Research: What Physical Retail Stores Deliver in a Digital Economy

Insight summary

• •Physical retail stores are experiencing growth despite e-commerce expansion, with companies like Warby Parker and Ulta Beauty rapidly opening new locations in 2025 and 2026.
• •Multi-brand retailers face challenges as they cannot rely on exclusivity to attract customers and must avoid showrooming where consumers buy elsewhere.
• •A 26-month study on a multi-brand electronics retailer shows large, experience-centric stores significantly increase total net revenue by over 21%, while smaller convenience-centric stores do not.
• •Store openings reduced nearby online sales by 8-11%, but large stores offset this with an overall increase in combined channel revenue of up to 27.5%.
• •Large stores drive growth mainly by increasing purchase frequency among existing customers rather than new customer acquisition.
• •Effective physical store investment requires aligning store role, format, category benefits, and operational capabilities to maximize total customer value across channels.
• •Retailers should assess stores based on total business growth and customer engagement rather than isolated channel performance or sales shifts.