Why Some Retail Survived E-Commerce and Some Didn't
E-commerce didn't hit retail evenly, and the categories that got hurt the worst are almost entirely predictable in hindsight. Fashion now sees roughly 38.8% of spending happen online. Electronics sits even higher, at 45.7%. Grocery, the retail category CRE investors have leaned on most heavily this cycle, remains dramatically less exposed to the same pressure. The gap between those numbers is the actual explanation for why some retail real estate is thriving right now and some of it has been closing stores by the thousands.
The Categories That Lost the Most Ground
More than 8,000 U.S. chain stores closed in 2025, and closures have continued into 2026 as retailers prioritize profitability over expansion. Furniture, appliances, and home improvement have seen particularly soft demand, a combination of e-commerce competition and consumers delaying large discretionary purchases while interest rates stay elevated. Legacy department stores have been under pressure for years from declining mall traffic and rising operating costs, and that pressure hasn't let up. What connects almost every hard-hit category: they're high-consideration, easily comparison-shopped online, and don't require the customer to see or touch the product before buying.
The Categories That Held Their Ground
Grocery is the clearest counterexample, and it's not close. The category has resisted online migration for a structural reason that has nothing to do with retailer strategy: fresh food doesn't translate well to a shipped product, purchases happen frequently enough that convenience of a nearby physical store beats delivery lag, and margins in grocery are thin enough that home delivery economics remain difficult at scale. Personal care, healthcare, and fitness tenants have been expanding into retail space specifically because those categories require physical presence almost by definition. You don't get a haircut or a dental cleaning shipped to your door.
E-Commerce Penetration Tells You Where a Category Sits Today
Category-level online penetration is the single most useful number for judging how exposed a specific retail tenant actually is, more useful than broad statements about "retail" as a category. A tenant in a category sitting near 40% online penetration and still climbing is in a fundamentally different competitive position than a tenant in a category that's stayed in the single digits for a decade. Apparel is a useful middle case: online penetration keeps climbing incrementally each year, which means an apparel tenant today faces meaningfully more digital competition than the same tenant faced five years ago, even without anything changing about the store itself.
What This Means for a Specific Retail Tenant, Not Just a Category
The practical diligence question isn't "is retail a good investment," a question this series flagged as close to meaningless on its own a few pieces ago. It's "what category does this specific tenant sell in, and how exposed is that category to online substitution." A grocery-anchored center and an apparel-anchored center can carry identical square footage and identical asking rent while facing entirely different structural risk, because one tenant category has genuine resistance to e-commerce and the other has been losing ground to it every year for a decade.
The Physical Store Isn't Dying, It's Sorting Itself by Category
None of this means physical retail is disappearing. It means physical retail is dividing itself along a line that has almost nothing to do with location or center quality and everything to do with what's actually being sold inside. A center full of the wrong tenant mix in a great location still carries the wrong mix. Tenant category, visible on a listing before ever touring the property, is one of the fastest ways to separate durable retail from retail that's competing against a losing trend.
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