European Retail Sector Outlook 2024

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Consumer confidence is expected to face continued headwinds in the short term. While inflation is on a decline across European markets, prices for many essential products, such as food, energy, and fuel, remain high. This is likely to hinder consumers' ability to allocate spending toward discretionary items. According to GlobalData's Q3 2023 survey of European consumers, individuals are least inclined to cut spending on essential products like groceries, personal hygiene, and cleaning items. Conversely, they are more likely to cut back on dining out, travel and leisure activities, and visits to spas or salons. Coupled with increased borrowing and housing costs, a slowing job market and geopolitical risks will contribute to the prevailing sense of uncertainty among consumers. Furthermore, European tourism has not yet returned to pre-pandemic levels, although intra European travel has shown a robust recovery. According to data from Tourism Economics, in 2022, visitor arrivals to Europe from short-haul sources were only 16% below 2019 levels, and in 2023, they are projected to be just 7% below.

However, long-haul traveller numbers remain significantly below pre-pandemic levels. In 2022, international arrivals were down by 41% compared to 2019, with the number of Chinese tourists, who are also known for their high spending levels, still 86% below pre-pandemic volumes. On a more positive note, visitors from other far-away countries, such as the US and Middle Eastern states like the UAE and Saudi Arabia, have recovered strongly in both number and spending. Against this backdrop of challenging economic and sectoral trends, retailers have continued to focus on their real estate commitments and have sought to position themselves in the right properties in the right locations to secure sales revenue, control costs, and preserve and enhance margins.

While inflation is on a decline across European markets, prices for many essential products, such as food, energy, and fuel, remain high.

6 RETAIL OUTLOOK 2024

THE TIDE IS TURNING DIVERSE | 7