I was recently reminded of the power of technology this Christmas when buying the most prosaic of items, a t-shirt. The process, however, was unusual: you had to answer four questions via the website, such as your shoe size, and an algorithm calculate the perfect fit. To be able to obtain a tailored item of clothing online without any physical interaction emphasised the rate of change we are seeing in the retail sector. Indeed, over the past 10 years retail and technology have become inexorably linked. New competitors have emerged and business models have evolved. Consumers can engage seamlessly across multiple channels, meaning that the power now resides firmly with the consumer. Amid all of this change, European retail markets have mostly continued to perform strongly, with the Nordics and Southern Europe markets outperforming in 2017. Positive macro-economic conditions are expected to remain conducive to further growth. There are signs, though, that the market has reached a mature point in the cycle, which is expected to lead to a moderation in the rate of growth over the next five years. We also continue to note downside risks, namely sustained growth in competing channels to physical stores. In this month’s Europe Watch we highlight the key trends impacting the European retail sector.
Source : CBRE Global Investors