After the extraordinary boom during the pandemic years, Europe’s e-commerce sector has returned to a more sustainable growth path. But while online retail no longer expands at the explosive pace seen in 2020 and 2021, a new report by global real estate services firm CBRE makes one thing clear: e-commerce continues to fundamentally reshape both logistics infrastructure and physical retail real estate.
According to CBRE’s report The Next Chapter: Retail and Logistics in Europe’s E-Commerce Future, inflation-adjusted online spending across Europe now stands just 1% below its 2021 peak, confirming that online retail remains structurally strong despite the post-pandemic normalization.
Frank Emmerich, Head of Retail Germany at CBRE, explains:
“The era of explosive e-commerce growth may be over, but the structural trend remains intact. For retail real estate, this means increasing market polarization.”
According to CBRE, retailers are increasingly concentrating their store networks on high-performing prime locations, while investing more aggressively in flagship stores designed to strengthen brand perception and customer engagement.
This development is expected to further widen the gap between prime and secondary retail locations.
E-Commerce Sales Volumes and Penetration Rates
Stores Become Part of Fulfillment Infrastructure
One of the report’s most important conclusions is that physical stores are increasingly becoming part of retailers’ fulfillment infrastructure.
As omnichannel retail strategies mature, stores are no longer serving purely as sales locations. Instead, retailers increasingly use physical locations for:
- Click & Collect services
- Online returns processing
- Local fulfillment of digital orders
- Inventory management across channels
CBRE observes that many retailers are already increasing the share of back-of-house space significantly.
In some cases, stockroom space has expanded from around 15% of total leased area to as much as 25%, reflecting the growing logistical role of physical stores.
This development fundamentally changes how retail space is planned and utilized.
Returns Become a Strategic Driver of Footfall
Another important shift concerns return logistics.
According to CBRE’s European Retail Occupier Survey, 45% of retailers have already introduced or are planning fees for online returns. Among fashion retailers, that number rises to 55%.
The reason is simple: reverse logistics remain expensive, often representing 20% to 30% of the total value of online purchases.
As a result, more retailers are actively encouraging customers to return products directly in stores — turning physical retail into an important operational component of e-commerce rather than a competing channel.
Grocery and Health & Beauty Drive the Next Growth Wave
The report also highlights changing category dynamics.
While electronics and fashion remain among the most mature e-commerce segments, future growth is expected particularly in:
- Grocery retail
- Health & Beauty
- Online food retail
CBRE identifies grocery as especially significant. Although online grocery still has relatively low penetration, the category represents approximately 40% of total retail spending, meaning even modest increases in online adoption can significantly impact overall retail structures.
Implications for Retail Real Estate: Stores are Being Redefined
For retail real estate, CBRE’s findings suggest that the next phase of e-commerce is not reducing the importance of physical stores — but fundamentally redefining their role.
The long-standing assumption that online retail would gradually replace brick-and-mortar stores increasingly appears outdated. Instead, physical stores are becoming integrated components within a much broader omnichannel ecosystem that combines customer experience, logistics, fulfillment, and data-driven retail operations.
This shift has direct consequences for retail property owners, developers, and leasing managers.
1. Prime Assets Become Even More Valuable
One of the clearest developments visible across Europe is the ongoing rationalization of store networks.
Rather than operating large store portfolios, many retailers are increasingly concentrating investments on fewer but significantly more productive locations. Flagship stores in dominant shopping centers and prime high street locations continue to attract capital, while secondary locations face rising pressure.
For landlords, this points toward further market polarization.
The gap between dominant retail destinations and weaker secondary assets is likely to widen as retailers become increasingly selective in allocating physical space.
2. Stores Become Operational Infrastructure
Perhaps the most important structural shift concerns the operational role of stores themselves.
Retailers increasingly use physical stores not only for sales but as active components of their supply chain. Click & Collect services, in-store returns, same-day delivery preparation, and local fulfillment of online orders are becoming standard operational functions.
CBRE observes that some retailers are already significantly increasing stockroom and operational areas inside stores.
Where stores traditionally allocated roughly 15% of leased space to storage and back-of-house functions, some operators are now moving toward 25% of total floor area.
For developers and landlords, this creates entirely new design requirements. Future retail units increasingly may require:
- larger storage areas
- dedicated logistics access
- separate pick-up infrastructure
- redesigned back-of-house layouts
- greater technical integration with distribution systems
In simple terms: the classic sales floor is shrinking while operational infrastructure inside the store grows.
3. Return Logistics Are Driving Footfall Back to Stores
Another important development concerns reverse logistics. According to CBRE, 45% of retailers have already introduced or are planning fees for online returns. Among fashion retailers, the figure rises to 55%.
With reverse logistics often accounting for 20% to 30% of total order value, retailers increasingly encourage customers to bring returned products directly back into stores.
This creates an interesting reversal: For years, e-commerce was seen primarily as a driver of lost footfall for physical retail. Now digital retail operations themselves increasingly rely on physical stores to solve operational inefficiencies.
Shopping centers are therefore evolving into important service and fulfillment hubs within omnichannel retail strategies..
4. Retail Space Must Become More Flexible
As online and offline channels merge further, traditional store formats are becoming less standardized. Retailers increasingly demand spaces that can serve multiple purposes simultaneously:
- product presentation
- customer service
- experiential retail
- fulfillment operations
- digital integration
This requires significantly more flexibility from landlords. Future retail assets may need to accommodate changing store concepts faster than traditional leasing cycles were designed for.
This also explains why turnover-based rents, shorter lease agreements, and more flexible store layouts are becoming increasingly common across Europe.
5. Retail and Logistics Are Beginning to Converge
Perhaps the most profound long-term implication is the gradual convergence of retail and logistics real estate.
For decades, both asset classes operated separately. That distinction is increasingly disappearing. Physical retail is becoming part of logistics infrastructure, while logistics facilities themselves increasingly determine retail performance.
For retail real estate professionals, the strategic question is therefore changing fundamentally. Success will no longer be defined purely by tenant mix and footfall performance. Increasingly, retail assets will also be judged by how effectively they support retailers’ wider fulfillment and distribution networks.
The Store Is No Longer Just a Store
CBRE’s report ultimately points toward a broader structural transformation of physical retail. Stores are no longer simply points of sale. They are becoming hybrid spaces that combine:
- brand building
- customer experience
- fulfillment infrastructure
- data collection
- service functions
- logistics operations
For retail real estate professionals, this changes the strategic question entirely. The future is no longer about defending physical retail against e-commerce. It is about designing physical retail assets that can actively support and enhance the digital retail ecosystem.
Or put simply: The next chapter of e-commerce is not happening outside physical retail — it is happening inside the store itself.
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For more information, please download the CBRE report
“Retail and Logistics in Europe’s e-commerce future”
