This report highlights key trends in the nongrocery retail sector, combining market data with insights from executives and thousands of consumers across Europe. Covering industries like furniture, DIY, consumer electronics, sporting goods, beauty, and pet care, it offers valuable perspectives on the evolving retail landscape. Featuring exclusive insights from CEOs of leading European brands, this report provides a comprehensive view of the industry’s future.
In the past four years, the nongrocery retail sector has had to navigate a volatile macroeconomic environment, face supply chain disruptions, and adapt to changing consumer spending. Currently, growth rates seem to have stabilized just below those of the pre-COVID-19 era, but we still observe many differences in the pace of recovery across categories and European countries. While some categories have not recovered, others have benefited from pockets of growth. For example, growth in pet care is above 2019 levels in all markets, a pace that should continue, and beauty and personal care are projected to grow up to 2 percent annually in the coming years.
Several elements indicate the next five years will be equally challenging for nongrocery retailers. Economic uncertainty has led European households to remain cautious with their discretionary spending, while structural trends, such as an emphasis on omnichannel journeys, are reshaping the sector’s competitive landscape. In addition, the rise of discounters has spurred a race to the bottom on prices and quality, compelling retailers to offer a distinctive value proposition beyond these factors and overcome the “good enough” syndrome.
Other developments and trends will complicate the path forward. Continued shocks to the supply chain and labor markets could compel retailers to be much more agile and explore strategies such as more vertical integration and the incorporation of design-to value principles. Sustainability presents a difficult equation: retailers would need to balance selling more products with reducing their carbon footprint and making products more sustainable.
Building on the success of previous reports dedicated to grocery, fashion, and beauty,1 the inaugural State of Retail—Europe delves into the key trends that will shape the nongrocery sector in 2025 and beyond. Deep dives into specific categories—furniture and furnishings, DIY and hardware, consumer electronics, sporting goods, beauty and personal care, and pet care—explore ways retailers can keep pace with these trends. How can they create a compelling, customer-centric value proposition and build lasting loyalty? What does the future hold for physical stores? What steps should players take to develop omnichannel commerce? How can retailers expand beyond merely selling products to offering an ecosystem of services in pursuit of growth and profitability? And what role will AI and analytics play in their future success?