Retail sentiment across the European Union remained broadly stable in early 2026, but weakening sales and cautious expectations continue to shape the European retail outlook.
The latest business climate survey from the European Commission points to steady confidence levels alongside softer consumer demand, creating a mixed picture for the retail sector.
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
The data, collected between February and March 2026, show that while retailers are not reporting a sharp downturn, trading conditions remain challenging across key markets.
Sales weaken as demand softens
The retail business climate indicator held close to its long-term average in March 2026, signalling stable sentiment. However, underlying data show a decline in both recent and expected sales.
Retailers across the EU reported weaker trading performance compared with historical norms. In major markets, the balance of opinion on recent sales turned negative, reflecting reduced consumer spending.
Survey findings point to subdued demand as a key factor. Broader EU economic sentiment also remains below its long-term benchmark, with retail and consumer confidence contributing to the weaker outlook.
This gap between stable sentiment and falling sales highlights ongoing pressure on day-to-day retail activity.
Orders rise while stock levels tighten
Ordering expectations have shown modest improvement. Retailers reported that order books have “rebounded” to around their long-term average, suggesting some stabilisation in supply activity.
At the same time, stock levels have declined for several consecutive months and are now below average. This indicates that many retailers are actively reducing inventory in response to slower sales.
Lower stock holdings may help manage costs in the short term, but they also signal a cautious approach to future demand.
Price expectations remain elevated. Retailers expect selling prices to stay above average, with some markets reporting the highest levels since early 2024. This reflects ongoing cost pressures and efforts to protect margins.
Cautious outlook for European retail sector
The overall outlook for the European retail sector remains cautious. The survey shows that expectations for the general business situation have declined and sit below long-term averages.
Retailers continue to report pressure on cash positions, although there are signs of slight improvement. Employment expectations are moving closer to normal levels but do not yet point to significant hiring growth.
Wider economic uncertainty continues to influence the sector. Consumer demand remains soft, and sentiment across the EU economy has not fully recovered to pre-2022 levels.
The survey presents a mixed European retail outlook for 2026: stable confidence at headline level, but weaker sales, tighter inventory management and cautious business planning. For international retailers and supply chain partners, the data suggest a steady but restrained market environment.
