Though online shopping, particularly by smartphone, is growing in popularity, physical retailers continue to handle the vast majority of sales, says the report, titled European Retail Real Estate: Successfully Navigating a World in Transition.

“Store-based retailing continues to be the dominant sales channel, accounting for 90 percent of total retail sales in Europe in 2018, with online sales at only 9 percent of total retail sales,” the report notes.

Retail sales are expected to grow by about 2 percent across Europe this year, having reached €3.3 trillion (roughly $3.7 trillion) last year. Sales increased by 1 percent from 2017 to 2018.

And though digital retail commerce is projected to expand by about 66 percent between 2018 and 2023 (an average increase of 10.7 percent annually), the great majority of that will be handled by retailers with physical stores. Internet retailing accounted for only 7.9 percent of total European retail sales in 2017, and of this, only 4.5 percent was conducted by the pure-play online players, meaning that omni-channel retailers were responsible for roughly 94 percent of total retail sales.

Demographics and tastes are changing too. “Europe’s population is aging, and a new kind of affluent, time-rich, mature consumer is emerging with a strong focus on health and well-being,” the report notes.

The retail real estate evolution shows a polarization between luxury and discount destinations; these two are performing strongly, but midmarket offerings less so. There also continues to be an emphasis on entertainment at retail centers.

Retail landlords are harvesting more value out of their properties by adding in such nonretail uses as housing and offices, says the report, which cites recent developments by U.K. developers Hammerson and Intu.