A new report from McKinsey & Company via ICSC summarizes that AI is changing not just how people shop, but why they visit stores at all.
As AI takes over more of the routine parts of shopping such as product searches, price comparisons, and even reordering everyday items, consumers are becoming more selective about when they shop in person. Physical stores are no longer just places to buy things; they are becoming destinations built around either convenience or customer experience.
Convenience-oriented retail focuses on speed, efficiency, and fitting seamlessly into everyday routines. For example, grocery-heavy stores that also carry household items or gifts (Trader Joes, Whole Foods, Fred Meyer, Haggen) that allow consumers to accomplish multiple errands in one stop. Coffee chains releasing the inline model and only keeping or expanding with drive-thru locations (Woods, Starbucks, Mercury, Dutch Bros). Retailers incorporating curbside pick-up or advanced online ordering thrive on accessibility, reliable inventory, fast pickup options, and proximity to daily traffic patterns.
Conversely, there is also a demand for experience-oriented retail, especially among younger consumers. Examples include vibrant, mixed-use lifestyle districts along waterfronts and urban cores that draw visitors because they offer more than just shopping. These environments combine retail with restaurants, entertainment, public gathering spaces, local makers, events, and walkability. Consumers visit not only to buy products, but also to spend time, discover something new, and connect socially.
The report argues that retailers and landlords can no longer rely on generic store formats or traditional shopping centers. Instead, every location needs a clear purpose. Some will function as highly efficient convenience hubs, while others will focus on discovery, engagement, and creating a sense of place.
For retail real estate owners, this creates both a challenge and an opportunity. Shopping centers that simply provide retail space may struggle, while properties that intentionally curate tenant mixes around convenience or experience are more likely to remain relevant. Grocery-anchored neighborhood centers may continue to perform well because they align with daily routines, while experiential districts that combine dining, wellness, entertainment, and community programming may capture more discretionary spending and longer visit times.
AI is not replacing physical retail, but it is raising the expectations for what physical retail needs to deliver. The retailers and property owners that adapt fastest to these changing consumer behaviors will be best positioned for the next era of shopping.
Source: https://www.icsc.com/news-and-views/icsc-exchange/shopping-in-the-age-of-ai
