Brick-and-Mortar Retail’s Enduring Role in the U.S. Economy (2025)

Despite the relentless growth of e-commerce, physical retail stores remain the backbone of U.S. retail in 2025. Even as online sales climb, the vast majority of American retail spending still occurs in brick-and-mortar stores. Excluding restaurants, auto dealerships, and gas stations – categories less relevant to online shopping – physical retail channels continue to dominate retail sales and drive economic activity.

Physical Stores Still Dominate U.S. Retail Sales in 2025

Store-based retail sales in the U.S. are forecast to grow modestly (about 1.5% in 2025) while holding around a 76% share of total retail sales.

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Physical retail’s market share remains robust. Roughly three-quarters of U.S. retail spending (excluding cars, gasoline, and restaurant meals) still occurs in physical stores. Government data corroborates this dominance. In the second quarter of 2025, e-commerce accounted for only about 22% of total retail sales when focusing on categories consumers typically buy online. That means nearly 78% of relevant retail dollars were spent in person. In fact, consumers spent over $1 trillion more in physical stores than online in Q2 2025. Far from being a relic, brick-and-mortar retail is critical to overall retail revenue and continues to grow alongside digital channels.

Core retail sales (excluding autos, gas, and restaurants) will total roughly $5.2–$5.3 trillion in 2024. By comparison, U.S. e-commerce sales are about $1.5 trillion, or ~15–16% of total retail, leaving well over $5 trillion flowing through physical stores.

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Put simply, stores are still where most shopping happens. Industry analysts note that even in 2025, about 80% of all shopping is done in-store. This ongoing dominance underpins millions of jobs and is a major contributor to GDP (retail is ~20% of U.S. GDP). Brick-and-mortar retail’s sheer scale ensures it will remain a pillar of the economy for the foreseeable future.

Shopping Malls: Struggle or Successful Evolution?

Shopping malls in America have faced well-documented challenges, but the narrative is mixed in 2025 – some malls are struggling while others are thriving through evolution. Data tells a two-sided story: overall mall traffic is inching up, yet many weaker malls continue to decline.

In the first half of 2025, average weekly foot traffic at malls was up about 2% from 2024, a positive sign of the post-pandemic recovery. However, mall visitation is still well below pre-2019 levels in many places.

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Analysts project that as consumer habits shift, 25% of the nation’s 1,200 malls could close by 2028 – 1 malls that have been losing tenants. Indeed, from 2016 through 2024, a net 18,730 stores in U.S. malls closed, reflecting ongoing consolidation in weaker locations.

Yet top-tier malls are defying the doom-and-gloom. The best performing malls – typically upscale, experience-rich centers in strong markets – are not only surviving but thriving. The busiest U.S. malls now see higher foot traffic than before the pandemic.

The top malls averaged 12% more visits than in 2019 and boast occupancy rates around 95%.

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These premier shopping centers have reinvented themselves with fresh retail mixes, entertainment, dining, and even co-working or residential elements. They continue to draw crowds, including younger shoppers: about 73% of Gen Z consumers visit a mall at least once a month, often treating it as a social hub (over 80% say they go primarily to socialize). Overall, shopping centers (malls, outlets, and open-air centers) still capture roughly a quarter of U.S. household retail spending—about 24.3% of retail dollars, or $2.65 trillion in 2024.

This underscores that while weaker malls are repurposing or closing, many shopping centers remain central to how Americans shop. The mall sector is evolving, not extinct – successful malls are adapting with new tenants and uses, and even struggling properties are often being redeveloped into mixed-use “town center” concepts. In summary, reports of the mall’s death are greatly exaggerated: 2025 finds the mall landscape bifurcated between challenges at lower-tier centers and a resilient, even booming, outlook for top-tier retail destinations.

Not Offline vs. Online, But a Hybrid Ecosystem

It’s a mistake to view retail as a winner-takes-all battle between e-commerce and brick-and-mortar. In reality, online and physical retail form an overlapping ecosystem that often complements and reinforces each other. Most consumers are omnichannel shoppers who blend the digital and in-store experiences.

73% of retail shoppers use multiple channels during their purchase journey, while only a small minority shop exclusively online (7%) or in stores (20%).

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In practice, this means a typical consumer might research products online, visit a store to see them in person, order online for home delivery, or buy online and pick up in-store. Retailers have learned that integrating channels drives greater sales: when a new physical store opens, online sales in that region actually increase thanks to the halo effect.

Opening a physical store led to an average 6.9% lift in online sales in the surrounding marketon average . For emerging brands, the boost can be even higher (online sales jumped by ~14% when they added their first stores).

International Council of Shopping Centers

Far from cannibalizing each other, e-commerce and stores amplify one another – a strong digital presence can drive people to stores, and store visibility increases brand awareness and web traffic.

Omnichannel strategies are now the norm in retail because they cater to how people prefer to shop. For example, buy online, pickup in store (BOPIS) and curbside pickup have become standard offerings, blending convenience with immediacy. Over one-third of Americans have regularly used services like BOPIS, and nearly 67% plan to continue using these omnichannel options.

Meanwhile, many shoppers use mobile apps while browsing in-store – to read reviews or compare prices – illustrating that the line between online and offline is blurred. Retailers are investing in tech to bridge these worlds: apps that show store inventory, digital coupons for in-store use, and augmented reality tools to visualize products at home.

The payoff is a more engaged customer and often a bigger basket. Industry data consistently shows that omnichannel customers spend more on average than single-channel customers, as each touchpoint — physical or digital — reinforces the other. In short, the future of retail isn’t online or offline, but both. Winning retailers are those orchestrating a seamless experience across channels, meeting customers wherever they choose to shop.

Case Study: Kohl’s and Amazon Returns – Turning Foot Traffic into Sales

A vivid example of omnichannel thinking is Kohl’s partnership with Amazon to handle Amazon product returns in Kohl’s stores. At first glance, this is unconventional – a brick-and-mortar retailer facilitating returns for an online giant – but it has proven to be a savvy strategy to boost Kohl’s store traffic and sales.

Here’s how it works: Amazon shoppers can bring their return items to any Kohl’s store (a service now offered at most Kohl’s locations nationwide). Kohl’s processes returns for free on Amazon’s behalf, a convenience for Amazon customers. In return, Kohl’s gets something invaluable: additional foot traffic. Many people who might not have visited a Kohl’s otherwise are now walking into the store to drop off returns. The results have been impressive.

Kohl’s stores that accepted Amazon returns saw an 8.5% increase in customer traffic compared to other stores.

International Council of Shopping Centers

Moreover, Kohl’s disclosed that it has processed millions of Amazon return transactions in-store, which brought in millions of new customers—and, crucially, many of those return customers ended up shopping at Kohl’s. In fact, the company noted that a significant portion of people coming in for Amazon returns were first-time or lapsed Kohl’s shoppers (nearly 60% were new or infrequent Kohl’s customers in one test). This indicates the partnership is not just recycling existing traffic but truly expanding Kohl’s reach to new audiences.

Kohl’s clever incentive to convert returns into sales: when you bring an Amazon return to Kohl’s, the store often rewards you on the spot with a Kohl’s coupon (usually 20–25% off) that’s valid for that day. This coupon strategy is highly effective – once customers have returned their Amazon package, the coupon entices them to browse Kohl’s offerings. Many end up making an impulse purchase or picking up an item they needed, effectively turning a return into a new sale.

It’s a win-win: the customer enjoys a discount, and Kohl’s gains revenue and potentially a repeat customer. By integrating an online competitor’s service into its own stores, Kohl’s has created a brick-and-mortar touchpoint that drives incremental sales and customer engagement.

Retail analysts point to this as a prime example of omnichannel thinking – leveraging the interplay between digital and physical retail to mutual benefit. Kohl’s, which generates roughly 30–35% of its revenue through digital channels, understands that its physical stores can serve as convenient hubs in the e-commerce ecosystem. The Amazon returns initiative shows Kohl’s embracing its stores not just as sales outlets but also as service centers that boost overall brand traffic.

Conclusion

In 2025, brick-and-mortar retail is far from obsolete – it is evolving and co-existing with e-commerce in a symbiotic relationship.

• Physical stores still account for the lion’s share of U.S. retail activity, anchoring the economy with trillions in sales.
• Shopping malls, once thought to be dying, are reinventing themselves. While many weaker malls are closing or being repurposed, the strongest malls are thriving with high occupancy and growing foot traffic.
• And critically, the retail landscape is no longer a simple online vs. offline rivalry. Instead, a blended omnichannel model is the new reality – consumers expect seamless integration between websites, apps, and stores.

Retailers who leverage the strengths of both physical and digital channels are reaping rewards in customer loyalty and sales growth. The case of Kohl’s and Amazon returns illustrates how even traditional retailers can innovate by turning digital disruption into an in-store opportunity.

For business and marketing professionals, the takeaway is clear: physical retail remains a cornerstone of strategy in 2025. Successful brands treat their stores not as relics of the past but as essential assets that complement their digital presence. Brick-and-mortar locations provide tangible experiences, immediacy, and service that online shopping alone cannot – and these strengths, combined with technology, can enhance the overall customer journey.

As consumers flit between online and brick-and-mortar, the retailers who thrive will be those who meet them at every turn. In the United States, the store is not only alive and well—it’s an integral part of retail’s future. The continued strong performance of physical retail channels confirms that brick-and-mortar is here to stay as a critical driver of the U.S. economy in 2025 and beyond.