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Retail is in yet another period of upheaval: A trade war is roiling consumers, enabling inflation and fueling speculation about a recession. Yet in many ways the industry has also entered a period of stability, according to a report Monday from commercial real estate firm Colliers.
This is because e-commerce is no longer the destablizing force it once was.
In the last 15 years, the value of in-store sales declined just once, in 2020, amid pandemic lockdowns, according to research from two U.S. Colliers analysts, Anjee Solanki, national director of retail services and practice groups, and Nicole Larson, manager of national retail research. Physical stores still account for over 76% of core retail sales and, while e-commerce’s share continues to grow, the once-torrid pace of that growth has eased, they said.
“The real retail reality is that while headwinds like tariffs and store closures persist, the disruption from e-commerce appears largely behind us,” Solanki said by email.
One reason for this is the realization on the part of direct-to-consumer brands — including some that at one point achieved unicorn-levels of investment — that stores are a critical channel, whether they run them or sell via wholesale to other retailers. Even some established brands like Nike have had to relearn the value of partnering with legacy retailers.
Another is that many traditional retailers knocked off balance by the rise of Amazon, and online commerce in general, long ago established their own e-commerce. In fact, with consumers expecting to be able to make purchases and returns on or offline, retailers running stores are often at an advantage, according to Colliers. In 2024, stores were integral to about a third of online retail sales via fulfillment like pickup or ship-from-store — a milestone reached a year earlier than those researchers predicted — and in five years that is set to rise to over 36%.
Brick and mortar continues to dominate
% of core retail sales by channel
Stores have also emerged as an important channel for returns, which have increased due to e-commerce. Returns were projected to land at $890 billion in 2024, equal to roughly 17% of retailers’ annual sales, according to a report from the National Retail Federation. Whether to handle returns in stores, outsource to a third party or offer a hybrid of the two “depends on a retailer’s format and priorities,” Solanki said.
“Returns are a key part of the omnichannel experience but handling them in-store requires balancing customer engagement with operational efficiency,” she said. “While in-store returns can drive additional sales and reinforce brand control, they also take up valuable space, potentially limiting revenue per square foot. Outsourcing to third party logistics providers may reduce costs and free up store resources, though it sacrifices direct customer touchpoints.”