Retail is one of Europe’s most visible and vital economic sectors. It not only connects producers and consumers, but also shapes daily life in towns and cities. Today, the sector stands at a crossroads. Global trends such as digitalisation, e-commerce, evolving consumer behaviour and regulatory shifts aimed at greening SME activity are reshaping how retail businesses operate, the skills they require, where they locate and what they need to succeed.
Small and medium-sized enterprises (SMEs) are at the heart of this retail transformation. Representing the vast majority of retail businesses and jobs in the EU, they face growing pressure to adopt new digital tools, implement sustainability practices and respond to changing local demand. The twin transition holds significant potential to revitalise the retail landscape, but it also risks leaving smaller, independent businesses behind.
This report provides an in-depth analysis of how retail SMEs are navigating the twin transition, and what this means for the sector’s competitive environment, labour markets and the vitality of city and town centres. Drawing on established and original data sources, as well as a comprehensive mapping of national and local policy initiatives, the three main chapters of the report examine these interconnected dimensions: SME competitiveness, employment and skills, and the role of retail in towns and cities for local economies and quality of life.
The report highlights the uneven pace of digital and green adoption, persistent barriers to workforce development, and the need for coherent, place-based policies to sustain vibrant city and town centres. It also discusses how digital tools and sustainable practices can translate into higher productivity and greater resilience, when SMEs have the capacity to adopt and deploy them effectively.
The evidence and policy insights presented aim to support EU institutions, national governments and local authorities in designing measures that help retail SMEs adapt and actively contribute to a more digital, sustainable and inclusive economy. Realising the potential of the twin transition as a driver of renewal will depend on coordinated action across levels of government, coherent strategies and targeted support for finance, skills and infrastructure. With an enabling environment in place, retail SMEs can continue to act as engines of innovation, employment and community life across the EU.
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