Understanding the Ongoing Retail Reset and What It Means for 2026

February 3, 2026

The U.S. retail sector continues to evolve strategically, reflecting years of deliberate optimization in response to shifting consumer behavior and demand for convenience. What some have labeled a “retail reset” is a reallocation of resources toward necessity-based retail formats that support everyday needs.

While some legacy formats rationalize store counts to align with profitability and efficiency, demand remains strong for necessity-oriented retail in key categories: quick-service restaurants, fitness, healthcare, and experiential services in grocery-anchored centers.

Retail real estate fundamentals remain resilient. Average U.S. retail rents reached record levels in 2025, and investor demand for well-located shopping centers stayed robust, with retail property sales markedly higher than in prior years. Limited new construction has kept overall availability rates low, further supporting rental growth and tenancy strength.

“What we’re seeing isn’t a pullback from physical retail, it’s a refinement,” said Lauren Ball, Chief Operating Officer of Westwood Financial. “Retailers are becoming more disciplined about where and how they grow. The demand we’re seeing from QSR, fitness, healthcare, and service-based tenants shows that well-located centers remain incredibly valuable.” Consumer traffic data reinforces this trend: grocery visits and fitness center foot traffic grew year-over-year in 2025, while value-oriented and experiential brands consistently outperformed legacy categories.

“Optimization is the dominant theme,” said KC Bills, Chief Executive Officer of Westwood Financial. “Successful retailers are deploying capital into formats that meet everyday needs. Grocery-anchored centers, quick-service and fast-casual restaurants, health and wellness, and essential services continue to generate consistent traffic and long-term commercial value.”

For landlords and communities, this evolution presents a tangible opportunity. Space formerly occupied by obsolete formats is being re-tenanted by necessity-based operators and service providers that complement how people live and shop today. Centers that emphasize daily traffic drivers maintain strong occupancy, rental growth, and investor interest.

The future of physical retail is less about store counts and more about strategic alignment with consumer needs. Necessity retail—rooted in convenience, value, and frequency—remains a structural driver of foot traffic, leasing velocity, and long-term real estate performance.

At Westwood Financial, we believe Location is Everything.