European Retail Sector Outlook 2024

WHAT CUSTOMERS & RETAILERS WANT

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The challenges to maintaining and growing retail spending underscore the heightened importance of creating appealing spaces that entice consumers. The quantity of shoppers returning to physical stores has bounced back strongly. According to GlobalData, in-store non-grocery spending across Europe fell by 13% between 2019 and 2020 whilst online retail sales grew by 30%. However, with the easing of pandemic restrictions, consumers have returned to physical stores, motivated by the desire for an in-store experience and the opportunity to secure better prices through in-store discounts offered by retailers to drive footfall.

As a result of this focus on in-store shopping, retailers are seeking retail space that better allows them to strategically attract and engage with consumers. Within the retail landscape, fashion retailers form the bedrock of retail real estate activity; 30% of lettings Cushman & Wakefield have delivered across Europe since 2021 has been to fashion retailers. As well as committing to new stores, often in key locations with strong footfall, many fashion retailers have also invested in revamping or refreshing store formats. This includes not only refitting but also adding complementary services – such beauty studios and food and beverage outlets – for an enriched in-store customer experience. Health & beauty retailers have also been particularly active

with consumers continuing to focus on personal wellbeing. As a result, we anticipate cosmetics and healthcare brands will have more requirements for retail space, especially as the role of the physical store remains key for customer engagement in these categories. The evolving customer expectations for immersive experiences are not limited to retail but extend to leisure as well. Food & beverage (F&B) and leisure operators actively reshape their real estate strategies and constitute approximately a fifth of lettings since 2021. This underscores the ongoing trend of heightened customer demand for in-person socialisation and entertainment. Notably, there is a growing demand for space from experiential brands rooted in culture and entertainment. This encompasses experiential entertainment focused on "learning and discovery," such as museums expanding into new locations, and culture-based entertainment, including immersive experiences tied to television and other media. As consumers increasingly seek out novel and captivating in-person experiences, the demand for space from F&B and leisure, along with culture and entertainment-based experiential brands, is expected to rise on both a short and long term basis.

The challenges to maintaining and growing retail spending underscore the heightened importance of

ANALYSIS OF C&W EUROPEAN RETAIL LETTINGS*

(NO OF DEALS, 2021-H1 2023)

creating appealing spaces that entice consumers.

29% FASHION

8% HEALTH & BEAUTY

17% FOOD & BEVERAGE

7% PERSONAL SERVICES

14% PERSONAL GOODS

3% SUPERMARKETS

10% MIXED GOODS

3% LEISURE

9%

0% OTHER

HOME & DIY

Source: Cushman & Wakefield Research * relates to analysis of nearly 5,000 letting deals that Cushman & Wakefield has delivered across 13 European countries since the beginning of 2021

8 RETAIL OUTLOOK 2024

THE TIDE IS TURNING DIVERSE | 9