Press Release
Bricks and Mortar Retail Prevails with Occupiers Eyeing Expansion Across Europe
October 14, 2024
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Director, External Communications & PR
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External Communications Manager
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Almost three quarters of respondents looking to increase their retail store portfolios
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Retailers prioritising retail parks to fulfill expansion plans
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Physical stores remain key to overall strategy
Retailers across Europe continue to commit to the physical store, with 72% of occupiers confirming they have plans for further expansion, according to CBRE’s 2024 European Retail Occupier Survey.
CBRE’s research comes at a time of renewed optimism, with the retail industry and broader economy emerging from a challenging period. The report, in which CBRE gathered responses from over 60 retailers with a combined global footprint of more than 130,000 stores, found that 71% of retailers that have plans to increase their bricks and mortar offering expect to do so in markets they already have a presence in.
Larger stores are also in favour, with 72% of retailers looking to increase the size of their stores. This marks a significant increase from CBRE’s survey findings in 2022 in which only 26% of respondents cited a desire to take larger stores.
The search for larger stores is one of a few key trends the firm has observed, notably across athleisure and fashion in gateway and capital cities, alongside the own-to-occupy trend, whereby luxury retailers are showing an increasing desire to own their stores as opposed to leasing. However, leasing stores remains the predominant strategy for the mass market, with 84% of respondents stating that they have no plans to expand their store ownership.
Improved consumer confidence is starting to translate into higher levels of consumer spending, which is giving retailers confidence to commit to stores both in markets familiar to them, and new markets altogether. Brand loyalty is often enhanced through in-store experience, and this is where we see retailers really committing to store investments and using bricks and mortar to truly showcase their brand identity.
When asked which locations they would be targeting, retail parks dominated, with 45% of retailers selecting the subsector for their preferred future store locations. This is further supported by the high volumes of local resident footfall, availability of free parking and the critical mass of similar retailers in retail parks, all of which were identified by respondents as factors that have the greatest influence on store performance.
From a technology perspective, retailers are in exploratory mode as opposed to implementation mode. 61% of respondents said they were exploring Artificial Intelligence (AI), but only 25% have already implemented AI solutions.
ESG considerations, however, are rising in importance. According to CBRE’s research, six in ten retailers expect green leases to be part of lease negotiations over the next three years, an increase from 45% two years ago, marking a clear indication that such leases could become commonplace.
Overall, physical stores are a core component of overall strategy, with 97% of respondents in agreement. Furthermore, group consensus was that bricks and mortar is more effective than online retail for consumer engagement, cross-selling products, sales productivity, introduction of new products and acquiring new customers.
Our findings tell us that after a number of challenging years, retailers have confidence in the market and are looking to expand. The trends highlighted in the survey are further backed by performance data from CBRE-managed shopping centres across Europe, which shows that tenant sales increased by 5% in H1 2024 on a year-over-year basis, well above the rate of inflation. Retailers see the value of the physical store, and that it is a significant enabler in achieving growth ambitions.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2024 revenue). The company has more than 140,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.co.uk.