From 2028, Europe’s population is projected to shrink, with a net loss of around six million people by 2050. Signs of contraction are already visible in parts of Central and Eastern Europe (Latvia, Poland, Croatia, Romania, Greece, Hungary, Slovakia, and Bulgaria), as well as Italy. Estonia, Lithuania, Germany, and Finland are expected to follow.

While a smaller population inevitably narrows the size of the consumer base, the relationship between demographics and retail sales is complex. Rising incomes and accumulated wealth can offset population decline by boosting per capita spending. Hungary illustrates this dynamic well: in 2024, despite a 0.3% annual decline in population, per capita spending increased by 3.5%, resulting in a 2.5% rise in real retail sales.

Despite the population decline, the number of households across the EU is projected to increase nearly 6% by 2050, supporting demand in housing-related categories such as furniture and appliances. Tourism also plays a vital role: Europe remains the world’s leading destination, attracting nearly 750 million international arrivals in 2023 and generating over €500 billion in spending. In major tourist hubs like Paris, London, Rome, and Barcelona, this influx of visitors provides a significant boost to retail, hospitality, and leisure sectors, helping to counterbalance domestic demographic decline.

In short, while population decline will affect retail fundamentals, rising per capita expenditure, more households, and strong tourism flows act as crucial buffers, sustaining sales and expanding the consumer base beyond national borders. Moreover, other demographic trends will continue to reshape spending behaviour for decades.

Migration and diversity

Migration remains a significant driver of demographic change in Europe. In 2024, the EU population reached a record 450.4 million, driven by a net migration gain of 2.3 million, more than compensating for a natural decline of 1.3 million. Looking ahead, long-term projections suggest annual net migration will remain between 1.0 and 1.25 million through the early 2040s. While this inflow is expected to offset much of the natural decline, it will not fully counterbalance it by century’s end, according to the European Commission.

Migrants, especially those of working age, bring distinct consumption patterns. Generally arriving from lower-income backgrounds, in most European countries, they tend to boost demand in essential categories such as food, housing, clothing, and basic services. At the same time, migration enriches cultural diversity, driving interest in international foods, varied fashion styles, remittance services, and multilingual retail experiences. Economically, migration expands both the consumer base and the labour pool, supporting growth across retail subsectors.

Income growth

Over the next 25 years, real income across the EU and the UK is expected to grow at an average annual compound rate of 1.4%. Central and Eastern European (CEE) countries will see the most significant rise in middle-income households, defined as those earning between €20,000 and €70,000 in real terms. Notable increases are also anticipated in Spain, Portugal, eastern and southern France, northern Italy, and Ireland. Meanwhile, cities in the UK, Switzerland, and the Nordics are projected to lead in the growth of high-income households, earning over €70,000 annually.

This expansion of the middle class will drive demand for home improvements, furniture, and consumer technology, as families seek greater comfort and aspirational products. Rising discretionary income will also boost spending on leisure, dining, and premium food and beverage (F&B) offerings. At the upper end of the income spectrum, the growing number of affluent households in key urban centres will support strong demand for luxury goods - including fashion, jewellery, accessories, and high-end beauty and personal care, reflecting a broader uplift in affluence across Europe.

Ageing population

Demographic ageing is accelerating across Europe, reshaping the region’s population structure. By 2050, the median age in the EU-27 is projected to rise by 4.5 years, reaching 48.2. The number of people aged 80 and above is expected to nearly double, while the broader 70+ age group will continue to grow steadily. In contrast, all other age brackets are set to decline, with the most pronounced drops among younger cohorts and those aged 40 to 60.

This demographic shift will significantly influence consumption patterns. As the population ages, retail demand is expected to move away from categories like fast fashion and childcare products, and toward health, wellness, leisure, and services tailored to older adults. While this transition may not fully compensate for volume losses in some sectors, it opens up new growth opportunities. Products that support longevity, age-friendly home environments, and active lifestyles for seniors will become increasingly important. Retailers will need to adapt both their offerings and marketing strategies to meet the evolving needs of an older, more health-conscious consumer base.

Intergenerational wealth transfer

By 2030, an estimated $18 trillion in assets will change hands globally, with $3.5 trillion of that expected in Europe. A study by CERP covering the UK, France, Germany, Ireland, Italy, and Spain indicates that around 44% of this wealth will go to individuals in the top income quartile, and approximately 63% will be inherited by those aged 55 and over.

This shift in wealth is likely to reinforce the momentum of the silver economy. As older, financially secure cohorts gain more resources, spending is expected to rise in areas such as wellness, leisure, experiences, and luxury goods. Retailers must adapt to changing consumer preferences, placing greater emphasis on sustainability and premium experiences. Some of the transferred wealth is also likely to be used to support younger family members, particularly when it comes to housing and aspirational consumption.

Urban concentration and rural depopulation

The urban-rural divide is widening, as more people gravitate toward city living. Currently, 75% of the population in the EU and UK resides in cities, and this share is expected to rise to around 83% by 2050. In contrast, rural areas are experiencing steady population decline, shrinking at an average annual rate of 0.31–0.36%. By mid-century, nearly all rural regions are projected to lose residents.

This demographic shift will concentrate retail demand in urban centres. As cities grow, urban stores and e-commerce platforms are set to thrive, prompting retailers to rethink distribution models and store formats. Retail activity will increasingly cluster in metropolitan hubs, favouring high-street and mixed-use developments, while posing challenges for maintaining viable retail networks in smaller towns and rural communities.

Rising single-person households

Across the continent, single-person living is gaining prevalence. Nearly one in three Europeans now lives alone, and in countries like Finland, Norway, and Sweden, close to half of all households consist of just one individual. Despite the overall population decline projected by 2050, the total number of households is expected to grow by nearly 6%, meaning the share of solo households will continue to rise.

This shift is reshaping retail demand. Smaller households tend to favour convenience formats, ready-to-eat meals, compact living products, and single-portion items. As a result, demand for bulk purchases and family-sized goods may decline, while urban retail concepts and tailored offerings for solo living are likely to gain traction.

Shrinking working-age population

Europe’s working-age population is shrinking, with long-term implications for productivity and consumption. Currently, individuals aged 20 to 64 make up 59% of the total population, but by 2050, this share is expected to drop to 53% - a decrease of 9.2%.

This demographic shift could dampen spending on non-essential goods and services, as fewer working-age consumers could weigh on overall disposable income in the short term. Labour shortages could also drive up operational costs for retailers, influencing pricing strategies and limiting expansion. While rising wages may boost purchasing power for some households, they could also increase retail overheads, creating a complex environment for both consumer demand and business profitability.

Retail’s new demographic reality

While demographic change will certainly reshape Europe’s retail landscape, population decline alone should not be seen as a structural headwind. Higher per-capita spending, an increasing number of households, tourism flows, ageing-related consumption shifts, migration, and ongoing price effects are all powerful forces that will sustain retail sales and offset shrinking populations in many regions.

Rising incomes and ageing populations are expected to drive the fastest growth in discretionary categories, health and personal care, home comfort, technology, and leisure, particularly in major urban cities. By contrast, non-discretionary categories such as food & drink and housing will see slower growth, with demand more concentrated in smaller cities and rural areas.

Overall, CEE cities are forecast to lead retail growth, building from a relatively low spending base per capita compared to the rest of Europe, followed by Western cities. However, within categories, clothing and footwear will expand most strongly in CEE and Southern Europe, while furniture growth will be most pronounced in CEE and the Nordics.

More importantly, the retail market is likely to experience a growing polarisation, leaving an increasingly narrow middle ground. Consumption patterns will diverge between luxury and budget spending, as well as between elderly and younger generations, and between urban and rural communities. Likewise, prime locations will continue to attract strong demand, while secondary sites may face rising challenges. For retailers and investors, the key will not be coping with an overall contraction in demand, but navigating this fragmented landscape and positioning themselves on the winning side of these divides.

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