especially in porcelain. “Creating stories with paving has calmed down,” says Branch. “We are seeing more simplicity in paving, cleaner and calmer, not a lot of color. A lot of large-format products are being used.” Branch uses porcelain almost exclusively in the retail environment. For his Fanatics Sportsbook project at FedEx Field in DC, he specified Tilebar’s Silkwood in the color Almond.
“We often will look at porcelain tile,” says Ruscio. “It is a preferred material, but I have to admit we look at vinyl flooring, as well. Through technology, it has evolved to offer various patterns and textures. You can get creative with vinyl strip flooring. It is appreciated by the retailer because it’s durable, has good aesthetics and cost-wise is a better value than porcelain floor tile. I do feel that it has become a more viable option quite often for many different stores. We are seeing a lot of short-term leases today, and vinyl is one of the go-to flooring materials in that case.”
Benson’s flooring specifications vary based on the client’s needs, with lease length a part of the equation. “Leases are shorter than they used to be, and we have to think about the lifecycle of the product,” the designer notes. “Brands are moving more quickly today. Leadership is changing; the market is changing. The visual direction today may not be what they want tomorrow.”
“We gravitate towards items that hold up well, modern LVT iterations that are good at looking like real wood when engineered wood might not be in budget or suited to the wear level,” Benson adds.
In both soft surface and porcelin, Benson points to the proliferation of products on the market. Finding the right look, texture and format isn’t the challenge it once was. “We use a lot of large-format applied to large areas instead of poured floors. Porcelain has gotten so much better at mimicking looks,” he notes.
“I will use soft surface in special spaces-like amenity zone seating areas to create connection,” says Branch. “These spaces are hospitality driven, as so many things are. The carpet tile has to be damage- and vandalism-proof.” For flooring specifications, Branch’s approach is to “start with natural” and work his way down. He uses Schulter products for boundaries and keeps the overall palette very neutral.
Regarding poured floors, he notes he doesn’t use them like he used to, adding, “Twenty years ago, we used a lot of terrazzo. We would create stories with strong branding through patterns. The cost has slowed that down, except for an airport or in an accent area. I use polished concrete on certain projects today-less that I used to-but the project has to have that certain look and feel.”
For luxury retailers, Victoria points to the use of more monolithic-look terrazzo and large-scale porcelain. For outdoor and lifestyle projects, he likes microcement, refinished concrete, carpet tile (preferably carbon-negative) and resilient (preferably PVC-free). “We are seeing more monolithic looks-flooring and walls with the same colors or textures,” he notes. “Oftentimes in retail, we will do a monolithic look with area rugs to soften space, focusing spaces through rugs and textures. Sometimes these rugs are inlaid and sometimes they are a combination of varied area rugs. Terrazzo is a popular look in porcelain. A lot of concrete use is just about polishing what’s there.”
Gonzalez appreciates vendors visits and lunch-and-learns as a means to keep atop the attributes of the many flooring options today. She often likes to maintain optionality in a project proposal, based on a range of price points and availability, with the ability to maneuver important in flooring specification, and having broad knowledge of products on the market is helpful with this. “We often have to be creative with flooring, but that’s the beauty of being a designer,” she says.
CONSUMER SENTIMENT
As of December 2025, The Wall Street Journal reported that consumers were “dour” and “cranky” but continuing to spend, griping about the cost of goods and seeking value but swiping their cards nonetheless.
And, in fact, Thanksgiving weekend confirmed that, according to NRF, with a record 202.9 million consumer shopping during the five-day holiday weekend, “Consumers turned out both in-store and online throughout the five days. A total of 129.5 million consumers shopped in-store, up 3% from 126 million in 2024. Online saw 134.9 million shoppers, up 9% from 124.3 million last year.”
After all is said and done, the organization expects that holiday sales will surpass $1 trillion for the first time ever, up 3.7% to 4.2% over 2024. “American consumers may be cautious in sentiment yet remain fundamentally strong and continue to drive U.S. economic activity,” NRF president and CEO Matthew Shay says. “We remain bullish about the holiday shopping season and expect that consumers will continue to seek savings in nonessential categories to be able to spend on gifts for loved ones.”
Coming off the year of the tariff, it makes sense that consumers are uneasy about what they are paying for goods. But following the inflation surge of 2021 to 2023, it may be that consumers are somewhat desensitized, and the wait-it-out strategy has seen its time come and go.
Of course, some at lower incomes don’t have the privilege of brushing off the higher prices. For these Americans, the increased price of eggs and imported toys equate to fewer boxes under the tree.
AI IN RETAIL
One factor set to have a greater influence on the retail sector is artificial intelligence (AI), which can be used in a variety of ways, such as to guide customer decisions, assist with ordering and inventory, reduce waste, and better merchandise a store location.
On the customer side, having an AI guide that can help assist with decision-making can lead to fewer returns and less frustration, which also has benefits for the retailer. While this type of assist does seem particularly well-suited for online shopping, it will be interesting to see how retailers apply that in-store, which astute retailers have done and will continue to do.
A sharp AI system can also provide highly personalized and curated suggestions to consumers based on ordering history, sizing, color palettes and the like, maximizing a consumer’s satisfaction with a brand and minimizing flops that erode a consumer’s connection.
“Speed, convenience and personalization are top priorities for retail customers, especially the many people who search for and purchase goods online,” says Oracle NetSuite’s Lisa Schwarz, senior director of global product marketing. “But retailers face major challenges in meeting these expectations, particularly when it comes to personalized shopping experiences in the moment.
“New and evolving artificial intelligence (AI) technologies promise to help retailers overcome these challenges,” Schwarz adds. “AI-powered solutions are helping to improve operations throughout the retail value chain, beginning with inventory management and logistics, progressing to customer analytics and forecasting, and reaching further to include shopper engagement and personalization. With so much to gain, it’s no surprise that 40% of retail executives say their businesses use some form of intelligent automation.”