Brick-and-mortar retail is undergoing a profound structural transformation. Traditional non-food formats are steadily losing relevance, while new mixed-use concepts, hybrid consumption models, and urban experience spaces are emerging. At the same time, changing mobility patterns are reshaping how people interact with city centers. As a result, urban retail spaces, department stores, and city malls are taking on a new strategic importance.
In conversation with Joachim Stumpf, Managing Director of BBE Retail Consultancy / IPH Retail Real Estate, ACROSS explores the future of inner-city retail real estate — caught between shrinkage, polarization, and transformation.
ACROSS: TRADITIONAL NON-FOOD RETAIL HAS BEEN SHRINKING FOR YEARS. WHICH CAUSES ARE STRUCTURAL — AND WHICH DEVELOPMENTS CAN NO LONGER BE REVERSED?
JOACHIM STUMPF: The decline of traditional non-food retail is not cyclical; it is the result of a deep structural break. In categories such as fashion, footwear, consumer electronics and books, online and multichannel penetration has reached a level where a large share of former in-store sales has permanently shifted elsewhere.
Demographics reinforce this trend. Immigration and an aging population primarily drive demand for everyday essentials, while non-food categories benefit far less. In addition, certain retail formats are structurally uncompetitive — most notably department stores and medium-sized specialist retailers with a high non-food share. High fixed costs, limited differentiation, and a lack of investment capacity are intensifying the pressure. These developments are irreversible. In Germany by 2030, we expect total retail space to decline by around ten million sq m, predominantly in non-food. With similar changes in other markets.
This interview was published in ACROSS Issue 1|2026
Download the full magazine to view similar insights and news from the European placemaking scene.
ACROSS: WHICH PRODUCT CATEGORIES WILL DISAPPEAR FROM PRIME HIGH-STREET LOCATIONS — AND WHICH WILL REMAIN RELEVANT?
JOACHIM STUMPF: The most significant adjustments are happening in large-format retail. Consumer electronics retailers and traditional department stores are sharply reducing their footprints. Fashion and footwear retailers will also operate with smaller spaces or concentrate on a limited number of high-quality flagship locations.
At the same time, fashion will remain the leading category in city centers and the most important reason for visiting them. It would be a serious mistake to neglect these assortments simply because of their high online penetration. City centers without attractive fashion offers lose a key frequency anchor.
ACROSS: DOES RETAIL SHRINKAGE INEVITABLY MEAN A LOSS OF IMPORTANCE FOR CITY CENTERS — OR DOES IT CREATE NEW OPPORTUNITIES?
JOACHIM STUMPF: Retail shrinkage is a challenge, but it also opens substantial opportunities. The decisive factor is how actively concentration on shorter, high-performing prime locations is managed. Growing formats in food retail, drugstores, beauty, health, direct-to-consumer brands, value retail, and gastronomy can be strategically integrated.
“The decline of non-food retail is not cyclical — it is structural and irreversible.”
In addition, the mix of so-called Retail+ uses is becoming increasingly important. Depending on the location, this may include leisure and fitness, co-working, offices, residential use, education, healthcare, or hotels. There is no universal formula — each city center needs an individual solution aligned with local demand and structural conditions.
ACROSS: RETAIL IS POLARIZING BETWEEN PRICE LEADERSHIP AND SUSTAINABLE OR EXPERIENCE-DRIVEN CONCEPTS. DOES THE TRADITIONAL MIDDLE GROUND STILL HAVE A FUTURE?
JOACHIM STUMPF: In retail today, one thing is clear: mediocrity is no longer an option. On one side, we see omnichannel champions, powerful food retailers, and experience-driven concepts with strong liquidity, digital capabilities, and innovative strength. On the other side are retailers without clear positioning, without a digital strategy, without differentiation from platforms like Temu or Shein — and often without sufficient financial reserves.
“Retail shrinkage doesn’t weaken city centers — poorly managed shrinkage does.”
Our — admittedly painful — hypothesis is this: anyone who does not act now, whether in terms of liquidity, AI adoption, assortment strategy, service, or experience, will disappear from the market within a few years.
ACROSS: HOW ARE SUSTAINABILITY, ESG, AND PRICE SENSITIVITY CHANGING SPACE REQUIREMENTS AND RENTAL MODELS IN CITY CENTERS?
JOACHIM STUMPF: ESG and sustainability are undoubtedly gaining importance, but from a tenant’s perspective, they are rarely the decisive factor. Space requirements are primarily driven by realistic sales expectations and company-specific needs. Pressure on rents remains high, while tenants’ willingness to compromise has declined.
We are also seeing a reduction in the size of large flagship stores, while smaller locations are being closed altogether. Flexible rental models such as turnover-based rents still play a minor role in city centers. Far more important are tailored incentive packages combined with clearly defined break options.
ACROSS: WHAT ROLE DO EXPERIENCE AND QUALITY OF STAY PLAY TODAY — AND WHERE ARE THE LIMITS OF STAGING?
JOACHIM STUMPF: The limit is reached where the additional contribution margin no longer justifies the required investment. Experience must never be an end in itself; it must fit the target group and assortment and ideally increase capture and conversion rates.
This can range from large-scale concepts, such as the well-known wave installation at L+T in Osnabrück, to smaller measures like integrating gastronomy, services, or community elements into bookstores or fashion stores.
“The key is to form meaningful usage clusters.”
ACROSS: RETAIL IS CONSIDERED A NEW GUIDING PRINCIPLE. WHICH NON-RETAIL USES ARE TRULY VIABLE FOR INNER-CITY RETAIL PROPERTIES?
JOACHIM STUMPF: Viable uses are those that create clear added value and complement retail. These include gastronomy, health and wellness, leisure, services, and experience-driven formats. The key is to form meaningful usage clusters that generate footfall, extend dwell time, and increase the everyday relevance of the location.
ACROSS: ARE HEALTH, MEDICAL, AND BEAUTY CONCEPTS A SUSTAINABLE GAME CHANGER FOR HIGH STREETS, DEPARTMENT STORES, AND CITY MALLS?
JOACHIM STUMPF: Absolutely. These concepts reflect strong societal trends toward health, longevity, and self-optimization. They generate high footfall, are largely resistant to online substitution, and represent strong brick-and-mortar expertise. It is essential to expand traditional healthcare uses to include aesthetic and beauty concepts, including medical-cosmetic services.
ACROSS: ARE RETAIL PROPERTIES INCREASINGLY BECOMING LOCAL CITY HUBS — AND WHAT DOES THIS MEAN FOR OWNERS AND OPERATORS?
JOACHIM STUMPF: Retail properties are clearly evolving into urban city hubs. For owners and operators, this means committing to a clear longterm positioning. Retail+ is not a short-term leasing strategy; it is a strategic decision.
Thematic clusters, healthcare offerings, leisure uses , and public services enhance the quality of stay and reposition properties as central touchpoints of urban everyday life.
ACROSS: HYBRID SHOPPING AND CHANNEL CONVERGENCE ARE THE NEW NORMAL. WHAT DOES THIS MEAN FOR INNER-CITY SPACE?
JOACHIM STUMPF: Hybrid shopping increases adaptation pressure but also creates new opportunities. We see more small-format city center concepts from typically large-scale retailers such as Decathlon or IKEA, as well as the expansion of owned retail by manufacturers like Dyson and Lego or fan shops operated by sports clubs. As a result, city centers are increasingly becoming brand and experience spaces.
ACROSS: PLATFORMIZATION, SOCIAL COMMERCE, AND RETAIL MEDIA — WHICH TREND IS HAVING THE GREATEST IMPACT ON BRICK-AND-MORTAR RETAIL?
JOACHIM STUMPF: At present, platformization poses the greatest threat. Players such as Temu, Shein, and, of course, Amazon are putting massive pressure on many non-food retailers.
“Mediocrity is no longer an option in retail.”
Looking ahead, so-called retail agents will become increasingly relevant as AI applications begin to determine store selection. That fundamentally changes the rules of the game.
ACROSS: MEDIUM-SIZED RETAILERS ARE UNDER PRESSURE FROM STAFF SHORTAGES AND A LACK OF SUCCESSORS. WHAT DOES THIS MEAN FOR CITY CENTERS?
JOACHIM STUMPF: Small and mid-sized cities with a high share of owner-operated retailers are particularly affected. After around 5,000 store closures in 2024, we expect another 4,500 permanent closures in 2025. This leads to visible gaps in city centers and significantly increases the pressure on municipalities and property owners to act.
ACROSS: HOW DO OPPORTUNITIES FOR SPACE SUBSTITUTION DIFFER BETWEEN LARGE CITIES, MEDIUM-SIZED CITIES, AND SMALL TOWNS?
JOACHIM STUMPF: Opportunities for substituting retail space are highly location dependent. Expanding concepts — apart from grocery retail and discounters — are primarily focused on large cities and metropolitan areas. These locations benefit from strong centrality, economic power, tourism, large catchment areas, and attractive urban environments.
In medium-sized cities and especially small towns, the situation is far more challenging. Polarization is increasing: prime locations are shrinking, while peripheral areas often lose their retail function entirely. Where new retailers or gastronomy cannot fill the gaps, conversion to residential, office, education, or healthcare uses often remains the only option. Gastronomy plays a key role, as it has recovered more strongly than retail since the pandemic and has become an increasingly important reason for visiting city centers. Nevertheless, the loss of retail space can neither be fully nor universally compensated.
ACROSS: WHAT MUST CITIES, INVESTORS, AND PROPERTY OWNERS DO TODAY TO FUTURE-PROOF CITY CENTERS IN THE LONG TERM?
JOACHIM STUMPF: It starts with a realistic assessment of the market — without denial or wishful thinking. Each stakeholder must focus on their role. Cities should invest in the quality of public spaces and create planning frameworks that enable transformation.
Owners and investors need to understand the long-term consequences that a short-term, seemingly profitable leasing decision can have on the attractiveness of a location. An open dialogue among all stakeholders is essential. Only if cities, owners, investors and users work together on a clear vision can city centers preserve their economic, social and identity-shaping role over the long term.
Joachim Stumpf
Managing Director of BBE Retail Consultancy / IPH Retail Real Estate
