Investors in Europe’s retail property sector should focus on core high streets and retail parks as new technology transforms the retail landscape, according to a new report1 from Savills Investment Management (“Savills IM”), the international real estate investment manager.

The report says the mega-trend of digitalisation and the ‘internet of things’2 is influencing massive changes in the retail market and buyers’ behaviour. It notes that growing internet sales are impacting the profitability of physical stores and influencing shop closures, especially outside main retail areas. Savills IM highlights that the impact on the retailers becomes more pronounced once internet sales reaches 5-6% of total retail sales.


Although the trend varies across European cities, in general smaller towns and cities with a low level of shopping experience are suffering, with e-commerce trends likely to put medium-sized shopping centres most at risk compared to larger destinations and smaller convenience centres.


Medium-sized regional centres and major cities with good economic foundations and socio-demographic parameters are better able to withstand e-commerce pressures, Savills IM says, while easily-accessible retail parks are being used as strategic hubs for click & collect and online-order deliveries, or ‘omni-channel’ retail.


Key strategic takeaways for investors listed in the report include:


  • Focus on opening stores on prime high streets in Europe’s key cities and in selected secondary cities
  • Focus on establishing a presence in retail parks that will benefit from several trends connected to the growth in online sales
  • Stores will remain a key point of contact between retailers and customers
  • Online-only retailers offer customers a less enhanced shopping experience than omni-channel retailers

1 The Evolution of the retail market and buyer behaviour in the age of digitalisation, by Savills Investment Management, November 2016

2The ‘internet of things’ is a network of physical objects or other things embedded with electronics, software, sensors and connectivity to enable objects to exchange data with the manufacturer, operator or other connected devices




Kiran Patel, Chief Investment Officer at Savills IM, commented:

“The role of digitalisation in the retail evolution is perhaps most visible in the tenant mix at shopping destinations. Whereas less space is being devoted to traditional sales, there is a significant increase in leisure and food & beverage space, which coincides with the trend towards eating out.


“Reports of the death of the high street have certainly been exaggerated. Even some pure e-tailers are opening flagship stores on high streets. For example, an online furniture store recently opened a store in Soho in central London and a shoe retailer opened four shops in the Berlin, Frankfurt, Hamburg and Munich city centres.”



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Savills Investment Management


  • Savills Investment Management is an international real estate investment manager with offices in Amsterdam, Copenhagen, Frankfurt, Hamburg, Hong Kong, Jersey, London, Luxembourg, Madrid, Milan, Munich, Paris, Singapore, Stockholm, Sydney and Tokyo 
  • As at 30 June 2016, Savills Investment Management managed a total of c.€17 billion of assets
  • Savills Investment Management is the brand name for entities in the Savills Investment Management group, including Savills Investment Management LLP, Savills Investment Management (UK) Ltd, Savills Investment Management (Luxembourg) Sàrl, Savills Investment Management (Jersey) Limited, Savills Investment Management SGR SpA, Savills Investment Management (Germany) GmbH, Savills Investment Management KVG GmbH, Savills Investment Management Pte Ltd, Savills Investment Management Asia Limited and Savills Investment Management (Hong Kong) Limited
  • Savills Investment Management LLP is a limited liability partnership registered in England No: OC306423 regulated by the Financial Conduct Authority
  • Savills Investment Management is regulated in the UK, Italy, Germany, Jersey, Japan and Luxembourg.
  • 07 December 2016