In spite of the economic challenges within Europe, retail sales are still predicted to increase by 4% in 2024 and a further 4% in 2025 in real terms. This forecast is on the back of a period of lower growth seen post-pandemic (3% in 2022, and -6% in 2023). After a significant decline in retail sales in 2023, when interest rates and inflation remained near their peak, retail sales in 2024 are yet to rebound to levels seen prior to the cost of living crisis. This correlates to the increasing savings rate across Europe as consumers have become more hesitant to spend due to the prolonged effects of the weaker economic landscape.

Slowing retail sales growth is also the result of consumer spending returning to a level seen prior to the pandemic. In fact, the 4% annual growth forecast for 2024 is slightly above the previous ten-year average growth of 3%. So, although savings are increasingly prioritised by consumers, retail sales continue to remain resilient, with growth now returning to a rate similar to pre-pandemic levels.

Leading the retail sales growth in 2024 are eastern European markets, which are forecast to rebound from the negative growth recorded last year. This is led by Hungary (6%), Romania (4%), Czech Republic (4%) and Poland (4%). While southern European markets are forecast relatively low growth for 2024 and 2025, the same markets have shown resilience in retail sales in previous years.

Retail sales have, in part, been helped by increasing international travel. According to the European Travel Commission (ETC), foreign arrivals across the continent were up 12% year-on-year and 6% on 2019 levels in the first two quarters of 2024.

Retail sales per category show that growth in 2024 is expected to be broadly uniform, fluctuating between 2–4% as spending appears to have stabilised. Compared to 2023, when the effects of higher interest rates and inflation were impacting consumers, fluctuations varied between 3% and -4% as consumers prioritised spend in different areas. Eating-out sales have historically varied the most, declining by 32% in 2020 and rebounding by 25% in 2022. This is typically a category that consumers both scale down and save for in times of financial strain. Fashion sales also tend to fluctuate in uncertain economic conditions, oscillating between -12% in 2020 and 13% in 2021.

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