He European retail stay strong. Experience in health and beauty product rentals a growth of 57% in 2023compared to the previous year, which corresponds to a doubling of the area occupied across Europe, according to the latest report from Cushman & Wakefield, European Retail Radarwhich analyzes 2,000 rental transactions in Europe advised by the same real estate consultancy.
The study shows that brands of Fashion They remain the cornerstone of the industry, accounting for almost 40% of the total contracted area in Europe. Particularly active fashion retailers in 2023 were the brands of the Italian giant Calzedonia and the Polish brands of LPP.
In this sense, Rob Travers, Head of EMEA Retail at Cushman & Wakefieldexplained: “The recovery in consumer confidence, together with easing inflation and improving tourist traffic, has contributed to positive growth in retail activity in 2023«.
On the other hand, the sector Food & Drinks (F&B) maintains its position as the second most active company in terms of transaction volume, representing 16% of the total number of transactions carried out and 8% of the total volume of leased space. Some big names in the industry, such as Burger King and Starbucks, showed strong activity in 2023, followed by fast-growing chains such as Taiwanese bubble tea operator Gong Cha, US chicken chain Popeye’s and Hawaiian Poke Bowl in Belgium.
The operators of Health & Beauty, with well-known brands such as Rituals, Rossman, Kiko and Douglas showing major signs of activity in 2023. The sector accounted for 10% of operations carried out in 2023 and 7% of new hires recorded in 2023, doubling the area occupied in 2022 and registering an increase in the number of operations by 57%.
Last year, retailers Mixed goods They also occupied 35% more space compared to 2022, with Danish brand Normal along with Miniso and Pepco/Dealz driving activity across the sector.
Approximately 10% of transactions were processed by premium brands, representing a 15% increase year-over-year and an adoption increase of over 60%. Luxury retailers saw a 6 percentage point increase in transactions, focusing on major luxury destinations such as London and Paris.
Large format slowdown
Cushman & Wakefield’s report shows that the retail real estate market has seen a 20% increase in the number of medium-sized format operations (600 – 1,000 m2), largely due to the activity of retail operators. Mixed goods. Areas of less than 600 m² account for 83% of registered businesses, although there is a clear trend towards smaller areas.
The number of businesses on areas under 2,000 m² increased in 2023, while businesses on areas over 2,000 m² recorded a decline of 30% compared to the previous year. The slowdown in these large format spaces is due to the post-pandemic slowdown in the home and DIY sector, which recorded a 19% decline in operating activities compared to 2022.
Spanish retail continues to boom
Spanish retail has observed behavior similar to that in Europe. The sector of Fashion They accounted for 24% of operations carried out in Spain. The segment for its part Food & Drinks It has acquired 21% of the operations, registering growth compared to 2022, the year in which it acquired 17% of the registered operations. The operations of Personal goods They accounted for 15% of retail transactions; Mixed goods 14% (up from 9% in 2022) and Health & Beauty 8% (up from 5% in 2022).
As in the EMEA region, Spain recorded a year-on-year increase in the weight of total closed establishments to below 600 m2, representing 83% of establishments.
Optimistic and cautious outlook
Consumer confidence has improved over the past year and this is expected to continue in 2024. However, the pace of improvement will remain modest as consumers feel the impact of ongoing cost of living pressures, geopolitical tensions and broader economic concerns.
The outlook remains cautiously optimistic, with retail sales growth expected to rebound in the second half of 2024, although growth is expected to remain moderate. In turn, retailers will continue to face near-term margin pressures, particularly the additional challenge presented by recent cost increases.
The report states that retailers and owners are refocusing on getting the most out of their stores, with omnichannel selling reinforcing the need for continuous improvement. In this sense, Travers He added: “Of course there are challenges. Margin erosion is a real concern as consumer spending concerns are compounded by continued strain on both supply chains and rising operating costs. “This has led to volatile competitive tensions, with some retailers foregoing offers when conditions become tight.”
Also Robert Travers, Head of EMEA Retail at Cushman & Wakefieldexplained: “It’s clear that the real estate sector is at the forefront of retail performance and doing it well has never been more important.” As a result, retailers are more demanding than ever about the demands of their physical stores.