With the expansion of the use of the Internet for online ordering and buying of products over the past twenty-five years (aka e-commerce), there has been a flow of debates, discussions and projections on the economic sustainability of physical stores. The market is now much more complex, entailing a variety of online, offline and mixed retailers with different degrees of experience (e.g., whether they originate from the digital or physical spheres). One thing, however, should be made clear: brick-and-mortar stores are not ‘doomed’, and there is no need to talk solemnly about their destiny or demise. A recent research report by McKinsey & Company in collaboration with ICSC shows that the true story is in how consumers combine between physical (offline) and digital (online) channels (e.g., stores, websites & apps) for shopping.

• Online shopping can cover a broad span of activities such as search for products and for the retailers relevant for consideration, comparison of products and prices, ordering and paying for purchase of chosen products, and post-purchase service. When consumers combine online and in-store shopping, any of those online activities may occur prior to visiting a store, after the visit, and even simultaneously during a store visit.

McKinsey identifies in its research and advisory report three forces, described as structural shifts, that are set to shape the future of shopping in coming years. Firstly, the authors focus more prominently on the increasing role that artificial intelligence (AI) is taking up in performing shopping tasks and in purchasing decisions. Yet, two more forces or shifts the authors highlight are salient: the growing expectations for convenience and transparency, and the shift in spending power between generations. Conspicuously, these shifts may have the more significant and determining impact on the future of physical stores and shops (e.g., their formats), whether on the streets or in malls and shopping centres. But more importantly, it appears that online and offline shopping have become strongly intertwined and there is no point in trying to treat them separately.

• McKinsey partnered with ICSC for carrying out this research project, based in the US (“Shopping in the Age of AI”, 2026 [1]). ICSC is a member organisation for the marketplace industry dedicated to serving retailers and real-estate proprietors of commercial sites such as malls and shopping centres. At the core of the project is a survey executed by ICSC of 3,000 American consumers about their shopping preferences. The data from the survey were complemented by interviews with retail and real estate executives, followed by the analyses of McKinsey for preparing the report.

The first force refers to the rise in use of AI-enabled technologies, tools and agents. It regards mainly the use of AI agents (e.g., ‘virtual assistants’) and other tools directly by consumers through their shopping journey (e.g., for consultation on products, assigning tasks like ordering to perform on shoppers’ behalf). However, the authors also refer to crucial applications of AI-enabled tools by store staff. The report suggests that consumers are increasingly likely to apply the AI-enabled tools prior to entering any store or launching a shopping journey online; the preliminary utilisation of AI refers apparently to the ability of AI models to learn and anticipate needs and intent of consumers and seamlessly initiate reminders or recommendations for products. Hence, the report suggests that AI could have the more profound impact on shopping.

The second force regards the higher expectations of consumers for a friendly, convenient, transparent and easy to navigate environment for shopping, digital as well as physical. It entails, for instance, immediate access to valid information on pricing or availability of products in inventory. Consumers also expect more smooth transitions between digital and physical retail channels. Convenience will be elaborated below as a mission setter.

The third transformational force concerns the implications of the shift in spending power between succeeding generations through the years, and especially during the past fifty years as computer, information and Internet (cyber) technologies have been taking a growing part in human lives. As members of an emerging generation earn more income from their working jobs and accumulate capital of different forms, their spending power grows, gaining more influence as consumers. Furthermore, as a younger generation is more native to digital technologies and accustomed to using them, those technologies also assume a greater role in their shopping behaviour. This applies in the 21st century primarily to the Millennials (Gen Y) and to Gen Z who demonstrate stronger preferences for mixing online with in-store shopping and for automation. A consequence of this is that digital (and smart) technologies become more prevalent in the methods and tools retailers provide, allowing those technologies to become more dominant and thus reshape the shopping behaviour for everyone.

The report authors distinguish between two major purposes of consumers for visiting a physical store: convenience or discovery. Either convenience (functional, utilitarian) or discovery (exploratory, experiential) serves as the consumer’s main reason and motivation for visiting a chosen store. The main purpose is described as the mission of the consumer-shopper in attending a brick-and-mortar store; thereof retailers are called to define the primary mission for a store, that it will have to deliver on in order to attract customers. In order words, a mission of a store is derived from accommodating a mission of shoppers.

• It is noted that the authors suggest a third possible mission, fulfillment (of orders), but it is more likely that a facility for serving this mission will be attached to a store for either convenience or discovery rather than a standalone ‘store’. We refer here to a fulfillment facility for consumers to pick-up orders as opposed to a remote fulfillment hub from which orders are dispatched by delivery to customers’ addresses.

A store aimed at convenience as its mission has to concentrate on offering speed, simplicity and certainty. It should work, for instance, to shorten as much as possible the pathways (and dwelling time) from entry through displays to checkout. Shoppers usually lookout in convenience-oriented trips for efficiency as their priority. Offering a broad range of products is not an advantage in a store designated for convenience, to the contrary; hence the store should prioritise the more essential and frequently requested products, and it may satisfy with lower variety and assortment (models, brands). Store staff are expected foremost to assist shoppers to accomplish their tasks more quickly and with less effort (e.g., find their way to products, resolve issues).

A store aimed at discovery as its mission, on the other hand, has to focus on curating experiences that appeal in opportunities for exploration, personalisation and connection. Shoppers engaged in discovery-oriented store visits show interest in features like personalised recommendations and tailored promotions. They also seek to gain a social benefit during the visit to enrich their shopping experience. It calls for a broader range of products and greater assortment of alternatives, greater opportunity to engage with and experience products tangibly, and to benefit from product expertise and advice of the store associates. It may be added that the space and design of the store can also contribute to the appeal of discovery-experiential stores.

The convenience-discovery distinction is interwoven through the report as a guiding theme; in many cases it provides a context for interpreting the preferences of shoppers or proposing the features that would be more suitable for a store according to its designated mission. In particular, it may guide the choice of AI-enabled technologies and their applications by agentic AI. The authors stress the necessity for retailers to differentiate among their stores by assigning each store to be convenience-driven or discovery-driven (i.e., by its primary mission). If the stores of a retailer are all alike, designed and operated according to the same model (“uniformly”), they contend that such retailers “risk creating locations that are partially optimized for every mission and fully optimized for none“. Therefore, they recommend a set of measures for setting the primary mission of each store (location), deploy technology that is most appropriate to reinforce the chosen mission, and upgrade store capabilities and (human) talent models, with respective expectations of them, to match the store’s mission.

Let us address here the mission designation proposed at two levels: at the single store level and at the chain or network level of the retailer (i.e., allocation of stores by primary mission):

At the store level, it is important to reckon that while a store is oriented to optimise its convenience, it should provide an adequate level of interest by fostering discovery in the store, and vice versa. The authors do not seem to emphasise the need to care for the ‘secondary mission’. A store that is highly convenient, working like a perfect machine, but is dull and boring will not be able to keep its shoppers in. Alternately, a store that is exciting and offers a rich variety and surprising treats, but the shopping process is cumbersome and effortful will also not be able to hold to its customers. It is reasonable that investing in delivering on both missions at a high level can be ineffective but relying on one of the missions while neglecting the other is unlikely to suffice.

We may take a note from a different view of Hagtvedt and Chandukala on creating immersive in-store experiences [2]. They propose two key contributors to an immersive experience: convenience and interest (evoking interest can be linked to discovery, cf. McKinsey). Each of these contributors can be delivered by a set of features. They encourage retailers to include features that deliver on convenience (facilitate) as well as interest (stimulate). Retailers may mix features that facilitate with those that stimulate, yet Hagtvedt and Chandukala recommend working towards offering features that both spark interest and contribute to ease of shopping and thus engage shoppers (additional contributors like pleasure are required for an experience to be truly immersive). They suggest engaging features or aspects such as functional aesthetics next to visual merchandising and atmospherics, in-store restaurants, augmented reality and virtual reality. The researchers make this cautionary comment: “Interest encourages immersion, whereas inconvenience can disrupt that process and spark negative emotions such as frustration and irritation. Immersion seems unlikely if a shopping experience is interesting but difficult, or if it is easy but boring” (p. 3).

At the chain or network level of a retailer, there is good sense in building a mixture of stores that are differentiated, where some are convenience-oriented and others are discovery-oriented. Consumers would choose a store of one type or the other for an upcoming shopping trip in accordance with their main purpose or mission. The critical question is how the distribution in such a mixture should be composed. Still, a retailer has to cater in every store for convenience and discovery, but to different degrees. It means that the concept of distinct missions of stores for differentiation needs some qualification or realistic moderation.

A retail chain may be based, for example, on mostly convenience-oriented stores, yet include a few flagship stores that focus on discovery and experiential shopping (i.e., these stores may strengthen relationships with customers and elevate the retailer’s brand image). Alternately, a retailer may build a chain of discovery-oriented stores that offer rich and interesting experiences while operating a secondary sub-chain of convenience-oriented stores under a sub-brand (i.e., not to dilute the brand of its primarily experiential chain). Any store may add nowadays a fulfillment facility with a counter for handling order pickups, returns or other arrangements, to be located inside the store in a secluded area or in an adjacent space with a separate access (‘curbside’).

The use of AI-enabled tools, particularly referred to in the framework of agentic AI, is proliferating. Consumers may apply them from early stages of the shopping journey for search, comparison, and learning about products, to advanced stages such as following reviews and personalised recommendations, authorising AI agents to perform tasks like ordering automatically, and post-purchase support. Technology, powered by its information resources and AI tools, may serve retailers in some functions irrespective of the store mission (e.g., real-time inventory & fulfillment, traffic, sales, and customer data). Yet, each mission may command certain specialisations that would better help the store to perform its leading role.

The priority of application of advanced technologies by retailers in convenience-oriented stores would be for improving stock reliability, optimising layouts and ensuring on-shelf availability of products sought more often by shoppers; methods may include digital-twin simulations, AI-analytics platforms, computer vision and in-store detection sensors. A retailer may also provide store associates with AI-enabled tools to perform better as facilitators for shoppers (e.g., check inventory, locate products, answer queries). Retailers also work to improve the ease of shopping at the final stage of the journey in-store by deploying technologies for enabling more frictionless checkout and payment options.

In the case of discovery-oriented stores, it becomes vital for retailers to equip their store associates with AI-enabled tools that provide them with real-time inventory visibility, customer context, and guidance through clear “next-best” actions. The objective is to free associates from certain time-absorbing operational tasks, while enabling them to be more conducive helpers to customers-shoppers. Moreover, it is particularly intended to let the associates turn from being “transaction executors” or facilitators into “trusted advisors: someone who can interpret needs, build rapport, and guide decisions with credibility and empathy“. Store associates can be powered to that effect by equipping them with hand-held devices (tablet-like) to be used ‘on the fly’ and that would let them better assist, communicate, and offer personalised advisory to customers. It means that the store associates are the ones given the access to up-to-date inventory status data, product information and individual customer background (e.g., demographics, lifestyle, preferences, past purchase behaviour) in their dashboards supplied with AI-enabled assisting agents.

• However, that does not exclude the possibility of installing large-screen display posts (e.g., causing less eye fatigue than a personal smartphone screen) with AI-powered applications that customers themselves can use, for instance, to find and order products in the catalogue but not displayed in the selling areas of the store. It would depend on which approach, independent or assisted, shoppers are found to prefer. (Note: Larger stores more frequently allow customers to collect those products more readily at the end of their visit, brought from a micro-fulfillment centre adjacent to the store in the same building.)

Finally, let us turn to the balance between online and physical (in-store) shopping channels. Notably, even today just small (minority) proportions of consumers across generations report that they shop mainly online. The major differences are in the tendency to shop both online and in-store in combination vis-à-vis shopping mainly in physical stores. As shown in the table below, survey respondents of Gen Z and millennials (Gen Y) “are significantly more likely than older cohorts to describe their shopping as a blend of online and in-store”. These younger consumers have grown into the digital age, as the authors suggest, and using its tools or participating in its social platforms comes more natural and obvious to them. Evidently, respondents of the three more veteran generations demonstrate much stronger preference to shopping mainly in-store, and this tendency strengthens as we go backward in time.

Generation (years born)	Mainly Online	Both Online & In-Store	Mainly In-Store
Gen Z (1998-2012)	14%	48%	38%
Millennials (1980-1997)	14%	48%	38%
Gen X (1965-1979)	13%	38%	49%
Baby Boomers (1945-1964)	13%	25%	63%
Silent Generation (1920-1944)	7%	21%	71%

The push of retailers to align with the digital proficiency and related shopping habits of the younger generations (born post 1980) is understandable — they set the future, their spending power grows as they are increasingly involved in the economy, and their preferences become more essential to address. Yet the Gen X, baby boomers and the silent generation still hold much influence in the market and may retain considerable spending power. Retailers should continue to allow them a freedom of choice in using digital methods and tools or the more traditional and human-assisted methods for performing the shopping tasks. When these consumers do use the digital and online applications, retailers will have to ensure they are comprehensible, easy to use and access. Those generations are likely to keep brick-and-mortar stores viable for several more decades to come, and apparently the younger generations welcome these stores as well (they expect them to be mainly experiential destinations).

• Note: The final Chapter 5 of the report, not covered here, is dedicated to considerations and practical implications for owners and developers of commercial real-estate properties such as shopping centres and malls.

The report of McKinsey with the collaboration of ICSC brings readers some enlightening findings on consumer shopping preferences and behaviours, complemented by insightful interpretation and practical recommendations. The contribution of the authors is mainly two-fold: (1) elucidating the impact of three forces or structural shifts, foremost the use of AI, on future online and in-store shopping; (2) presenting a guiding theme of distinction between shopper- and accordingly store missions. These viewpoints are well knitted together. Nonetheless, the portrayal of a distinct shopping mission for each store as clear-cut, seemingly to emphasise the need for differentiation, may have been excessive and requires some qualification. Consumers are not ‘locked’ on a single dimension, and neither should stores be. While a consumer-shopper may focus on a primary goal or mission (e.g., discovery) when choosing a store, he or she is still unlikely to ignore other dimensions (e.g., convenience) and would expect to see a satisfying mix of them in the store visited. This moderation by no means disturbs the general concept proposed.

Ron Ventura, Ph.D. (Marketing)

Sources:

[1] “Shopping in the Age of AI: Redefining Stores for a New Era“; Colleenn Baum, Molly Squire, & Tyler Rose, with Joshua Reuben; McKinsey & Company (in collaboration with ICSC), April 2026

[2] Immersive Retailing: The In-Store Experience; Henrik Hagtvedt and Sandeep R. Chandukala, 2023; Journal of Retailing 99 (4), pp. 505-517