Ranking: the 30 most-attractive European cities for expanding retailers

Happy fifth birthday to Brexit, or should we say bon anniversaire? Many readers will not be celebrating this milestone, and we know the government let the day slide with no fanfare, but, if nothing else, the anniversary presents an opportunity for retailers to reflect on the complex path that they’ve had to navigate as a result of the historic vote.

The birthday also comes as inflation has eased, and many retailers will now be evaluating their presence within Europe (or lack thereof), our trading relationship, and their ambitions for expansion in the next five years. But where do the best opportunities lie? Which regions have been overlooked? And how do the UK’s best retail cities stack up against our European neighbours? 

“After a challenging period, inflation has subsided across the continent, relieving pressures on consumers and businesses alike.” says founder and chief executive of JDM Retail Jonathan De Mello. 

“Normal consumer habits have begun to return, and increased lettings and rental recovery reflect a retail market that is finally picking up. As occupiers are again thinking about growth, JDM Retail and Oxford Economics have published our first Retail City Index, which aims to encapsulate the core considerations that occupiers think about when planning for expansion into new markets – namely market size, potential for growth, and ease of doing business.” 

City-first strategy

The index is focused on cities to reflect the evolution in how retailers approach entering new markets, says De Mello. 

“When retailers are looking at expansion they’re looking at fewer stores than before, but looking at bigger markets to trade in. So they don’t necessarily want to go into every small town in a market, but instead they want to tackle a city,” he adds. 

“You might get occupiers from Asia coming into the European marketplace saying, ‘we want to do the UK’, but really they just want to do London, Manchester, Birmingham and Glasgow.” 

Oxford Economics’ managing director, economic consultancy Sam Moore agrees. 

“Within the European economy, major cities tend to be at the forefront of growth,” he says. 

“A superior sectoral structure, with a typically high concentration of dynamic ICT and professional & technical services sectors, enables city economies to usually outperform their nations. This creates more jobs, and combined with rich cultural offerings, attracts a greater number of people. 

“But of course, there are wide differences across the cities. The likes of London and Paris remain the heavyweights in terms of scale, but certain smaller cities can offer better growth prospects. Therefore, a key task for businesses is selecting the right locations.” 

Retail City Index: the 30 most-attractive European cities for expanding retailers 

European cities ranked by their market size, potential for growth, and ease of doing business

Source: JDM Retail and Oxford Economics for Retail Week

Full report and methodology

Paris je t’aime 

Which city but Paris could be la crème de la crème of this ranking with a score of 79? Although second place London has it almost matched in market size and beats it in business environment (which takes into account factors like control of corruption, political instability and strength of institutions), the French capital pipped it to the post with a higher spend potential – but both cities are indeed the powerhouses of European retail, each head and shoulders ahead of all the other cities in this index. 

There are a few factors limiting London’s potential for first place – Brexit hindering its ability to benefit from the wider EU economy being just one, says De Mello. 

“It’s a historic issue, and before Brexit. But international tourism into our cities and particularly London has been impacted through not being in Schengen,” he says. 

“Tourists with the Schengen visa can access Milan, Berlin and Paris all with one visa. So obviously people with very high net worths that are compelled to spend money on retail would prefer to go there than they would London – where they’ll need to get a separate visa at an extra cost and with extra time. Whereas if we were part of Schengen, or kept closer ties with the EU, that would be easier for them. On top of that we don’t allow them to claim back their VAT as well.” 

Who’s missing?

If you were asked to rank Europe’s most attractive retail destinations without seeing this list, many would have put Milan in third or maybe even second place, but Italy’s premier shopping capital finds its place far further down the ranking at number eight. 

Despite being considered as one of the world’s most important luxury fashion destinations, Oxford Economics and JDM Retail found that Milan’s standing has been impacted by Italy’s poor governance (by European standards) and weakened growth prospects. 

Among the primary causes are Milan’s ageing population which has shrunk significantly over the last five years, putting it at a disadvantage among its more youthful European peers within its class size. 

Other factors hindering its growth include a spread of new out-of-town shopping destinations which are diverting traffic away from the city centre. 

Rome doesn’t make it into the top 30, landing four places out, with the biggest gulf between market size (9th) and overall ranking (34^th) due to declining retail sales, fall in population and weak growth in disposable income.

Several fast-growth cities missed out on a spot, but for different reasons. Warsaw in Poland doesn’t make the top 30 despite being one of the fastest-developing economies due to an abundance of shopping malls diverting attention from its commercial centre. It’s a similar story for Athens, Greece, where the +100,000 sq m futuristic Ellinikon Mall is set to open and dominate the retail landscape, and Istanbul in Turkey where the vast majority of the global retail happens outside of the city centre. 

Untapped potential

Paris, London and Milan’s reputations are undeniable, but where else in Europe have retailers overlooked?

Dublin is punching well above its market size thanks to its strong sales potential. The capital of Ireland has the smallest market size in the top 10, and if this ranking was based on market size alone, Dublin would come in at 19 – just behind Lyon in France – yet it comes in at 5^th for growth. Dublin is one of the fastest-growing cities in Europe, with 10% more residents in 2024 than there were just five years ago, and a 27% higher nominal disposable income after housing costs making it an extremely attractive city for retailers looking to broaden their horizons. 

Outperforming Dublin still is Denmark’s Copenhagen, which comes in fifth in the overall ranking and second in spend potential, despite being 13^th in market size.

“In five years, Copenhagen will become even stronger as a city,” says De Mello. 

“From an economics perspective and also from a business environment perspective, it’s very inviting for new or established retailers to set up there.”

Another worthy mention goes to Oslo. Despite being one of the smaller capitals, it’s ranked 21^st for spend and only 43^rd for presence of international brands – a key indicator that it has untapped potential among even some of the biggest retailers. 

Country-wide

If retailers want to take a more country-forward approach than taking on the continent city-by-city, according to this data their best bet would be Germany – with six cities in the top 30 making it one of the most attractive countries for international expansion in Europe. Most attractive among those German cities is the capital Berlin, a strong all-rounder across the three metrics landing it in third place overall. 

Other top contenders include the UK and France, which each have four cities in the ranking in London, Manchester, Birmingham and Glasow, and Paris, Lyon, Marseille and Bordeaux. 

According to this data, any retailer looking to invest in Italy may want to tread carefully, as previously mentioned factors mean despite being one of the largest markets in Europe, just one Italian city has made it into the top 30. Sfortunato.