Retail Isn’t Struggling. It’s Separating. Here Are the Categories Leading the Way

“How’s the shopping center business going?”

It’s a question I hear often as I travel across the country. And more often than not, people outside of our industry expect a very specific answer shaped by years of headlines about store closures and the rise of e-commerce.

But that narrative is very different from what we're seeing as owners of suburban open air shopping centers. The reality is more nuanced and, in the types of shopping centers we own, far more positive.

Retailers selling commoditized products that consumers can buy online at the same price continue to face pressure. However, for those that create experiences and give people a reason to leave the house, business is stronger than ever. In a market where new retail construction is shrinking, these high-performing retailers are growing the fastest and locking up prime locations while others wait on the sidelines.

What we're seeing is a separation between concepts that translate seamlessly online and those that truly benefit from a physical presence.

Physical Retail Matters More Than Ever

The staying power of brick-and-mortar retail is increasingly tied to economics as much as experience.

Over the past several years, many retailers have recognized that operating physical locations closer to their customers can be more efficient than relying solely on shipping and managing high volumes of returns. The continued growth of buy online, pick up in-store (BOPIS) has only reinforced this shift, turning stores into critical components of a brand’s fulfillment strategy.

At the same time, categories like grocery continue to invest heavily in physical expansion. Both large- and small-format grocers are adding locations to better serve their customer base, with companies like Sprouts Farmers Market planning more than 40 new stores in 2026 alone.

Taken together, these trends underscore a broader point: physical retail remains highly effective when it complements how consumers actually want to shop.

4 Categories Driving In-Person Demand

Across the leasing landscape, the retailers expanding most aggressively today tend to share a few defining characteristics. They offer a clear value proposition, lead their respective categories, and create an experience that cannot be easily replicated online.

That dynamic is most visible in the following four categories:

1. Wellness and Fitness

Consumers are putting their well-being first, spurring heightened interest in traditional fitness centers and newer biohacking recovery services. Small-format fitness centers offering services such as yoga and Pilates have been trending since the pandemic, while larger-format centers, which took longer to recover, are now back in a big way, with both longstanding chains and newer concepts entering hypergrowth mode.

Contrast therapies are growing in popularity, too, especially among consumers with higher levels of disposable income. Best-in-class performers include luxury outlets offering infrared sauna and cold-plunge therapies, as well as hydration and wellness spas with IV therapy, micronutrient and weight loss services.

2. Food and Beverage

Quick-service restaurants continue to perform well, alongside a growing number of health-focused and specialty concepts. From a leasing perspective, second-generation restaurant space in strong locations is especially attractive, as it allows operators to move quickly and capitalize on existing infrastructure.

These uses not only fill space efficiently but also contribute meaningfully to overall center activity.

3. Value-Driven Retail

Few things motivate shoppers to get off the couch and into a physical store like the hunt for a bargain. That’s why off-price brands like TJ Maxx, Burlington, and Ross continue to thrive. And as inflation and supply chain uncertainties linger, demand for value-oriented retailers will only grow.

4. Experiential Retail

Experiential retail is evolving beyond its initial wave of entertainment-driven concepts.

While uses like indoor adventure parks and golf simulators remain popular, newer formats are blending activity with social experiences. For example, high-end golf simulators are now being paired with lounge environments where customers can gather, watch events, and spend extended time on-site.

These concepts are not just filling space, they're helping to anchor traffic and extend dwell time within centers.

A Supply-Constrained Environment

As retailers in top-trending categories search for real estate, they’ll quickly realize that supply is tight. Retail construction slowed to 64.2 million square feet in the fist quarter of 2026, an 8 percent year-over-year decrease, according to data from the CoStar Group. And because new open-air shopping centers take years and sometimes decades to develop, additional supply isn’t coming anytime soon.

For these reasons, the best approach for growing brick-and-mortar retailers is to move into existing space, and with a 5.5 percent vacancy rate in shopping centers, opportunities exist. The key is to locate vacant property in areas with built-in foot traffic. Retailers looking to attract more Gen Z consumers, for example, are leasing space adjacent to college campuses, places where students already frequent.

Fortune Favors Fast Movers

So how is the shopping center business?

For retailers offering differentiated products, services and experiences, it's performing extremely well. However, the window of opportunity isn't unlimited. With demand concentrated among a growing group of high-performing categories and supply remaining constrained, competition for the best locations is intensifying.

Retailers that are prepared to move quickly and invest in the right locations will be best positioned to take advantage of the current environment.

Adam Greenberg is the senior vice president of leasing at DLC, experts in shopping center real estate.