The high street's digital-physical fusion: How Gen Z is reshaping retail

As Britain's high streets navigate an era of profound transformation, new research suggests younger consumers are far from abandoning physical retail — they are instead driving its evolution toward experience-led commerce. To understand this shifting landscape, FashionUnited spoke with Dan Edelman, Vice President and General Manager of UK Merchant Services at American Express, whose recent research offers crucial insights into how Generation Z and Millennial consumers are reshaping traditional retail environments.

How do you see the role of entertainment evolving on local high streets to meet the expectations of Gen Z and Millennial shoppers over the next decade?

According to American Express data, 61 per cent of Generation Z and Millennial shoppers believe their local high streets will remain integral to their daily lives over the next decade. The research reveals that 41 per cent of young consumers visit their local high street specifically for leisure activities, with a similar proportion (42 per cent) citing entertainment venues — from cinemas to escape rooms — as crucial elements of a "great" high street.

What specific types of "experience-led retail" do you believe will have the biggest impact on attracting younger consumers, and how can non-leisure retailers adapt to this trend?

The research illuminates a striking generational divide in retail preferences. While traditional retailers might view augmented reality (AR) as a novelty, 58 per cent of 18-34-year-olds report being more likely to purchase from retailers offering AR experiences — in stark contrast to just 15 per cent of over-55s.

This digital-physical fusion extends beyond technology. The data shows 56 per cent of younger shoppers favour retailers with integrated hospitality spaces, such as in-store cafés or bars, compared with 30 per cent of those aged over 55. This suggests a fundamental shift in how retail space is conceptualised, moving from pure transaction to social destination.

How can local businesses collaborate to create a cohesive environment that encourages longer visits and boosts the local economy?

"The fact that Gen Z and Millennial consumers are actively looking for entertaining and social experiences on their local high streets is clearly a positive sign for local economies," says Edelman. Perhaps most notably for industry strategists, the research points toward an emerging ecosystem approach to high street retail, with 46 per cent of consumers expressing interest in joined-up loyalty schemes across independent businesses.

For fashion retailers, the implications are clear: success in capturing the next generation of consumers will depend less on traditional merchandising and more on creating immersive, socially-oriented spaces that blend digital innovation with physical experience. As retailers formulate their long-term strategies, the data suggests that investment in experiential elements — from AR fitting rooms to in-store social spaces — may be as crucial as the product offering itself. The high street of tomorrow, it seems, will be as much about entertainment as it is about commerce.