What is the current state of the retail sector in Europe?
The European retail landscape in 2025 and 2026 is shaped by a paradox: purchasing power continued to grow, inflation moved closer to the European Central Bank’s target, and labor markets remained resilient, yet consumer sentiment stayed cautious. Retail turnover increased, but continued to lag behind income growth as households adapted to years of economic uncertainty.
The lasting effects of the pandemic, inflation, geopolitical tensions, and supply chain disruptions have fundamentally changed consumer behavior. Even as economic conditions improve, many Europeans remain price-conscious and increasingly focus on value, balancing affordability with quality, convenience, functionality, and trusted brands.
This study examines the key trends shaping European retail in 2025 and 2026. It provides insights into purchasing power, retail turnover, retail share of private consumption, and inflation, helping to explain how changing spending priorities and renewed inflationary pressures are influencing consumer behavior across Europe.
This study highlights how the retail sector in Europe has developed.
In addition to well-founded brief analyses, the 20-page PDF also includes numerous maps and charts that present the content and data in a clear and comprehensible way.
Some key results at a glance:
Purchasing power
In 2025, purchasing power across the EU continued to grow despite ongoing geopolitical uncertainty and elevated inflation in parts of Europe. Average per capita purchasing power reached 22,425 euros, representing a nominal increase of 3.3 percent compared to the revised 2024 figure. In total, residents of the 27 member states had approximately 10.1 trillion euros at their disposal for expenses such as food, retail purchases, housing, services, energy costs, private pensions, insurance, vacations, and mobility. The strongest increases were recorded in Poland (+8.8 percent), Lithuania (+8.3 percent), Romania (+7.7 percent), and Bulgaria (+7.3 percent), reflecting the continued economic convergence of Southern and Eastern European markets.
Retail turnover
After a robust 5.5 percent increase in 2023 and growth of 3.0 percent in 2024, the growth rate of retail turnover in the EU slowed further to 2.1 percent in 2025, reflecting the continued normalization of consumer spending patterns beyond the post-pandemic recovery. The strongest gains were recorded in Northern and Eastern Europe, led by Norway (+13.1 percent) and Lithuania (+10.5 percent), followed by Sweden (+8.9 percent), Bulgaria (+8.2 percent), and Slovakia (+8.0 percent). Rising wages and improving purchasing power supported retail spending across these markets. By contrast, large Western European markets remain weak and continue to hold back overall growth, with the United Kingdom even recording a decline of -0.6 percent.
“The key finding is not that Europeans are spending less, but that they are spending differently. Retail turnover continues to grow, yet an increasing share of consumer budgets is flowing into services and experiences. This points to a structural shift in spending priorities across Europe. Rising purchasing power no longer translates automatically into higher retail spending.”
— Philipp Willroth, Study Lead, NIQ Geomarketing
Retail share of private consumption
Retail’s share of total private consumption in the EU declined for the fourth consecutive year in 2025, falling to 31.9 percent. While purchasing power increased by 3.3 percent and retail turnover grew by 2.1 percent, consumers continued to allocate a larger share of their budgets to services, travel, leisure, and hospitality. Significant regional differences persist across the EU. Croatia recorded the highest retail share at 48.3 percent, followed by Lithuania (45.7 percent), Bulgaria (44.0 percent), and Hungary (43.2 percent). Germany ranked last with just 22.2 percent of total consumer spending directed toward retail purchases.
Inflation
After the sharp price increases seen in the years following the 2022 energy crisis, inflation across the EU stabilized further in 2025, averaging 2.5 percent and coming close to the European Central Bank’s target. The highest rates were recorded in Romania (6.8 percent), followed by Estonia (4.8 percent), Hungary (4.4 percent), Croatia (4.4 percent), and Slovakia (4.2 percent), reflecting continued wage growth and labor market pressures in parts of Eastern Europe. By contrast, France reported one of the lowest inflation rates in Europe, at just 0.9 percent, supported by weaker domestic demand and a favorable energy mix. In 2026, inflation in the EU-27 is expected to rise again to 3.1 percent, driven primarily by renewed pressure on energy markets.
