The Future of Retail Is Hyper-Local
Segmenting consumers across the United States has often posed challenges to the retail industry. In a country that is geographically vast and demographically broad, it's difficult to provide retail solutions that suit all shoppers, whether in merchandising, store design, or customer experience.
Over the past 25 years, the retail industry has become much more consolidated and complex, with smaller chains merging to form monolithic retail giants. These new organizations often took a "one size fits all" approach to strategy and assortment planning, which has yielded a retail experience that can sometimes feel disjointed across the country.
In the wake of rapidly changing consumer behavior, especially in the last five years, retailers can no longer afford to use blanket strategies across store fleets. Consumers across different regions and environments have individualized needs that retailers and brands must adapt to. And these differences should impact decision-making around pricing, marketing, staffing, store formats, and store openings.
Using a localized approach to the in-store experience allows retailers to better connect with their shoppers, build loyalty, and reduce obstacles. By better understanding consumer movement and how it has evolved over time, the industry can bring a personal touch to each shopper.
Consumer Migration Signals Shifting Retail Needs
Since the pandemic, consumer movement across the country has revealed new priorities. In 2020, many consumers sought more space, land, and relief from the pressures of commuting or city life.
Over the past four years, ending in June 2025, metro areas such as Dallas, Houston, Phoenix, Austin, Orlando, Atlanta, and Charlotte, among others, have experienced the largest net population change. These "second-tier" cities have been able to court consumers seeking to leave major metropolitan areas, looking for a more manageable city or a sprawling suburban oasis.
On the other hand, areas that have seen the largest exodus of residents over the last four years ending in June 2025 include Los Angeles, New York, Miami, San Francisco, and Chicago. These major cities saw the direct impact of pandemic-era work-from-home policies and safety precautions, prompting consumers to move to other markets.
Note, though, that some consumers recently returned to these markets. Placer.ai's Office Index shows that monthly visits recovered toabout 75% of the pre-pandemic levels as of September 2025.
These shifting geographic dynamics have highlighted consumers' changing retail needs as they relocate. Consumers moving from large cities may no longer have access to the same variety of discretionary chains, such as luxury brands or apparel retailers, but also may have broader access to grocery stores, superstores, or warehouse clubs.
Traffic to warehouse clubs was up almost 5% through October 2025, signaling that consumer movement, coupled with strong retailer value propositions, attracts visitors. Consumers who may not have had space previously, especially younger shoppers, may be new entrants into the category since relocating.
Retailers and brands need to understand population and demographic changes across the country, particularly over the last five years, to better accommodate consumer needs and preferences.
Using this information can help retailers create localized assortments and service offerings across markets and gain a better understanding of local competition.
Finding the Right Store Format for Success
Consumer migration and changing behaviors have drastically shifted how shoppers navigate physical retail stores. While in-store offerings remain critical to retail's overall success, brands must be more strategic in their approach to fleet expansion and renovation. It's no longer simply about opening more stores, but about opening the right types of stores in the right locations. Taking a localized approach to store format selection is critical.
For example, analyzing grocery retail performance by store format among the 40 largest grocery chains reveals that small format stores, or stores with less than 30,000 square feet of retail space, grew traffic by more than 5% in the first half of 2025 year-over-year. This makes small-format grocery stores the fastest-growing store format.
In contrast, mid-size and large grocery stores saw visits grow by only around 1% during the same period. Mega grocery stores, or those with a footprint of more than 90,000 square feet, saw the second-fastest year-over-year growth of close to 2% in the first half of 2025. Small and mega grocery formats are the newer entrants in retailer fleets, but they provide leverage to chains hoping to enter new markets or meet the changing needs of their shoppers.
Store formats can enable retailers to provide a more localized offering to shoppers. In small-format stores, retailers can merchandise their most productive stock-keeping units (SKUs), essentials, or items favored by tourists. Mega stores, such as grocery stores, can offer more services, restaurant concepts, or a one-stop shop for consumers. Store formats can help to bridge the gap between a retailer's current footprint and new customers it hopes to court.
Taking a Localized Approach
So how do retailers and brands better service shoppers at a local level?
Understanding shopper behavior across regions is critical to thinking tactically about each store location. Differences in the market can impact how stores price, promote, service, and merchandise to make the greatest impact on shoppers and differentiate from local competition.
The future of retail is hyper-focused, and consumers demand that the industry evolve to provide experiences that meet their needs today, rather than five to 10 years ago.
Elizabeth Lafontaine is Director of Research at Placer.ai.
Source: GlobeSt/ALM