Retail Infrastructure Development and Format Evolution in Europe

Introduction

European retail infrastructure mirrors deep-rooted changes in consumer shopping habits and interactions with physical spaces over several years. In general, traditional high street retail is experiencing a decline in footfall in many cities, whereas neighborhood convenience formats, retail parks, and mixed use developments are still drawing investment. Retailers are increasingly making infrastructure decisions based on location-specific demand patterns instead of using standard rollout models.

Grocery and essential retail are the main drivers of the infrastructure changes. REWE Group has been rolling out its small urban store formats in Germany to accommodate frequent shopping trips and short living spaces. In the United Kingdom, Sainsburys Local stores serve dense residential areas and commuter zones, thus, they are complemented by larger supermarkets.

Shopping center operators are also changing infrastructure strategies to have a different impact. Unibail Rodamco Westfield has transformed a number of its European properties to lifestyle destinations that evoke the combination of retail, dining, and entertainment. The approach affects the tenant mix and thus, retailers are encouraged to investing in experience-focused store designs.

For detailed analysis and forecasts, refer to the Europe Retail Market report and its full table of contents.

Major Drivers, Trends and Challenges

Urban redevelopment is among the primary factors behind changes in infrastructure. Cities in Europe have committed to mixed use zoning as the main planning strategy. In this way, retail activities are integrated with residential and office spaces. The result is a preference for flexible store formats and a limitation of large scale standalone developments in central locations.

Retailers are continuing to optimize store size and layout by means of various initiatives. For instance, in 2025, IKEA launched smaller city center planning studios across Europe, where customers can discover products in a digital way and complete orders from centralized warehouses. This approach yields a reduction in real estate costs while a brand presence is still kept.

The adoption of green practices has become a dominant theme in infrastructure investments. Besides energy efficient buildings, a reduced parking footprint, and improved public transport access have become the most prominent site selection factors. Retailers are obliged to meet national and European environmental regulations, thus increasing the capital requirements.

On the other hand, rising rental costs, planning restrictions, and uneven footfall recovery are among the obstacles faced by the sector. Retailers should find a balance between their physical presence and profitability, especially in upscale urban locations. Infrastructure related decisions have to be more closely aligned with the digital and logistics strategies that are in place.

Retail infrastructure flexibility remains essential for maintaining relevance in evolving European retail landscapes.

Table of Contents

1. Introduction
2. Definition and Scope
3. Retail Real Estate Trends
4. Store Format Innovation
5. Urban and Suburban Development
6. Investment and Regulatory Challenges
7. Future Infrastructure Outlook

Related Resources

Europe Real Estate Market

Alternative Building Materials Market