According to the Retail Report 2025, an initiative launched in 2016 by the ministry of the economy, the Chamber of Commerce and the Luxembourg Confederation, the retail sector in Luxembourg is doing well overall: at the end of the third quarter of 2024, the total retail floor space in Luxembourg amounted to 1.1m square metres. This represents growth of 5.3% since 2019. This growth is reflected in a fall in the commercial vacancy rate, which fell between 2023 and 2024 from 12.3% to 11.9%. This trend can be seen in both town centres (from 14.9% to 14.3%) and village centres (from 10.4% to 9.6%). Economy minister (DP) welcomed this fall in vacancies. “Local shops bring life to our towns and town centres, contributing to their attractiveness and to the quality of life of our fellow citizens,” he said, pointing out that the government would be doing all it could to support the sector.
Food sector driving growth
This growth in floor space is being driven by the 13.3% increase in floor space in the food sector, representing 348,750 square metres. This sector is currently the most dynamic in Luxembourg, followed by the DIY sector. Since 2019, 102 new food outlets have been registered. This growth applies to all categories of establishment, from traditional supermarkets to hard discount chains, whose sales areas have increased by more than 35%. By 2024, there were six hypermarkets, 205 supermarkets, 30 hard discounters and 283 mini-markets.
The growing diversity of the population is also reflected in the boom in grocery shops specialising in international products, which have grown by 21.8% since 2019. At the same time, growth in the number of retail businesses (+1.1%) and hotels and catering businesses (+2.5%) over five years remains moderate and well below population growth over the same period (+7.6%). However, as the sales area has grown faster than the number of shops, the average surface area per outlet has increased.
While Luxembourg shops are still established on the street, e-commerce and omnichannel strategies combining physical and digital presence are on the increase: in five years, the proportion of shops with an online shop has risen from 33.5% to 44.4%. The only exception is the car and motorbike accessories sector, where this trend is less marked. This explains why, between 2023 and 2024, the average square metre of retail space per inhabitant rose from 1.66 to 1.68 square metres.
Retail is losing ground in city centres
The highlight of the third 2025 edition of the report is the confirmation of the trend observed since 2019: retail outlets--which are losing ground to the service and hospitality sectors--are gradually leaving town centres in favour of shopping centres on the outskirts. Over the period, the share of retail trade has fallen from 37.5% to 33.6%.
In 2024, the number of shops in town centres fell by 9.6% to 1,095 units, while the number of shops in shopping centres rose by 4% to 590 units. The vacancy rate in town centres was 14%, compared with 7.8% in shopping centres. This dynamic can also be seen in the change in floor space: 134,885 square metres of retail space in town centres--a fall of 9.6%--compared with 302,735 square metres in shopping centres, an increase of 10.9%. “We are seeing a shift towards more multifunctional city centres,” explained , CEO of Luxembourg Confederation. This trend is prompting retailers to adopt new approaches such as pop-up stores and showrooms, which have seen an increase of 72.5% since 2019. Pop-up stores offer the advantage of “being able to get a shop window for an affordable rent,” said Delles.
Retail businesses migrating to shopping centres are being replaced in city centres by service and hospitality businesses. Since 2019, 30 new restaurants (+2.4%) and 103 fast-food outlets have opened. The country currently has 1,261 restaurants, 376 fast-food outlets, 476 bistros and cafés and 265 pubs and music clubs. The on-trade employs 23,800 people (+9.2% since 2020).
A sector short of manpower
With a contribution of 8.6% to the country’s total gross value added and 11.56% of total employment (i.e., 55,800 jobs), commerce remains an important sector for the economy.
For , director-general of the Chamber of Commerce, “Luxembourg’s commerce sector has shown remarkable resilience in an unpredictable geopolitical context and a volatile and complex economic environment. Weak consumer confidence in the face of prevailing uncertainties and pressure on business profitability are major challenges for the sector. The attractiveness and success of retailers will depend on their ability to innovate and integrate new technological tools and processes, particularly digital ones. These levers can boost their productivity, optimise the quality of their services and enhance the customer experience to meet the evolving expectations of consumers in a rapidly changing competitive environment.”
For the Chamber of Commerce, citing the latest figures from its economic barometer, the main challenge facing commerce in 2025 will be the lack of skilled and unskilled labour. The issue of regulatory constraints comes last. Thelen sees this as a result of the government’s policy of simplifying administrative procedures.
This article was originally published in .