Creating Resilience

ICSC Las Vegas 2025: Adapting Strategy to a Shifting Retail Landscape

June 24, 2025 3 Minute Read

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From store strategy to consumer engagement, the retail sector is actively recalibrating during a period of profound change, shaped by evolving behaviors, tighter margins and rising expectations. A CBRE survey of more than 50 retailers, landlords and investors at the ICSC Las Vegas convention last month reflected an urgency to adapt to a rapidly changing retail real estate environment.

Retail leaders spoke candidly about the shifts they’re seeing, from consumers shopping closer to home and demanding more wellness-focused offerings to a need for smarter, smaller store formats. There’s also a growing recognition that success will be defined by how well the industry embraces emerging technologies, sustainability initiatives and flexible strategies.

Following are some key takeaways from our survey of this year’s ICSC attendees.

Changing Consumer Priorities Reshaping Demand

Today’s consumers are more intentional with their purchasing decisions. There’s a growing preference for wellness-oriented goods and services, with “food as medicine” becoming a strong consideration for many households. Consumers are consolidating shopping trips and placing more value on freshness, convenience and purpose-driven brands. Hybrid work arrangements have shifted retail demand toward both residential areas and workplace-adjacent locations, reflecting consumers’ more flexible routines and spurring change in both what shoppers buy and where they shop. These evolving habits create opportunities for retailers that cater to localized food-and-wellness-driven needs.

Figure 1: What retail category has the most momentum right now?

Chart depicting the distribution of tenant types in a commercial property portfolio. Health & Wellness/Fitness leads at 45%, followed by Food & Beverage.

Source: CBRE ICSC Survey, May 2025.

Footprints, Formats & Rise of Suburban Markets

Responding to these new consumer behaviors, retailers are actively rightsizing and reformatting their stores. With fewer shopping trips and more targeted purchases, large urban flagships are giving way to smaller, more efficient suburban locations. These changes ripple into real estate decisions, requiring landlords to accommodate a broader mix of formats, from hybrid concepts to micro-locations with high visibility.

Recent net absorption data supports this shift, with strong demand in secondary markets like Cincinnati, Tulsa and Oklahoma City—highlighting how evolving consumer preferences are creating new opportunities in areas that were once overlooked.

Figure 2: Top 20 markets for rolling-four-quarter absorption

Map of the US showing net absorption of commercial real estate space by region; color-coded bubbles indicate volume in thousands of square feet.

Source: CBRE Econometric Advisors, Q1 2025.

Figure 3: How are retailers adapting their footprint?

Pie chart showing commercial real estate market trends: 65.4% holding steady, 23.1% contracting, 11.5% expanding.

Source: CBRE ICSC Survey, May 2025.

Digitization & AI Are Tools, Not Threats

As physical footprints shrink and margins tighten, technology has become a key enabler of smarter operations. AI has moved from innovation to expectation and, contrary to common fear, is enhancing, not replacing, the retail workforce. AI should be viewed as an effectiveness tool that allows retailers to do more with less. It’s also increasingly being used to personalize engagement, refine social media strategies, predict buying behavior, identify VIPs and track performance in real-time. With 80% of retailers expected to adopt AI solutions by the end of 2025, thoughtful implementation strategies are needed to remain competitive.

Figure 4: AI Powering Retail

Five key advantages of using AI for business operations including product recommendations, demand forecasting, real-time pricing, customer support and streamlined checkout.

Source: CBRE Research, Q1 2025.

Strategic Flexibility Amid Uncertainty

Today’s retailers face economic, political and operational headwinds, underscoring the need to remain agile. Proactive planning and value engineering are necessary tools in an unpredictable market. Many retailers are doubling down on flexible formats and adaptable strategies, including adaptive reuse, landlord-as-partner models and mixed-use concepts that combine fitness, retail and food under one roof. Owners of retail real estate who anticipate and support this agility, especially in suburban and smaller markets, will be best positioned to thrive alongside their tenants.

Figure 5: What’s one retail trend that will matter more a year from now than it does today?

Commercial real estate market trends: Pie chart illustrating key drivers such as expansion, right-sizing, adaptive reuse, and more.

Source: CBRE ICSC Survey, May 2025.

Looking Ahead

For owners and retailers, the message is clear: Retail real estate must evolve in step with the consumer. Spaces must be flexible, tech-ready and strategically located in markets with strong housing and economic fundamentals. Demand continues to shift toward smaller-format spaces in suburban areas and emerging markets, often tied to experience-driven brands and more health-conscious products.

Increases in retail space availability present an opportunity for landlords to rethink layouts, subdivide underutilized space and add the infrastructure retailers expect. These investments can drive stronger tenant demand, boost occupancy and enhance long-term asset value. Investors should also direct capital toward emerging secondary markets that are well-positioned to accommodate this evolving demand through creative redevelopment and flexible space planning.

The winners in this era will be those that support these smarter operations and offer the agility that retailers now require.

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