Retail investment: Widening gap between Europe’s retail markets

European retail markets are mostly in good shape at the start of the year. However, retail investors in Europe will need to adjust to a growing gap between robust retail markets and those that are subject to high risk in the long term. As Union Investment’s Global Retail Attractiveness Index (GRAI) shows, there are 25 points between the current top performer, Portugal, and the weakest market in Europe, Belgium. This difference is the largest that has been recorded for the index over the past 12 months. The ongoing positive economic climate in Europe, which is delivering rising revenues for online businesses as well as brick-and-mortar retailers in almost every country, is softening this trend at present. However, any sustained weakening of consumer sentiment is likely to cause retail markets to drift further apart.

The German retail market remains one of the top performers globally. Its stable top-tier position is due in particular to consistently strong increases in retail sales.

Germany is also the only country in the GRAI’s EU-12 index to see a slight rise in consumer confidence compared to Q4 2017 ( 2 points). In all the other European regions surveyed, consumer confidence in the domestic economy is deteriorating to a greater or lesser extent. The buoyant employment market and optimistic income expectations mean that German retail markets are particularly well supported. Local players and increasingly also foreign investors are attracted by the prospect of very predictable cash flows.

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