As shopping centre landlords and retailers gear up to attend Mapic next week in Cannes, the wider real estate industry is seeking clarity on the future of physical retail.
A recent report, the CBRE European Retail Occupier Survey 2024, suggests that retail still has a home in bricks and mortar, although there are caveats. The study finds that 71% of retailers planning to increase their number of physical stores intend to do so in markets where they are already present.
Spacious stores are among the top priorities, with 72% of respondents aiming to enlarge their store size. This marks a significant increase compared to the 2022 CBRE study results, where only 26% of respondents expressed interest in operating larger surfaces.
Larger stores
The preference for larger stores is one of the key trends observed in the market, particularly among fashion and athleisure brands in capital cities and major urban areas. A trend specific to the luxury sector is owning stores instead of leasing them. However, leasing remains the predominant strategy for the mass market, with 84% of respondents stating they have no plans to purchase stores.
Chris Gardner, head of European retail, CBRE, says: ‘Improved consumer confidence is starting to translate into higher 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.’
The survey also finds that in terms of preferred formats, retail parks remain dominant, with 45% of respondents favouring them as locations for future stores. The popularity of this format is also supported by factors such as high foot traffic generated by residents in the area, access to free parking, and consumers finding similar retailer profiles within the same retail park, all criteria which are influential factors for store performance.
From a digital perspective, retailers are in a phase of exploration and learning, rather than implementation. 61% of respondents stated they are investigating Artificial Intelligence (AI), but only 25% have already implemented AI solutions.
ESG issues
ESG standards are also becoming increasingly important, according to the data. The CBRE study finds that six in ten retailers anticipate that over the next three years, “green” building features will become an advantage in leasing negotiations. This represents a 45% increase over 2022 - clear evidence that environmentally friendly contracts are expected to become more common.
Overall, bricks and mortar stores remain an essential component of strategy, with 97% of respondents acknowledging their importance. Additionally, there is a shared belief on the effectiveness of physical stores, which outperform online retail in terms of consumer engagement, cross-selling, overall sales strategy effectiveness, introducing new products, and attracting new customers.
‘The fact that 72% of retailers want to increase the size of their physical stores, compared to just 26% in 2022, along with the appetite for expansion in both new and existing markets across Western Europe and CEE, suggest a favourable 2025 for retail,’ says Carmen Ravon, head of retail occupiers CEE, CBRE.
‘The sooner retailers can implement AI solutions, the more they will be able to enhance store profitability and the shopping experience. I would like to thank the retailers in CEE and EMEA who participated in our study; the findings are extremely interesting and reveal some key trends for the coming year,’ Ravon concludes.
Mapic, a gathering for professionals in retail real estate, leisure, food service, and retail technology, will take place in Cannes from 26 to 28 November. This year’s edition expects 5,000 participants, including 1,600 brand representatives. One of the exhibition’s key topics will be understanding evolving customer expectations, as people increasingly seek meaningful experiences and quality time together in physical retail spaces.
To meet these diverse needs, new projects must be mixed-use and multifunctional according to experts, while stores continue to transform into versatile spaces that offer product testing, sales, repair services, second-hand options, and immersive experiences - all innovative ways to build customer loyalty.
During the event, the Retail & Urban Regeneration Summit will spotlight mixed-use projects demonstrating the foundational role of retail in the creation of the city of tomorrow.
With the LeisurUp exhibition space at the Palais being completely redesigned, two new areas will be dedicated to brand licensing and immersive experiences - both significant and growing trends.
The Happetite Forum, meanwhile, will highlight successful and appealing restaurant concepts that are currently expanding internationally and across borders.
