European consumers have regained some purchasing power, but a proportionally larger share of their budgets is not necessarily flowing into retail. In 2025, average purchasing power per capita in the European Union reached EUR 22,425, up 3.3% in nominal terms from the previous year. Over the same period, retail turnover increased by 2.1%, while retail's share of private consumption fell to 31.9%, marking its fourth consecutive annual decline.
This is one of the most significant findings in NIQ Geomarketing's new European retail in 2025 and 2026 study. European consumers are not necessarily spending less. Instead, they are allocating their budgets differently, directing a growing share toward services, travel, leisure, and hospitality.
Higher purchasing power does not automatically mean higher retail sales
According to NIQ, consumers across the 27 EU member states had around EUR 10.1 trillion in purchasing power in 2025 to allocate across food, retail purchases, housing, energy, services, insurance, mobility, vacations, and other expenses.
Purchasing power increased, but retail did not capture the same rate of growth. While purchasing power rose by 3.3%, retail turnover increased by 2.1%. The decline in retail's share of private consumption should not, however, be interpreted as a broad contraction in store sales.
The latest Eurostat figures confirm that the market remains active. In July 2026, total retail sales volume in the EU was 1.0% higher than in July 2025. Compared with the previous month, sales volumes for food, beverages, and tobacco increased by 0.3%.
The shift is therefore mainly relative: retail is still generating growth, but it is competing for a smaller share of consumers' total spending power.
Competition increasingly extends beyond the shelf
This changes the way food companies should think about competition. For a manufacturer of cookies, beverages, preserves, or snacks, the most obvious competitor remains another brand in the same category. But from the perspective of the household budget, the competitive set is much broader.
Disposable income can also be spent on travel, dining out, digital services, leisure, and other experiences. Consumers are therefore deciding not only which product to buy, but also which types of spending deserve a greater share of their budget.
For food companies, this means growth cannot rely on improving economic conditions alone. Even when consumers have more money available, brands still need to give them a clear reason to allocate part of that budget to a specific category or product.
Perceived value matters more than price alone
NIQ also notes that, despite improvements in some economic indicators, many European consumers remain cautious and price-sensitive. At the same time, value is no longer defined simply by the lowest price. Quality, personal satisfaction, functionality, and trust in the brand also influence purchase decisions.
This aligns with another NIQ study conducted with World Data Lab and published in August 2026. The global research shows that the same consumer can move between very different behaviors, trading up when a product offers a convincing benefit and choosing a lower-priced alternative when the added value is unclear.
For portfolio managers, the question therefore becomes more specific. Rather than simply asking whether consumers are becoming more or less price-sensitive, it may be more useful to understand which categories and occasions justify higher spending, where consumers prioritize affordability, and which product attributes support a price premium.
From market share to share of wallet
Another useful perspective comes from an NIQ analysis published in September 2026 on changing retail loyalty. The study encourages companies to look beyond data generated within a single retailer and consider share of wallet, or the proportion of a customer's total spending that a business actually captures.
A shopper may continue visiting the same supermarket regularly and appear highly loyal in the retailer's data, while gradually shifting more spending toward discount stores, online platforms, quick commerce, or other channels.
The same logic applies to manufacturers. A brand may maintain relatively stable sales while its category becomes less important in the consumer's overall budget, or preserve its share within a category while new consumption occasions move toward different products or channels.
Alongside turnover and market share, it can therefore be useful to track indicators such as purchase frequency, spend per occasion, repurchase rate, category penetration, and the distribution of sales across different occasions and channels.
Understanding the need behind the purchase
From a strategic perspective, companies can also look at shopping missions, meaning the specific needs that trigger a purchase. A weekly grocery shop, a last-minute dinner solution, an on-the-go snack, or a product bought for a special occasion may each be served by different retailers, formats, and channels.
For food manufacturers and distributors, thinking in terms of occasions can support more precise decisions on format, pack size, packaging, price, distribution, and assortment. The same category may require different propositions depending on whether the product is intended for stocking at home, immediate consumption, gifting, or a social occasion.
This approach also reveals competitors that may not be obvious from a traditional category view. If the consumer is looking for a quick lunch solution, for example, the competitive set may include packaged food, deli counters, delivery services, and quick-service restaurants at the same time. Competition is no longer confined to products within the same category.
Retail and out-of-home can be part of the same strategy
The growing share of household budgets going to hospitality, leisure, and services is not necessarily a pure loss for the food industry. Part of that spending still goes to food & beverage, but through restaurants, hotels, bars, catering, travel retail, and other out-of-home channels.
For some companies, it may therefore make sense to look beyond retail sales and assess the potential of different consumption occasions. Products, pack formats, and commercial terms designed for large-scale retail can coexist with ranges developed for hospitality, foodservice, and other professional channels.
Retailers can also try to capture part of the spending associated with experiences through products designed for special occasions, immediate consumption, social occasions, or premium at-home consumption. The objective is not to recreate the restaurant experience, but to understand the need that is shifting consumer spending and determine whether retail can offer a relevant alternative for that occasion.
Europe remains a highly fragmented consumer market
The EU average of 31.9% also masks major differences between countries. In 2025, retail accounted for 48.3% of private consumption in Croatia, 45.7% in Lithuania, 44.0% in Bulgaria, and 43.2% in Hungary. In Germany, by contrast, the figure was just 22.2%.
These differences suggest that a European commercial strategy based only on continental averages may be misleading. In markets where retail captures a larger share of household spending, assortment, distribution coverage, and in-store positioning may carry different weight than in countries where services and experiences account for a much larger share of consumption.
Purchasing power growth is also highly uneven. In 2025, NIQ recorded increases of 8.8% in Poland, 8.3% in Lithuania, 7.7% in Romania, and 7.3% in Bulgaria. For manufacturers and exporters, it is therefore increasingly important to assess spending power, retail dynamics, channel structure, and consumer behavior together before deciding where to invest.
Competing for spending occasions
Rising purchasing power in Europe remains a positive backdrop, but it does not automatically translate into equivalent growth in food retail sales. Increasingly, competition depends on convincing consumers that a category, brand, or specific consumption occasion deserves a share of their budget.
For manufacturers and distributors, this means complementing traditional market share analysis with a broader view of where consumers spend, on which occasions, through which channels, and why.
