WITH THE CLOSING of familiar retail stores and the growth of e-commerce, it’s easy to forget that 90 percent of retailing is still done in “brick and mortar” retail stores.

Nevertheless, e-commerce, combined with the emergence of younger consumers who prefer to shop with their computers rather than their feet, and who spend their retail dollars on experiences rather than things, is driving the most profound changes in retailing in the past 100 years.

Author Marc Levinson, in his book “The Great A&P and the Struggle for Small Business in America,” has used the history of this once-dominant grocer to analyze the changes in American retailing. Starting in the 1860s as a Manhattan tea importer, A&P mastered the skills of “low price/ high volume” grocery retailing to achieve $1 billion in annual sales by 1929, becoming the most profitable retailer in America.

Here’s what grocery retailing looked like in 1929:

•    there was one grocery store for every 51 families, mostly in neighborhoods and downtown locations where shoppers could walk every day
•    the typical grocery store occupied a 20 x 30-sq.-foot space, with the owner at the front counter selecting products such as coffee, sugar and flour that the customers requested from bulk containers. The proprietor would measure or weigh the products, then package and sell them to the customer, usually on credit. But crucial advances in technology soon resulted in profound changes in food retailing:

    o    2 tin cans, cardboard boxes and cellophane allowed stores to prepackage and brand their foods; products such as canned vegetables, evaporated milk, and breakfast cereals became popular
    o    2 refrigeration enabled fresh produce and meat to be shipped by railroad across the country to be sold by grocers
    o    2 automobiles allowed customers to drive greater distances to shop in larger stores with more selection.

As Levinson points out, no retailer was more adept at mastering the new technologies than A&P. The company would hold its place as America’s most successful retailer for a remarkable 44 consecutive years.

By 1962, new retailers such as Target and Kmart began to offer a broad array of products at discounted prices in “big box” stores and regional “power” retailing centers. In 1963, Sears upset A&P’s grocery cart to become America’s most successful retailer.

The A&P stores, which had clung to their grocery-only format, became isolated in their older, smaller, lower-cost locations. Revenues dwindled. By 2015, A&P declared bankruptcy.

The store-based retailing model created in the 1920s has run its course. The Walmarts and Amazons have taken their place. Retailers face new challenges to create convenient, price-competitive alternatives combining ‘high tech” online shopping with “high touch” personalized sales of products and services:

•    Walmart is testing a “shopping cart to the fridge” service in which groceries would be purchased online, delivered to the customers’ homes and placed in their refrigerator or pantry
•    Nordstrom is trying out a “local” concept with 3,000-sq.-foot retail space, rather than its typical 40,000-sq.-foot store. The space has no merchandise, but instead employs tailors to take measurements for custom-made clothes, personal shoppers, personal stylists, manicurists and a bar
•    Apple, known for its high-tech products, is opening its latest store in the D.C. market not in a mall, or even a store, but rather in the old Carnegie Library. Built in 1903, and most recently home to the D.C. Historical Society, the location is being called a “town square”—a gathering place where customers can socialize with friends.

Meanwhile Amazon recently spent $13.7 billion to purchase Whole Foods grocery chain, giving the leader in e-commerce retailing 440 stores and 11 distribution centers in high-income neighborhoods. This expansion into store-based retailing also bolsters Amazon’s “last mile” delivery service, even for non- grocery products.

As the definition of retail expands, Realtors® are also seeing the traditional retail physical space adapting to new uses, replacing department stores and big box retailers with spaces dedicated to new purposes:

•    “experience” venues such as restaurants, athletic centers and spas;
•    “medical” spaces, such as urgent care centers, clinics, wellness centers or health food stores;
•    “entertainment” destinations such as movie theaters, game rooms, microbreweries and wine or hookah bars;
•    “educational and religious” locations such as places of worship, learning centers, language schools and tutoring programs.

As the definition of retail expands to fill the new demand and investors respond with mixed-use developments that combine retail with residential and office uses, local governments and landlords will need to be more flexible with zoning and exclusive-use restrictions.

The stakes are high for landlords, who see many traditional retailers, including large anchor tenants, closing shop or downsizing.

For local governments the threat is just as great. For instance, the top three taxpayers in Fairfax County in 2016 were the operators for Tysons Corner, Fair Oaks Mall and the redeveloped Springfield Town Center. These three properties provided roughly $27 million of Fairfax County’s annual real estate tax revenues.

For Realtors® in commercial real estate, their long-term survival could depend on how well they adapt to the new retail environment.