Fresh off the heels of ICSC Las Vegas and a dense slate of Q1 earnings reports from some of the country’s biggest retailers, a clearer picture is emerging: the consumer is under pressure, but the retail market is anything but uniform. From AI-fueled optimism on the convention floor to mixed financial results from major brands, this is a retail environment defined by divergence. Value and adaptability are winning. Legacy models are lagging. And one factor remains a persistent wildcard: tariffs, which continue to inject cost volatility and strategic uncertainty across the sector.
ICSC 2025 Highlights Confidence and Caution
More than 25,000 retail professionals gathered in Las Vegas for ICSC’s signature event this week, and the consensus was clear: while consumer caution and tariffs are top of mind, there’s still optimism in retail’s long game—especially where AI and innovation are driving better decisions and faster deals.
Top Left: Greg Kaiser and Emily Wood of LightBox with James Nelson of Avison Young
Top Right: Greg Kaiser and Tanya Ball of LightBox with Andy Bell and Alex Krikorian of CASTO
Bottom Left: Greg Kaiser of LightBox and Steve Lowe of Secure Net Lease
Bottom Middle: Emily Wood and Kayla Hankins of LightBox with Mara Frumkin and KC Herbert of SRS Real Estate Partners
Bottom Right: Greg Kaiser of LightBox and Thomas Jonsson of Surmount (formerly NNN Pro)
“Optimism was the dominant theme, despite headwinds in the economy,” said Greg Kaiser, director of Strategic Accounts at LightBox. “There’s high listing volume, and while closings are lagging, the willingness to get deals done is strong on all sides.”
If every ICSC conversation had a transcript, one word would top the word cloud: AI.
Attendees learned how AI is embedded in how deals are sourced, underwritten, marketed, and closed.
“The CRE industry has finally jumped with both feet into the AI swimming pool,” said Kaiser. “From deal sourcing to lease analysis and marketing, AI is now streamlining every stage of the process.”
Emily Wood of LightBox described AI as “the new co-pilot” in CRE, surfacing off-market buyers and compressing deal timelines. In a conversation between sessions, LightBox client David Robinov told Wood, “What used to take weeks now takes minutes.” He credited the AI-powered buyer-matching tool from Revere/LightBox for helping brokers uncover off-market buyers based on actual transaction behavior and fit. “AI isn’t just saving me time—it’s unlocking deal velocity,” he added. In today’s shifting retail market, that speed and adaptability are proving to be critical differentiators.
Retail Earnings Reveal a Divided Consumer
While sentiment was upbeat at ICSC, Q1 earnings from major retailers told a more nuanced story. Consumer spending remains selective, and inflationary pressures continue to weigh on margins and strategy.
The University of Michigan’s consumer sentiment index dropped to a two-year low of 50.8 in May, and inflation expectations surged to 7.3%—the highest since 1981. Even as CPI growth moderates, shoppers remain wary, and that uncertainty is playing out at the register.
Walmart beat expectations with a 4.5% increase in same-store sales and a 21% jump in e-commerce. But executives warned of “unprecedented” price hikes tied to new tariffs taking effect in the coming months.
Home Depot, by contrast, said it doesn’t plan to raise prices despite tariff pressures. “Because of our scale, the great partnerships we have with our suppliers and productivity that we continue to drive in our business, we intend to generally maintain our current pricing levels across our portfolio,” said CFO Richard McPhail. He noted that more than half of Home Depot’s products are sourced domestically and that the company has diversified its supply chain to reduce reliance on China.
Target reported a 3.1% decline in merchandise sales, with strength in grocery and essentials offset by weakness in discretionary categories. Executives cited tariffs and consumer caution as headwinds. CEO Brian Cornell said price increases are a “last resort,” while Chief Commercial Officer Rick Gomez outlined mitigation efforts including vendor negotiations, shifts in country of origin, and selective pricing adjustments.
TJX Companies, parent of T.J. Maxx, Marshalls, and HomeGoods, edged past Q1 earnings and revenue expectations but fell short on same-store sales. It maintained its full-year outlook but issued a weaker-than-expected forecast for Q2, citing tariff-related pressures. “The Company’s second quarter Fiscal 2026 outlook includes an incremental negative impact from tariff costs on the merchandise it was committed to at the time additional tariffs were announced in March and April of 2025,” TJX noted in its release. Shares slipped modestly following the report.
Upcoming earnings from Burlington, Ross, and discount variety chains like the Dollar Store will offer further insight into how value retailers are performing as consumers remain price-sensitive.
Retail Real Estate Gets Competitive
New data from the LightBox CRE Market Snapshot Report for Q1 2025 shows that retail accounted for 20% of all listings on the LightBox RCM platform, with retail listings surging 101% year-over-year. This reflects a sharp rise in investor interest across necessity-driven and value-add opportunities, particularly in open-air and grocery-anchored centers.
Nationally, retail vacancy rose by 20 basis points to 5.5% at the end of the first quarter, according to Cushman & Wakefield, with absorption dropping by 5.9M SF as several large retailers filed for bankruptcy during the period. Yet asking rents rose 2.3% year-over-year, and landlords report strong interest in well-located space.
Speaking in between sessions at ICSC, Kaiser emphasized that “Retail vacancy remains on the lower side across the board. Most empty spaces are tied to older properties without upgrades, not a lack of demand. And with limited new development, asking rents are steadily rising.”
Kayla Hankins, a LightBox team member at ICSC, noted that while the energy on the floor was high and deals were getting done, expansion isn’t easy. “Costs are up. Pro formas are tight. Everyone’s feeling the squeeze,” she said. “But there was a real shift toward collaboration—retailers and landlords sitting down and actually figuring it out together. Less posturing. More partnering.”
New Tenants, New Trends, New Rules
From the ICSC floor to earnings calls and deal announcements, one theme is consistent: the mix of retail tenants is changing—and fast. Demand is rising from sectors like medical, entertainment, resale, and EV-related services, filling gaps left by traditional big-box retailers and department stores.
“Resale is benefiting from both tariff pressure and sustainability trends,” said Kaiser, pointing to growth among secondhand and consignment brands. That shift, along with growing interest from experiential tenants, is helping to redefine what modern shopping centers look like.
Digital-first companies are also becoming major players in the physical retail landscape. Wayfair, long known for its e-commerce dominance, is expanding its brick-and-mortar strategy. In May, the company announced plans to purchase a former Lord & Taylor site in Westchester County, New York, to serve as a large-format showroom. The move follows the 2023 opening of its first-ever flagship store in Wilmette, Illinois, and signals a broader strategy to establish physical touchpoints in key suburban markets.
By investing in real estate, Wayfair is following the path of other online-native brands betting that physical locations can deepen brand engagement, reduce returns, and drive higher-margin sales.
Simon Property Group recently announced plans to invest $500 million in redeveloping properties into mixed-use destinations—adding residential, office, and entertainment components to traditional retail centers. These investments reflect a broader strategy: adapting portfolios to meet the evolving demands of both consumers and tenants.
Retail Isn’t Slowing Down—It’s Getting Smarter
Even in a mixed economic climate, the retail sector is proving resilient. Brokers, developers, and investors are adjusting strategies—not retreating. The momentum is shifting toward targeted expansion, smarter deals, and formats that meet consumers where they are.
“Retail is moving with purpose again,” Kaiser emphasized. “There’s less speculation, more strategy—and the players who adapt quickly are the ones making progress.”
Expect more thoughtful leasing, sharper site selection, and continued investment in mixed-use and value-driven assets through the rest of 2025.
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