Rapleys Retail Outlook: AI, experience, partnerships and M&A to drive retail trends in 2026

– Christmas trading winners had strong brands, well-managed inventory and integrated physical/digital channels

– Renewed physical retail demand will continue in 2026 alongside renewed investor confidence in foodstores and growth in travel retail

This outlook highlights the continuation in 2026 of a number of ongoing trends with the shift towards experience-led retail gathering further pace across high streets, out of town and shopping centres. This also supports the increasing focus on digitised stores using AI to allow customers to compare price, product and carbon footprint. Many physical formats are being designed to blend digital engagement with real-world experience using, for example, interactive displays and curated selections. 

Hybrid retail strategies are also set for further focus as digital-native brands are increasingly viewing physical pop-ups and showrooms as brand discovery touchpoints rather than full store networks with both benefitting sales each way.

Dan Kent, Head of Retail and Leisure at Rapleys, said: “We believe the use of Ai will quickly provide a more even playing field for retailers of all sizes and increase the importance of retailers creating an individualised offer and a strong retail brand and heritage.”

Rapleys also highlighted other key trends for 2026 including Partnership Models with newer or evolving brands leveraging partnership placements inside established retailers like John Lewis to expand or enter real-world retail with lower risk; and a likely increase in M&A activity with Next looking to buy LK Bennett, Frasers continuously adding brands to expand amongst a number of others.

Reviewing Christmas trading performance, Rapleys noted a few encouraging signals with performance strongest amongst well-positioned omni-channel operators with Next plc the standout performer in the UK thanks largely to its resilient UK demand and strong international online sales with a fifth positive upgrade to its annual profit outlook this financial year. Other performers included The Cotwold Company, Sainsburys and Marks & Spencer.

Kent said: “Overall, the Christmas period demonstrated that retailers with strong brands, effective inventory management and integrated online and physical channels were best placed to outperform in a cautious consumer environment. These are ongoing trends that will also be evident this year. As we entered 2026, forecasts were of continued growth in retail rents led by prime and food store led retail parks, historically low vacancy rates in prime central London, retail parks and affluent regional towns – all reflecting stronger leasing activity. This renewed physical retail demand means that retail is being seen as a strategic asset again to investors.”

Physical store expansion is on the cards for 2026, with 2025 reinforcing a structural trend of online-first retailers establishing physical presence through pop-ups, showrooms and flagship formats. Brands such as ASOS, SHEIN and Halara utilised temporary stores in high-profile London locations to drive brand engagement, enable product trial and support online conversion, while Debenhams.com continued to develop a showroom-led beauty strategy and Skims is planning a UK flagship.

Kent continues: “These moves underline a clear shift towards hybrid retail models, with physical space increasingly viewed as a customer acquisition and brand-building tool rather than a standalone sales channel. For landlords and investors, this supports ongoing demand for flexible, well-located retail space capable of accommodating experiential formats.”

Rapleys have been advising  a number of their key occupier clients in new store expansion including Boots for their first Fragrance only store at Broadgate in the City of London, and ongoing acquisition programmes across the UK for Sainsburys ,Boots Hearingcare , Boots Opticians , BFT (Body Fit training ) and Sue Ryder, amongst others.

On the foodstore side where the team has been particularly active predicts continued investor confidence and a greater understanding that good foodstore covenants drive out of town performance and many new store openings. The adviser also said that the ‘race for space’ will continue with most occupiers expanding their format offer to build and achieve their store growth strategies.   Sainsbury’s is pressing ahead with the conversion of the former Homebase stores acquired in 2025—a portfolio transaction in which the Rapleys retail team played a key advisory role—bringing a new wave of large-format foodstores into the pipeline. The wider market remains highly active: M&S, Aldi and Lidl all delivered substantial new openings through 2025 and continue to expand aggressively as they compete for share in a tightening grocery landscape.

Scott Mitchell, Head of Retail Investment at Rapleys said: “The food store investment market is evolving from a “buy anything” mentality to a more disciplined “buy the best” approach. The December interest rate cut, together with further expected easing in 2026, may provide additional market stimulus and lead to further yield compression throughout the year.”

Travel retail is the main other growth area within Rapleys’ outlook. In 2025, London Stansted Airport had its busiest ever year with passengers passing 30m for the first time and its £1.1bn, 177,605 sq ft extension under way. This will increase capacity to 43m yearly, making it Europe’s single busiest terminal. Rapleys are retained to advise on the occupier strategy for the 38 new retail and F&B units with a strong focus on customer experience. Owners MAG have received planning permission for a further increase of passenger capacity up to 51m. 

Other airport upgrade programmes include Manchester Airport’s Terminal 2 which has replaced Terminal 1 as the main hub and undergone a £1.3bn transformation programme including its retail & leisure mix; whilst Luton, Birmingham and Bristol (amongst others) are also planning significant upgrades incorporating retail and leisure to enhance customer experience and extend dwell times.

Kent concludes: “Retail has had a cautious outlook overall for a while, hampered by costs, legislation and consumer confidence. However, we believe that 2026 will bring huge positivity for retail landlords and occupiers alike with these core areas offering the most growth opportunities.”