The research on the role of physical characteristics of the retail environment in the purchase decision-making of Generation Z focuses on analyzing how visible and invisible elements of the sales space and the behavior of sales staff influence the purchasing decisions of this demographic group. Generation Z, being digitally literate and technologically aware, has specific expectations and needs regarding the physical retail environment. The aim of the paper is to identify how different aspects of the retail environment affect the perception and behavior of Generation Z consumers and how these factors can increase the likelihood of purchase and customer loyalty. The research was conducted through a survey questionnaire on a sample of 143 respondents from this generation. The results show that the physical elements of the retail environment have a significant impact on emotions and purchasing decisions. For example, an aesthetically pleasing store appearance and pleasant atmosphere elicit positive emotional reactions and increase the propensity to purchase. On the other hand, negative factors such as crowding and long checkout lines negatively affect the perception of the store, reducing customer satisfaction and their desire for repeat visits. Analyzing respondents' attitudes towards the importance of other customers' behavior in the store, the results show divided opinions. Respondents are evenly split between neutral views and those who consider the behavior of other customers important or very important. Regarding store crowding, most respondents stated that they are bothered by crowding, with 72% saying that crowding bothers or greatly bothers them. This indicates a high sensitivity of Generation Z to crowding, which can significantly affect their shopping experience. In conclusion, this paper contributes to the understanding of Generation Z consumer behavior and their preferences regarding the physical characteristics of the retail environment. Recommendations for future research include recognizing the potential of new technologies (AR and VR) at retail locations, examining the significance of retailer presence on social media on the perception of the store and purchasing decisions of Generation Z, and conducting qualitative research to better understand consumer preferences.