The twin transition is reshaping urban retail. E-commerce, remote work and demographic change are altering shopping patterns and reducing footfall in central areas, while sustainability concerns and energy costs push retailers to green their operations. National and local policies can support digitalisation, energy efficiency, circular models and urban logistics, alongside investments in public space, transport and cultural activities to boost town and city centres’ vitality. Effective governance, public-private partnerships and robust monitoring are crucial to balance revitalisation with inclusiveness, prevent displacement and ensure retail contributes to vibrant, resilient town and city centres.
Local Retail, Global Trends
How Digital, Green and Skills Shifts in the EU are Reshaping SMEs in Towns and Cities
Abstract
Introduction
Retail SMEs are the backbone of city centres, supporting vibrant and economically sustainable communities. However, they are facing profound transformations such as shifting consumer habits, demographic change and digital disruption that lead to a range of challenges in cities that include rising vacancy rates. Yet these local businesses are also key to ensuring vibrant, resilient communities. As the green and digital transitions accelerate, these trends bring both new pressures and critical opportunities for retail renewal.
The digital shift – particularly the rapid rise of e-commerce and multi-channel retailing – is reshaping how consumers engage with physical shops. Retailers must now navigate through changing expectations around convenience, personalisation and online presence. Yet, many SMEs, in particular in smaller cities, lack the resources and digital infrastructure to adapt. Similarly, the green transition requires retailers to adopt more sustainable practices, from energy efficiency and waste reduction to low-emission logistics and circular business models. These changes are increasingly demanded by consumers and driven by regulation but present real challenges for SMEs with limited financial and workforce capacity for transformation.
Despite these hurdles, the twin transition offers a chance to rethink and revitalise retail in urban areas. The rediscovery of local commerce during the COVID-19 pandemic, growing interest in proximity economy and consumer appetite for sustainable and digitally enabled shopping experiences point to emerging pathways for city centre retail’s renewal. Enhancing the environment in which retail SMEs operate can create more attractive, accessible, and resilient commercial areas that strengthen local identity and improve quality of life for residents and visitors. This chapter explores how demographic, economic and spatial trends in cities intersect with the twin transition in cities, and outlines the policies needed to help retail SMEs adapt, compete and thrive in a rapidly evolving landscape.
Challenges and opportunities for retail SMEs in cities brought by the digital transition
The evolutions of retail: The rise of e-commerce and the future of physical stores
The rise of e-commerce since the 2000s has been reshaping retail dynamics. Notably, it has weakened brick-and-mortar retail in city centres, particularly in small and medium-sized cities, as consumer behaviour has shifted toward online shopping for everyday needs (Delage et al., 2020[1]; Verhetsel, Beckers and Cant, 2022[2]). This rapid expansion of e-commerce has also been driven by consumer preferences for convenience and time efficiency. Studies highlight that shoppers can perceive the in-store experience as burdensome, preferring to allocate their time to leisure or other personal activities (Colla and Lapoule, 2012[3]). A study conducted in South Africa found that, among various motivational factors contributing to shopping apathy, convenience emerged as the most widely agreed-upon reason. Scoring 3.93 out of 5 (with 5 indicating strong agreement) among the 250 respondents, this finding helps explain the growing shift of consumers toward online shopping (Makhitha and Mbedzi, 2024[4]). Online grocery shopping offers the flexibility to purchase goods at any time, eliminates physical effort and helps consumers control impulse purchases by facilitating more rational buying decisions. These dynamics were exacerbated during the COVID-19 pandemic, which triggered a surge in online consumption and normalised new purchasing habits (Beckers et al., 2021[5]; 6t-bureau de recherche, 2022[6]).
The pandemic also accelerated the transition to multi-channel retailing and click-and-collect services and demonstrated the interconnected relationship between physical and online retail (Nanda, Xu and Zhang, 2021[7]). Physical stores often serve as "showcases" that enhance a retailer’s online presence. For example, the opening of a new physical store by one of the market leading retailers in the United Kingdom leads to an average increase of online penetration in the same locality by up to 30% (Jones and Livingstone, 2017[8]). The growing integration between online and physical retail has strengthened the dominance of out-of-town retail parks and large urban retail centres. These formats are particularly well positioned to support multi-channel and click-and-collect services, due to their capacity to offer high-quality digital interfaces and efficient, service-oriented logistics. This shift points to the reconfiguration of retail models rather than the decline in brick-and-mortar retail through the incorporation of new retail formats (Colla and Lapoule, 2012[3]).
Despite the growing prominence of e-commerce, some consumers remain apprehensive about online purchases. The complexity of digital platforms, challenges in assessing product quality – particularly for perishable goods, delivery costs and the absence of social interaction are among the main disadvantages of online shopping for consumers. Furthermore, the risk of late or incomplete deliveries, as well as deliveries containing unsatisfactory items that need to be returned, can negatively impact the overall customer experience. Additionally, some consumers find online shopping monotonous and continue to visit physical stores for certain product categories where they prefer to retain greater control over selection.
The adoption of new technologies by small retailers can improve competitiveness and customer engagement
Although e-commerce and digital technologies present challenges for city-centre retail SMEs, they also offer significant opportunities by allowing them to compete in an increasingly digital marketplace by optimising store operations (Zukin, Kasinitz and Chen, 2017[9]). The shift to digital commerce offers the potential to enhance operational efficiency, expand market reach – e.g. online storefronts or marketplaces allow retailers to sell beyond their local customer base – and improve consumer engagement through smart inventory management – e.g. real-time analytics helps predict demand, avoid stockouts or overstock and automate reordering – and integrated online-to-offline services – e.g. consumers can order online and pick up in-store. Digital solutions enable SMEs to enhance operations by better managing payments or by attracting new customers through websites and social media. E-commerce also enables SMEs to reduce operational costs, as for instance the payment of rent and salaries, and expand sales to international markets (OECD, 2023[10]). However, retail SMEs require targeted policy support from national and local policymakers, including investments in local high-speed internet infrastructure, financial incentives for digital adoption and tailored training programmes to upskill workers.
As traditional brick-and-mortar stores face intensifying competition from e-commerce, the strategic use of in-store technologies (ISTs) – digital tools integrated into physical retail spaces – can enhance consumer experience (Alexander and Kent, 2022[11]; Wang et al., 2023[12]). These technologies range from self-checkout systems and mobile payment solutions to immersive experiences powered by augmented reality and virtual reality (see Table 4.1). For example, fashion retailers have increasingly adopted ISTs such as interactive mirrors, virtual fitting rooms and digital signage to improve customer engagement and streamline omnichannel integration. The integration of gamification – the integration of game-like elements and mechanics into the shopping experience to engage customers, influence purchasing behaviour, and enhance brand loyalty – within the retail sector also presents a transformative opportunity to enhance customer engagement and experience, strengthen brand loyalty, and foster more sustainable retail experiences. By leveraging augmented reality, co-creation experiences and sensory-driven engagement, retailers can shift consumers from passive shoppers to active participants, while increasing footfall and prolonging dwell times. The adoption of digital tools and payment systems can also increase customer outreach across diverse demographics (e.g. younger consumers), and enhance user experience, offering convenience and security-related benefits, compared to traditional payment methods (e.g. cash-on-delivery).
Source: Alexander and Kent (2022[11]), Change in technology-enabled omnichannel customer experiences in-store, https://doi.org/10.1016/j.jretconser.2020.102338, adapted from Pantano and Gandini (2017[13]), Exploring the forms of sociality mediated by innovative technologies in retail settings, http://doi.org/10.1016/j.chb.2017.02.036.
The impact of teleworking and hybrid work models on urban retail dynamics
The widespread adoption of teleworking has significantly altered urban retail dynamics. This is particularly the case in city centres and capital regions where jobs are more amenable to remote work than other types of regions (OECD, 2020[14]). In European OECD countries, around 40% of jobs are amenable to teleworking in cities (OECD, 2020[15]). On average, the share of people teleworking increased by 11% in cities, 6.5% in towns and suburbs, and 4.8% in rural areas between 2019 and 2022 in the EU (Eurofound and European Commission Joint Research Centre, 2024[16]). This persisting shift has been driven by higher shares of occasional remote work (working from home less than half the time), which continued to grow even as the share of more regular remote work (working from home more than half the time) declined after the peak of the pandemic (OECD, 2024[17]). In 2022, approximately 30% of city and capital-city region workers (occasional and regular) worked from home (OECD, 2024[17]). As office workers and commuters have reduced their presence in urban cores, retail businesses dependent on their demand have been struggling, leading to rising vacancy rates. While the overall retail vacancy level in European shopping centres stands around 6%, recovering below the pre-pandemic rate of 7% after rising up to 10% in 2021 (CBRE, 2025[18]), major global cities paint a different picture. Between 2019 and 2022, retail vacancy rates in London (UK), Paris (France), Shanghai (China), New York (US) and Houston (US), increased by 3.3%, a trend expected to continue given persistently low demand for office space (McKinsey & Company, 2023[19]). However, estimates from the United Kingdom in 2021 indicated that teleworking actually relocated spending on locally consumed services, including retail. This apparent contradiction can be explained by the fact that while central business districts saw declines in foot traffic and in-person purchases due to fewer office workers, residential areas experienced an uptick in demand. In other words, teleworking shifted consumer activity from office districts towards residential neighbourhoods, thereby redistributing – rather than eliminating – retail spending. For instance, a prospective study found that spending in the City of London was projected to decline by 32.5% post-pandemic whereas, in the meantime, several residential neighbourhoods in Greater London were expected to see spending rise by over 50% (De Fraja et al., 2021[20]).
Hybrid work models have further influenced shopping behaviour, as consumers take advantage of flexible hours to visit stores during weekdays, reducing weekend congestion (Larson, 2024[21]). Consumers have shown a growing preference for supporting locally owned businesses, contributing to an increase in localised spending – that is, spending within one’s immediate community or neighbourhood. At the same time, with many consumers balancing online convenience with a renewed interest in in-person retail experiences (Verdon, 2022[22]). Additionally, coworking spaces, the use of which had been steadily rising in city centres before the pandemic, have further evolved as a form of shared telework infrastructure, supporting local retail and service economies (Gandini, 2024[23]). In France, the number of coworking spaces grew from 120 in 2013 to 600 in 2017 (ANCT, 2018[24]). In Italy, the presence of these spaces has facilitated the renewal of commercial areas, bars and cafés (Manzini Ceinar and Mariotti, 2021[25]). These shifts have created opportunities for retail SMEs to align their offerings with changing consumer habits. By broadening product selection to better reflect the needs and preferences of local customers – who are now more likely to shop closer to home – retailers can leverage localised neighbourhood spending. Additionally, tailoring promotions to attract customers during traditionally slower periods allows businesses to maximise sales within these more localised markets (Larson, 2024[21]).
Greening retail SMEs: A pathway to sustainability and competitiveness in cities
Greening local commerce: Challenges and opportunities for retail SMEs
The green transition is reshaping the retail landscape, driven by consumer demand for sustainable products, regulatory requirements for lower carbon emissions and the need for greater resource efficiency in the face of high energy prices. First, the green transition presents both financial and operational challenges. Many retail SMEs lack technical expertise and upfront capital to meet environmental regulations. For instance, the difficulty can be major for substantial energy retrofits, especially in leased premises where property owners capture most of the long-term savings yet have limited incentive to finance the upgrades. However, retail SMEs, particularly those in city centres, can play a crucial role in advancing sustainability through waste reduction, eco-friendly logistics, and energy-efficient operations. For local retailers, the green transition translates into sustainable practices such as reducing packaging through bulk sales, optimising supply chain logistics and adopting low-emission delivery solutions. Beyond their environmental benefits, these measures enhance economic efficiency by lowering operational costs and improving financial sustainability. Retailers also need to be at the forefront of innovation, pioneering new business models that align with shifting consumer expectations and environmental imperatives. This includes diversifying service offerings, repurposing waste into new value chains, and embedding circular economy principles.
Retail shopping in city centres is, in many contexts, more climate friendly. While suburban and peripheral shopping centres can be useful for accessing goods and services not always available in city centres, their reliance on car access contribute to high travel-related emissions. In Ireland, for example, a modelling study estimates that the combined hypothetical monthly emissions generated by private vehicles to reach retail centres represent approximately 9% of the total monthly CO₂ emissions recorded for the transport sector in 2016, 2019, and 2020 (O’Driscoll et al., 2022[26]). The development of these peripheral retail centres has been shaped by urban sprawl and polycentric urban development with the generalisation of car use in the mid-20th century, which has brought negative environmental externalities. Supporting city centre retail – alongside greener infrastructure and mobility options – is therefore key to sustainable urban development (Holz-Rau and Scheiner, 2019[27]).
More indirectly, the ecological transition poses challenges for urban retail SMEs through their logistics practices, as small retailers increasingly need to scale up their parcel delivery operations to remain competitive with e-commerce platforms. Globally, freight transport contributes to 8% of global greenhouse gas (GHG) emissions, rising to 11% when warehouses and ports are included (International Transport Forum, 2024[28]). Road freight remains the dominant source of these emissions, and congestion exacerbates the environmental footprint of last-metre deliveries. The lack of efficient urban logistics solutions can lead to an over-reliance on high-emission vehicles, thereby increasing air pollution and urban congestion. Urban logistics hubs (ULHs) can serve as a pivotal solution as the demand for efficient, sustainable, and cost-effective last-metre deliveries intensifies. ULHs are key facilities placed in city areas that help organise and manage the movement of goods, including the return of products and waste collection (known as reverse logistics). In ULHs, goods are grouped, sorted and sent out for delivery in a way that aims to make the process more efficient, e.g. by using fewer vehicles or switching to greener transport options, such as electric vans, cargo bikes, and pedestrian couriers. Notably, a study on the parcel delivery company Chronopost in France demonstrates the emissions-reducing potential of urban hubs, with an inner-city facility halving CO2 emissions compared to a suburban alternative (74 tonnes CO2/year versus 151 tonnes CO2/year), due to fewer vehicle-kilometres1 travelled (International Transport Forum, 2024[28]). Despite associated benefits, related to lower greenhouse gas emissions and traffic congestion, the deployment of urban logistics hubs faces significant challenges, including competition for urban space, regulatory fragmentation and last-metre delivery inefficiencies (International Transport Forum, 2024[28]). Integrating logistics planning into broader transport and land-use strategies is essential to overcoming these challenges while ensuring alignment with environmental and mobility goals.
The green transition demands a collective and coordinated approach between the public and private sectors, with local retail positioned as a key agent of economic, environmental and social sustainability. As cities evolve, policymakers need to acknowledge and support the transformative potential of local commerce in building more resilient, inclusive and sustainable urban environments. They can support retail SMEs by promoting sustainable urban logistics and circular economy practices and integrating sustainability considerations into urban planning frameworks. Strengthening local retail ecosystems through sustainable business models not only enhances economic resilience but also contributes to the broader objectives of climate adaptation and urban sustainability (see section Greening retail SMEs through urban policies and infrastructure investments).
Growing interest in green consumerism and proximity economy
The trend of green consumerism, while showing signs of recent slowdown, presents significant opportunities for retail SMEs to meet the growing demand for sustainable, eco-friendly products (see Box 4.1). For example, consumers are favouring organic food and environmentally responsible products, which minimise waste and chemical use. The 2025 European Commission’s Consumer Conditions Scoreboard highlighted that in 2024 43% of European consumers considered environmental concerns in their purchasing decisions and more than a third of them (35%) chose to repair a broken product rather than replacing it (European Commission, 2025[29]). While inflationary pressures are persisting in many economies (OECD, 2025[30]), global consumer sentiment towards sustainability remains strong. A survey covering 31 countries (including 14 OECD countries and 10 EU countries) found that consumers are, on average, willing to pay a premium of 9.7% for sustainably produced or responsibly sourced goods (PwC, 2024[31]). This willingness is likely driven by growing environmental awareness, with 85% of respondents reporting that they have personally experienced the disruptive effects of climate change in their daily lives. These trends underline both the rising green consumer preferences and the economic potential for retail SMEs that integrate sustainability into their business models. However, retailers must navigate the challenge of balancing affordability with sustainability, as higher costs associated with eco-friendly products and packaging can deter the most price-sensitive customers. Moreover, shifting towards circular business models – such as resale, rental and refurbishment – requires operational adjustments that may not yield immediate profitability and needs, for both public and private sectors, a vision on the long term. The challenge lies in aligning consumer preferences with commercially viable sustainability initiatives – making the circular economy both accessible and affordable, while enhancing its competitiveness. This could involve, for example, pricing negative environmental externalities such as the use of single-use products (OECD, 2024[32]; OECD, 2025[33]).
The retail sector is undergoing a profound transformation driven by regulatory pressures, shifting consumer expectations, and the imperative to reduce environmental impact. Several major trends are shaping this transition, requiring businesses to adopt new operational models that align with sustainability principles, among which:
Expansion of zero-plastic and sustainable packaging initiatives: Retailers are increasingly moving towards reusable, compostable, or recyclable packaging to comply with stricter regulations on plastic waste. Bulk sales, deposit-return schemes, and eco-designed packaging solutions are gaining traction.
Growth in second-hand retail and repair services: The circular economy is reshaping consumer habits, with rising demand for refurbished electronics, pre-owned fashion, and repairable household goods. Retailers are integrating second-hand sales into their business models to extend product lifecycles.
Development of durable and eco-designed products: Sustainability is influencing product design, with a shift towards materials that enhance durability, recyclability, and energy efficiency. Retailers are focusing on reducing obsolescence and improving product reparability.
Localisation of supply chains and responsible sourcing: Retailers are increasingly prioritising short supply chains, favouring locally sourced materials and food products to reduce carbon footprints and enhance supply chain resilience.
Emergence of sustainable logistics and last-metre delivery solutions: As urban areas impose low-emission zones, retailers are optimising their supply chains with electric vehicle fleets, cargo bikes, and consolidated delivery hubs. The goal is to reduce transport-related emissions while maintaining efficient customer service.
Development of eco-friendly retail spaces: Sustainable retail construction and refurbishment practices are gaining momentum, with an emphasis on energy-efficient buildings, green rooftops, and carbon-neutral stores. Retailers are also investing in smart lighting and Heating, ventilation, and air conditioning (HVAC) systems to lower energy consumption.
Waste reduction and circular economy integration: New business models, including rental services and product take-back schemes, are emerging to tackle waste. Supermarkets are testing zero-waste aisles, and fashion retailers are implementing textile recycling initiatives.
Source: Ministère du Travail, (Ministère du Travail, 2021[34]), Le commerce au défi de la transition écologique: Impacts sur les métiers et les compétences, www.lopcommerce.com/media/ny4d0at2/etude-transition-%C3%A9cologique.pdf.
Ongoing shifts in consumer profiles and preferences also include increased interest in the proximity economy from the aftermath of the COVID-19 pandemic (European Commission, 2024[35]). The proximity economy comprises “local and short value chains, local production and consumption, human-centric city models and social economy business models” (European Commission, n.d.[36]). Despite supply chain disruptions, inflation and rising energy costs – hitting retail SMEs and the self-employed hardest (OECD, 2020[14]) – the COVID-19 crisis ultimately strengthened consumer preferences for local and more resilient supply chains, representing an opportunity for retail SMEs to respond to this demand. On the one hand, to compensate for mobility restrictions and global supply chain disruptions in the short-term, place-based entrepreneurial activities became instrumental in sustaining the resilience of local areas and their communities (European Commission, 2024[35]). On the other hand, restricted mobility also led to a rediscovery of local shops, located in residential neighbourhoods (Dolega and Lord, 2020[37]; Kim et al., 2021[38]; de Leyris, Louvet and Munafò, 2022[39]). Consequently, appreciation for local production and consumption models increased on the part of consumers, sparking renewed interest in short value chains and localised economic loops where production, distribution, and consumption occur within a defined geographical area. Growing interest in the proximity economy has also emerged from an urban development perspective. This shift is partly driven by the negative effects of urban sprawl and the so-called “mobility economy” – which developed alongside transportation innovations and the delocalisation of production to reduce costs, especially outside of urban centres. These trends have spurred a reframing of economic organisation models to prioritise quality of life, environmental protection and addressing socio-economic challenges (European Commission, 2024[35]).
The proximity economy focuses on a local, community-driven approach that includes three key aspects: geographic (physical location), relational (social networks and interactions) and cognitive (sharing and acquiring technological and process-related knowledge within the ecosystem) (Intelligent Cities Challenge, 2024[40]). Planning concepts such as the 15-minute city have been key to illustrate the importance of effective land use and mixed-use development to the proximity economy in urban environments. However, niche manufacturing and agri-food retail activities in peri-urban and rural areas also fall within the purview of shifting consumer preferences for conscious shopping, customised offers and local shops as a space of exchange with specialised professionals. Within this context, retail SMEs are uniquely positioned to fill market gaps and operate following environmentally and socially protective modes of production and distribution through community embeddedness (Coca-Stefaniak, Parker and Rees, 2010[41]; European Commission, 2024[35]).
Finally, in popular tourism destinations, striking a balance between capitalising on visitor spending while maintaining relevance to local consumers is a multi-faceted challenge. City centres have often re-converted functions to serve tourism. For instance, in Italy, retail activities dropped by more than 20% in the centres of 120 cities between 2012 and 2023, while the hospitality sector – directly related to tourism – has shown opposite trends and increased by 42% (Confcommercio, 2024[42]). Still in Italy, evidence shows that the number of retailers dropped the least where hospitality increased the most. In cities, like Amsterdam (the Netherlands), the in-person retail experience is highly valued by tourists, reducing commercial vacancy rates and sustaining foot traffic (Slikker, Bloemers and Pot, 2024[43]). However, the increasing concentration of visitors in city centres alters the incentive structures for local entrepreneurs. The prioritisation of tourist-oriented goods and services, such as souvenir shops and boutique stores, often leads to the homogenisation of retail options (I Amsterdam, 2023[44]). This trend has more generally been observed in cities experiencing overtourism, which results in fewer choices for locals and an increased dominance of chain stores, including the rising presence of international retail chains (Xue, Kerstetter and Buzinde, 2015[45]). Retail SMEs in other major tourist destinations, such as Lisbon (Portugal) also contend with the transformation of commercial spaces. The proliferation of food and beverage establishments at the expense of specialised and locally oriented retail has reduced shopping options for residents, particularly for disadvantaged populations with lower mobility and purchasing power (Guimarães, 2017[46]). This phenomenon, also observed in cities like New York (United States), Florence (Italy), and Seoul (Korea), often results in retail gentrification, where long-established businesses are replaced by those catering to tourists (e.g. souvenir shops, international franchises, cafes).
The negative impact of demographic change on retail dynamics
Beyond the twin transition, retail SMEs in cities are also impacted by global trends, especially demographic change which is altering shopping patterns and service needs. For instance, the European Union’s population aged 65 or over is forecast to grow from 91 million people in 2019 to reach 130 million by 2050, representing almost a third of the total population (Eurostat, 2024[47]).
Demographic change impacts the size of local customer bases, as well as consumer needs and preferences, for example related to an ageing population. In some regions, depopulation and declining population density have led to a shrinking consumer base, making it harder for small businesses to maintain economic viability (Paddison and Calderwood, 2007[48]; Slach et al., 2020[49]; Galster, 2017[50]). At the same time, some areas experiencing population growth still face retail store closures, reducing commercial density and pushing more consumers to shop outside their communities (i.e. in out-of-town shopping areas), further exacerbating retail decline. In rural France, for example, while the population grew by 1% between 2013 and 2019, the number of small enterprises fell by over 6%, resulting in an overall 5.1% decline in commercial density (Allain and Épaulard, 2023[51]). Moreover, the degradation of city centres – both in physical infrastructure and social vibrancy – often goes hand-in-hand with declining local public finances. Reduced fiscal capacity limits the ability of local governments to invest in infrastructure, public spaces, or targeted policies to support retailers and residents, creating a self-reinforcing cycle of decline.
In general, demographic decline is felt most sharply in rural areas and small and medium-sized cities. Small and medium-sized cities are particularly susceptible to retail decline, as seen in countries such as Belgium (Delage et al., 2020[1]). In OECD countries, smaller cities (those with fewer than 250 000 inhabitants) account for much of the demographic decline, with regions far from a metropolitan area expected to shrink by 2.3% between 2020 and 2040 (OECD, 2019[52]; OECD, 2023[53]). Additionally, 22% of metropolitan areas across the OECD lost population between 2009 and 2020 (Burgalassi and Matsumoto, 2024[54]). On average, metropolitan areas that experienced population decline between 2008 and 2018 also saw a 4% increase in the share of older adults (Burgalassi and Matsumoto, 2024[54]). While a shrinking population presents the challenge of fewer potential customers since retail SMEs are often localised in place, population ageing patterns can represent an opportunity for growth (Coca-Stefaniak, Parker and Rees, 2010[41]). Though older cohorts tend to spend less on transport, durable goods and clothing than younger ones in favour of health and housing, they are also generally more affluent and spend a higher share of their income (Bodnár and Nerlich, 2022[55]). Retail SMEs can leverage these differences by adapting sales channels, adjusting marketing, and revising product ranges to adapt to shifting demand between groups of goods and consumption expectations such as customer service and advice (Schwartz and Leifels, 2016[56]; Moschis, 2021[57]).
Introduction
As cities navigate profound transformations driven by the green and digital transitions, retail SMEs must adapt to stay competitive, resilient, and relevant. Retail SMEs are the backbone of city centres, supporting vibrant and economically sustainable communities. Retailers are key anchors of the local economic ecosystem, generating daily activity, supporting nearby services and shaping the attractiveness of the area for other businesses and the local workforce – especially in small urban areas. The twin transition is not only reshaping consumer behaviour and operational models but also redefining the very role of retail SMEs within urban systems.
Retail SMEs are well positioned to lead in both transitions, but doing so requires targeted policies. This chapter examines how national and local governments can support and empower local retailers, particularly retail SMEs, in navigating two key transitions. First, it addresses the digital transformation, highlighting the importance of enhancing customer engagement, improving in-store operations and investing in digital infrastructure and skills. Second, it explores strategies to support the green transition, including the promotion of sustainable business practices and the reorganisation of urban logistics to reduce environmental impact. It showcases policy approaches and local innovations that align retail development with climate goals and technological change.
The OECD Principles on Urban Policy can play a key role in guiding support for retail SMEs through the twin transition by fostering inclusive and sustainable local economies (OECD, 2019[58]). By encouraging policymakers to maximise the potential of cities of all sizes, the principles ensure that retail SMEs in both large and smaller urban areas are equipped to benefit from green and digital innovations. Efforts to advance environmental quality – such as promoting low-carbon logistics or energy-efficient stores – can align retail development with climate goals.
Supporting retail SMEs in the digital shift
Improving customer engagement and store operations for retail SMEs in cities
To help retail SMEs in city centres face the challenges and leverage the opportunities brought by the digital transition, policymakers could implement policies for small retailers to adopt new technologies to improve customer engagement. Policymakers at national and local levels need to facilitate the digital integration of retail SMEs by providing targeted financial support, including grants and subsidies, to enable retail businesses to invest in essential digital tools. This public funding could focus on digital payment systems and social media marketing, equipping small retailers with the necessary resources to enhance customer engagement. For instance, the City of Cork in Ireland offers grants to small retailers to support the adoption of new technologies and digital tools, such as digital marketing strategies, recognising that many small shop owners lack the financial resources to invest in these solutions independently (see Box 4.2).
Policies can help small retailers embrace digital transformation to broaden their customer base and improve the efficiency of their operations by blending the strengths of physical retail with the opportunities of e-commerce. Municipalities can enhance the visibility of their city and its local businesses by investing in centralised digital platforms that showcase local amenities and city centre retailers, promote events, and integrate online shopping options – including click-and-collect services or local delivery. Local policymakers can also offer targeted grants or vouchers for digital capacity-building, enabling small shop owners to access services such as website development, social media marketing, e-commerce integration and customer data management systems. For example, the City of Braga in Portugal has adopted a phased approach to digitalising local commerce. It began by improving the city’s digital image and creating online promotional channels for city centre businesses. This was followed by support for delivery services and local logistics infrastructure, helping retailers reach customers beyond their traditional in-person visitors and compete more effectively with e-commerce platforms (see Box 4.2).
Cork’s digital transition: Tailored support for retail SMEs
Cork, Ireland’s second-largest city has a historic city centre that serves as a cultural and economic hub for the region. Facing challenges from competition with larger retail chains and the rise of e-commerce, the city has prioritised supporting small retailers with their digital and green transitions through expert consultants and tailored grant funding. Launched in 2022, the Digital for Business scheme provides expert consultancy to help businesses analyse and enhance their digital systems, aiming to improve efficiency and competitiveness. Funding of up to EUR 5 000 is provided for businesses for tools such as specialist software or digital marketing strategies. Running from 2015-2024, the Trading Online Voucher Scheme offered financial assistance to small businesses for them to develop or enhance their trading capabilities, through a grant of up to EUR 2 500 with a 50% of eligible costs covered. The grant could be used to support activities including website development, e-commerce platform integration and online advertising (see case study on Cork, Ireland – Supporting retail SMEs green and digital transition through expert advice and tailored grant funding).
Braga Smart Retail: A comprehensive approach to digitalising local commerce
Under the Portuguese Recovery and Resilience Plan, funded by the European Union, the City of Braga has launched the “Braga Smart Retail” initiative, allocating over EUR 1.5 million to advancing the digitalisation of more than 900 local retail businesses. Originally conceived during the COVID-19 pandemic to support food delivery services, the programme has since evolved in response to challenges identified by retailer associations, including intensifying competition from e-commerce platforms, shifts in consumer behaviour due to the pandemic, and the growing presence of multinational brands. This initiative aims to enhance the digital capacity of small and medium-sized enterprises in the retail sector, foster a holistic promotion of commerce, tourism, and services, and equip entrepreneurs and their workforce with the skills needed for a successful digital transition. By upgrading its existing Wi-Fi infrastructure, rather than investing in new networks, the city ensures cost-efficient and widespread connectivity for businesses and shoppers. Digital tools, including the Visit Braga website, a mobile app, and an online marketplace, aim to attract visitors and boost local commerce. To further enrich the shopping experience, Braga has introduced the Braga Smartguide, an interactive app linked to Google Maps, alongside in-store augmented reality solutions. Urban logistics are also being modernised through delivery lockers and bike delivery initiatives, supporting click-and-collect services while promoting sustainable logistics. Additionally, a centralised data platform aggregates insights from street sensors and mobile networks, providing local businesses with dashboards to optimise marketing strategies and tailor services to customer demographics (see case study on Braga, Portugal – Digital neighbourhoods redesign how retail SMEs work in the city).
Source: Local Enterprise Office (n.d.[59]), Local Enterprise Office Cork City, https://www.localenterprise.ie/corkcity/; City of Braga (2023[60]), Smart and trendy city – Sustainability report, https://www.cm-braga.pt/archive/doc/RelatorioSustentabilidade_2023_EN.pdf.
Improving cities’ digital infrastructure and skills to foster connectivity among small retailers
Ensuring retail SMEs in cities fully benefit from the digital transition requires high-quality digital infrastructure. Access to reliable, high-speed internet and advanced connectivity, such as 5G networks, is essential for small businesses to leverage digital tools and adopt e-commerce solutions. However, gaps in broadband coverage and limited public investment in digital infrastructure often create significant barriers, particularly in smaller commercial districts. For instance, across OECD countries, large functional urban areas (FUAs) with populations over 1.5 million have broadband download speeds that are on average 14% faster than the national average. In contrast, smaller FUAs tend to lag behind: those with fewer than 250 000 inhabitants have speeds that are 3.7% slower than the national average, and this gap widens to 4.8% for FUAs with fewer than 100 000 inhabitants (OECD, 2024[17]). National and local governments could expand high-speed broadband and 5G coverage in urban centres, by permitting the use of public infrastructure for antenna or fibre deployment, or by co-financing broadband expansion in less profitable or underserved urban areas, while supporting smart city initiatives that enhance digital connectivity (e.g., free public Wi-Fi and device charging). For instance, in Braga (Portugal), the city chose to upgrade its existing Wi-Fi network to improve connectivity for small retailers (see case study on Braga, Portugal – Digital neighbourhoods redesign how retail SMEs work in the city).
The lack of digital skills remains a critical challenge for retail SMEs seeking to adopt and effectively use new technologies (see Chapter 2, Addressing labour and skills shortages in Europe’s retail sector). Many small businesses lack expertise in digital marketing, e-commerce logistics, cybersecurity and data analytics, preventing them from capitalising on online sales channels and customer engagement tools. Workforce upskilling is critical to enable employees to use these technologies effectively and maximise their potential. For example, social media platforms and websites can help SMEs attract younger customer segments or expand sales beyond domestic markets. The age of business owners can sometimes act as a barrier to the adoption of these technologies, as observed in Bilbao (Spain) where the average age of retailers exceeds 50 years according to the local government.
To address this gap, local governments can implement targeted digital upskilling programmes. Training initiatives provided by local authorities could focus on equipping retail SMEs owners and employees with the skills needed to integrate digital solutions into their operations, while financial support schemes, such as subsidies for digital training or advisory services, can encourage broader participation. For instance, with the support from the City of Koper (Slovenia), the local “Sežana Incubator” provides education programmes for entrepreneurs looking to learn how to find customers, use digital marketing and develop new product. In Poitiers (France), workshops funded and organised by the city aim at training local retail shop owners to encourage the adoption of digital tools, while in Canada, the Digital Service Squad provides one-on-one advisory programmes to help retailers adopt digital technologies (see Box 4.3).
Empowering retailers through local digital training in Poitiers (France)
In Poitiers (France), post-COVID efforts focused on equipping retailers with essential digital skills through modular training sessions in collaboration with industry professionals. These workshops covered customer relationship management (CRM), website development, and social media strategies, while the city facilitated connections between retailers and trusted local experts for tailored digital support. Recognising the surge in demand for online sales platforms, Poitiers opted for training and information sessions in partnership with a local associative organisation specialised in digital tools to enhance business autonomy. The pandemic served as a catalyst to encourage digital adoption, particularly in leveraging social media for visibility rather than solely relying on e-commerce subscriptions without a strong customer base (see case study on Poitiers, France).
Scaling SME digital transformation with public support in Canada
In Canada, the Digital Main Street (DMS) initiative has played a crucial role in supporting brick-and-mortar SMEs through financial grants and personalised digital transformation assistance. Funded through a combined investment of CAD 74.1 million from provincial and federal governments between 2017 and 2024, the programme offered Digital Transformation Grants of CAD 2 500 to over 16 750 SMEs, primarily for digital marketing, website development, and technology investments (Ontario Business Improvement Area Association, 2024[61]). Additionally, the Digital Service Squad (DSS) programme provided one-on-one consulting by employing students and recent graduates with digital expertise to assist business owners in adopting new technologies (Ontario Business Improvement Area Association, n.d.[62]). Together, these initiatives have strengthened the digital capabilities of small businesses, enhancing their ability to compete in an increasingly digital marketplace.
Source: City of Poitiers (France) and Digital Main Street (n.d.[63]), https://digitalmainstreet.ca/fr/.
Greening retail SMEs through urban policies and infrastructure investments
The transition towards sustainability is reshaping the retail sector, with SMEs playing a crucial role in driving environmentally responsible business practices. This is particularly true in cities, which consume 70% of the world's food production, account for approximately 75% of global energy consumption and generate 70% of greenhouse gas emissions – shares that are set to rise (OECD, 2025[33]). Amid high energy costs, growing regulatory pressures, shifting consumer demand, and the need to reduce environmental impact, retail SMEs are adapting their operations to align with sustainability and circular economy goals. Moreover, retail SMEs can leverage the green transition by adopting sustainable sourcing, optimising energy efficiency, reducing waste through circular business models, and capitalising on consumer demand for eco-friendly products to increase revenues and reduce energy-related costs. These recommendations are consistent with Principle 5 (“Advancing environmental quality”) of the OECD Principles on Urban Policy, which urges cities to use resources more efficiently, foster sustainable consumption and production patterns.
Supporting energy-efficient and sustainable retail spaces in city centres
In the European Union, the main driver of inflation in the past years has been the escalating cost of energy, exacerbated by a combination of post-pandemic economic recovery, extreme weather conditions and geopolitical disruptions. The sharp increase in energy prices for non-household medium-sized consumers (private companies and public entities) – around 50% in 2024 compared to pre-2021 levels2 – was fuelled by Russia’s suspension of gas supply to several EU Member States and climate-induced supply constraints. This surge in energy costs has disproportionately impacted energy-intensive industries, compounding input cost pressures across multiple sectors. Inflation has affected the green transition in two opposite ways. Rising costs have discouraged long-term investments in resource efficiency while soaring energy prices have pushed SMEs to adopt short-term energy-saving measures. In 2022, according to the Eurobarometer data, the probability of surveyed SMEs in the EU investing in energy efficiency increased from 53% to 58% compared to the previous year (European Commission, 2023[64]).
The retail sector faces significant challenges in reducing its carbon footprint, particularly related to buildings’ emissions. Many retail establishments operate in ageing infrastructure with inefficient heating, cooling, and lighting systems, necessitating substantial capital investment for retrofitting as the building sector is a key contributor to greenhouse gas (GHG) emissions in the EU, representing 34% of energy-related emissions in 2022 (European Environment Agency, 2024[65]). Small and medium-sized retailers, in particular, struggle to finance these upgrades, risking non-compliance with future regulations (OECD, 2022[66]). While large retailers can leverage economies of scale to adopt green technologies and comply with evolving regulations, retail SMEs face disproportionate challenges due to resource limitations. Access to green financing mechanisms remains inadequate, with many businesses struggling to meet eligibility criteria for sustainable investment funds.
To support the green transition of small and medium-sized retailers in the context of high energy costs, national and local governments could develop integrated policy packages that combine short-term relief with long-term investment support. Targeted financial assistance – such as grants, subsidies or tax incentives – can help mitigate the immediate impact of energy price inflation on SMEs, particularly in energy-intensive sectors. National governments could also scale up support for building retrofits in the retail sector, recognising the constraints faced by SMEs operating in ageing, energy-inefficient infrastructure. This includes dedicated funding streams for small retailers to adopt low-carbon technologies such as heat pumps, energy-efficient lighting, and smart energy management systems, as exemplified by the Cork City Council’s Energy Efficiency Grant in Ireland (see Box 4.4). Finally, advisory and diagnostic services could be expanded to ensure that SMEs have access not only to finance, but also to the knowledge and technical assistance needed to identify viable investments and navigate regulatory requirements. In France, one of the programmes implemented under France’s National Recovery and Resilience Plan, financed through a combination of EU loans and grants in response to the COVID-19 crisis, provides a model for conducting sustainability assessments of SMEs, to provide them with tailored action plans (see Box 4.4). Finally, eligibility criteria for green financing could be simplified and aligned with SME capacities, enabling a wider range of businesses to access the capital needed for energy transition investments.
Empowering retail SMEs in Cork (Ireland) to achieve energy efficiency and sustainability
Cork City Council (Ireland), in partnership with its Local Enterprise Office (LEO), has implemented targeted measures to support retail SMEs in adopting energy-efficient technologies and reducing their environmental impact. A key initiative is the Energy Efficiency Grant, launched in 2021, which provides financial assistance to small businesses with fewer than 50 employees. Initially offering up to EUR 5 000, with businesses required to cover 50% of costs, the grant was expanded in 2024 to a maximum of EUR 10 000, while reducing the business contribution to 25%. The scheme facilitates investments in smart energy controls, renewable energy adoption, and other efficiency upgrades, helping businesses lower operational costs while aligning with national sustainability goals. By reducing financial barriers to green investments, Cork’s approach aims to strengthen the resilience and competitiveness of local retailers in an evolving market landscape (see case study on Cork, Ireland – Supporting retail SMEs green and digital transition through expert advice and tailored grant funding).
Supporting the green transition of small businesses through France’s National Recovery and Resilience Plan
As part of France’s National Recovery and Resilience Plan, the French government has introduced a EUR 15 million initiative to accelerate the ecological transition of artisans, independent retailers, and small businesses. Spearheaded by the Ministry of Ecological Transition and the Ministry for Small and Medium-Sized Enterprises, in partnership with key institutional actors – including the Ecological Transition Agency, the Chambers of Trades and Crafts, and the Chambers of Commerce and Industry – this programme aims to integrate sustainability more deeply into the business ecosystem. Aligning with France Relance’s overarching goals of resilience, competitiveness, and environmental responsibility, the initiative offers businesses free individual sustainability assessments. Conducted by expert advisors from the Chambers of Commerce and Industry (CCI) and the Chambers of Trades and Crafts (CMA), these assessments determine a company’s environmental maturity and provide tailored action plans for sustainable transformation. Businesses requiring further support can access targeted assistance for securing green financing, improving resource and energy efficiency, and obtaining environmental certifications. With 35 000 diagnostics and 10 000 customised support actions planned, this initiative marks a significant step towards embedding sustainability at the core of France’s small business sector.
Source: Local Enterprise Office (n.d.[59]), Local Enterprise Office Cork City, https://www.localenterprise.ie/corkcity/ and Aides Territoires (n.d.[67]), Accélérer la transition écologique des artisans, commerçants et indépendants, https://aides-territoires.beta.gouv.fr/aides/6f3a-accelerer-la-transition-ecologique-des-artisa/.
Facilitating the adoption of sustainable practices and circular business models by retail SMEs in cities
The circular economy presents significant opportunities for retail innovation. Small retailers in cities that proactively integrate sustainability into their business models can gain a competitive edge in an evolving market landscape. For example, resource efficiency and circular economy policies in the EU are projected to generate the largest employment gains in sectors such as retail, highlighting the significant job creation potential within this industry. Furthermore, by 2025, second-hand sales are expected to represent 12.6% of total online sales in Europe – more than double their market share of 5.7% in 2020. This shift underscores the need for retailers to embrace both the digital transformation and circular business models (OECD, 2025[33]). As consumer preferences shift towards environmentally responsible consumption, businesses that embed sustainability across their operations – ranging from product sourcing to waste reduction – can enhance brand loyalty and market differentiation. Business models centred on product refurbishment, resale, and leasing can generate new revenue streams while reducing waste and resource consumption (OECD, 2024[32]). Retailers that establish reverse logistics systems and repair services can capitalise on the growing market for sustainable consumption. However, mainstreaming circular models requires supportive regulatory frameworks, consumer awareness initiatives and cross-sector collaboration. By positioning sustainability as a core business strategy, retailers can future-proof their operations against regulatory and market shifts.
To facilitate the adoption of circular business models in the retail sector, national and local policymakers can combine regulatory, financial and demand-side measures. National and local regulations could encourage – or require in specific cases – retailers to integrate second-hand sales, offer repair and refurbishment services, and adopt sustainable product design practices – while being cautious not cause excessive costs for the retailers or limit flexibility too much. Public procurement can be used strategically by including circularity criteria – such as prioritising products with recycled or reused components – and by allocating a share of purchases to second-hand or refurbished goods sourced from local retailers. Financial incentives such as grants, tax credits or preferential loans can support investments in circular infrastructure (e.g. repair hubs), while fiscal measures like reduced VAT rates on repairs or refurbished items can stimulate demand. Governments can also promote waste reduction through support for deposit-return schemes, product take-back initiatives and zero-waste or reusable packaging solutions – by offering financial incentives and practical advice for these measures to be implemented.
Supporting low-emission logistics for retail SMEs in city centres
Logistics is a key issue for retail SMEs in cities for several reasons. Firstly, it supplies city centre shops and is therefore an integral part of their daily operations – contributing directly to their carbon footprint (see section Greening retail SMEs: A pathway to sustainability and competitiveness in cities). Secondly, to remain competitive with online platforms, city centre retailers must also develop their own delivery services to reach a wider customer base. National and local governments can support these businesses in achieving both objectives: reducing their greenhouse gas emissions while increasing the volume and efficiency of their deliveries.
Local policymakers could incentivise the development of logistics hubs through dedicated infrastructures and urban logistics zones to help secure appropriate locations. Given that last-metre delivery can represent up to 50% of overall logistics costs, policymakers could prioritise solutions that enhance efficiency while reducing externalities. Investing in adaptable, multi-functional logistics hubs – combining warehousing, commercial spaces, and essential urban services – will be key to ensuring a sustainable and resilient urban freight ecosystem (International Transport Forum, 2024[28]). To optimise last-metre delivery and minimise congestion, policymakers could rethink urban design and regulatory frameworks to accelerate the adoption of low-emission delivery solutions. This includes creating dedicated infrastructure for cargo bikes and electric vehicles, integrating urban logistics hubs within multimodal transport systems, and targeted incentives to encourage shared logistics models to maximise efficiency. For instance, the City of Braga (Portugal) is introducing new urban logistics solutions, including smart delivery lockers and bike delivery services, to facilitate click-and-collect services and reduce the environmental impact of urban freight transport. The City of Poitiers (France) is also currently trying to reduce delivery congestion and emissions by supporting the establishment of a cyclo-logistics hub in the city (see Box 4.5).
Enhancing retail supply chains with green logistics in Braga (Portugal)
In Braga (Portugal), innovative logistics solutions are enhancing the efficiency of local retail supply chains while promoting environmentally friendly delivery methods. The city is deploying delivery lockers and expanding bike delivery services to support click-and-collect systems, reducing reliance on high-emission transport and integrating digital tools into urban logistics. These measures aim to streamline stock deliveries for local retailers while addressing both green and digital transitions (see case study on
Braga, Portugal – Digital neighbourhoods redesign how retail SMEs work in the city).
Developing cyclo-logistics for sustainable last-metre deliveries in Poitiers (France)
In Poitiers (France), the city is developing a cyclo-logistics hub to facilitate sustainable last-metre deliveries in the city centre. Inspired by the successful implementation of similar initiatives in La Rochelle (France), this approach prioritises cargo bike deliveries to reduce congestion and emissions. However, challenges remain in securing suitable locations for the hub and adapting to the city's hilly terrain, requiring tailored infrastructure solutions (see case study on Poitiers, France – Revitalising a historic city centre with a data-driven and sustainable approach to urban commerce).
Source: City of Braga (Portugal) and City of Poitiers (France).
Introduction
As traditional retail districts face mounting challenges – including e-commerce competition, changing mobility patterns, and the lingering effects of the COVID-19 pandemic – city centres must adapt to remain commercially and socially vibrant. Improving city centres’ accessibility to increase footfall and leveraging spatial and historical assets to promote attractiveness can reinforce the appeal of city centres by sustaining daily activity and shaping a lively sense of place, underpinning local well-being and the broader economic ecosystem.
Enhancing the appeal of city centres can mitigate the adverse effects of rising business costs, notably driven by high energy costs or competition from e-commerce. Given that e-commerce holds a competitive advantage over brick-and-mortar retailers – particularly in terms of convenience for consumers – urban policy can be strategically designed to strengthen the ability of retail SMEs to compete effectively. This necessitates leveraging their unique assets and fostering a sustainable environment where they can thrive. Specifically, by enhancing the urban environment in which retail SMEs operate, urban policies can leverage sustainable practices – such as active mobility, pedestrianisation, and the expansion of green spaces – to create more attractive, accessible, and resilient commercial areas. These interventions not only improve quality of life for residents and visitors but also help mitigate some of the negative externalities of the digital transition, such as reduced foot traffic and increased reliance on delivery logistics. Integrating environmental quality into urban retail strategies can thus support both the competitiveness and sustainability of local businesses. To reach these objectives, national and local governments can draw on the OECD City Compass (OECD, 2024[68]) as a strategic reference to support retail SMEs through the twin transition. Building on lessons from recent crises, the OECD City Compass outlines four guiding principles for shaping the future of cities – resilience, proximity, sufficiency, and justice – which offer a valuable lens for urban retail policy. Applied to retail, they call for place-based approaches that enhance the sustainability, accessibility, and inclusiveness of city-centre commerce.
A conceptual framework on revitalising city centres has been developed by Matthew Carmona (2021[69]) and provides insights into how cities can achieve this objective:
Optimising convenience: Consumers should find city centres easy to access and convenient for meeting their needs. This requires investments in public transport, parking infrastructure, and pedestrian-friendly designs. Retail clusters should offer a diverse range of options, ensuring consumers can access goods and services efficiently. In the post-pandemic era, embedding city centre retail SMEs within a broader “experience economy” appears vital for their long-term viability (Lashgari and Shahab, 2022[70]).
Cultivating uniqueness and character: The distinctiveness of city centres is a critical competitive advantage for local retail SMEs compared to online retailers. One key advantage of traditional retail over e-commerce is its ability to foster social interactions and provide leisure opportunities, as simply strolling through an appealing commercial area can be a rewarding activity. Preserving cultural heritage, promoting local businesses, and fostering authenticity can also make city centres stand out as destinations.
Promoting mixed uses: City centres should be multifunctional spaces that integrate retail, leisure, residential, and green areas. Mixed-use planning supports economic diversity and ensures city centres remain vibrant throughout the day and week.
Facilitating social interaction: Public spaces should be inclusive and welcoming, fostering a sense of community. Events, street markets, and third spaces (e.g., libraries, cultural centres) can create opportunities for socialisation, positioning city centres as hubs of activity and connection.
Enhancing city centres’ accessibility to increase footfall and retail consumption
Enhance walkability and facilitate access through public transport
Accessibility to shops is a key factor influencing consumer decisions to visit retail areas in urban settings. In Swedish cities, both intra-municipal and intra-regional access to shops (measured through travel time) are positively and significantly associated with place attractiveness (measured through higher housing investment as a proxy) (Öner, 2017[71]). In Brussels (Belgium), it has been found that only 17% of retail customers use a private motorised vehicle to visit shopping streets in the city, while 48% walk or cycle, and 43% use public transport (Hub.Brussels, 2024[72]). Over the past decades, many cities have undertaken retail-led urban regeneration projects, with a significant portion of public interventions focused on pedestrianising city centres and developing public transport infrastructure (Guimarães, 2016[73]). While city centre retailers often express concerns about urban planning measures that restrict access to their shops by private cars, a growing body of research shows that high walkability, strong public transport connectivity, and qualitative urban spaces have positive effects on retail space attractiveness (Ivey and Bereitschaft, 2021[74]; Rosenthal, Strange and Urrego, 2022[75]).
There is a premium associated with walkability, active mobility, and access to public transport in commercial real estate, reflected in higher retail rents, increased sales prices and enhanced overall retail performance (Ivey and Bereitschaft, 2021[74]; Rosenthal, Strange and Urrego, 2022[75]). For instance, compared to less walkable locations, office, retail and apartment properties in highly walkable areas throughout the United States present higher value – with a value difference ranging from 6% to 54% – as well as higher net operating incomes for office and retail properties (Pivo and Fisher, 2011[76]). In the United States and Canada, new or improved infrastructure for active modes of transport (e.g. bike lanes, pedestrian paths) had either positive or neutral economic impacts on retail and food services (Volker and Handy, 2021[77]). In Aachen (Germany), retail locations near pedestrian zones, public transport stops, and off-street parking are more attractive, with corresponding increases in retail rents (Merten and Kuhnimhof, 2023[78]). In a sample of 14 Spanish cities, the median sales volume of stores located in pedestrian areas is 33% higher than in non-pedestrian areas (Yoshimura et al., 2022[79]).
However, despite these economic benefits, policies improving the accessibility of city centre for active mobility and public transport carry the risk of driving major changes in the retail landscape as well as retail gentrification, replacing businesses that cater to lower-income, older, or immigrant communities. For example, the pedestrianisation of one of the most famous boulevards of Brussels (Belgium), Boulevard Anspach – a formerly four-lane road for cars – has driven notable sectoral shifts, with a growing dominance of the HoReCa (Hotels, Restaurants and Cafés) sector and an increase in leisure-related retail, at the expense of local retailers. Meanwhile, the availability of daily-life and essential goods has evolved, with a rise in small food stores and a slight decline in larger ones. These trends indicate a shift toward recreational shopping and experience-driven consumption and a decline in accessibility and diversity of essential goods (Tiberghien, 2024[80]).
To further strengthen the attractiveness of city centres and retail SMEs, local policymakers could enhance walkability and facilitate access through public transport. Investments in pedestrian-friendly zones, high-quality public transport infrastructure, and active transport modes (e.g. bike lanes) can increase foot traffic and customer spending. Similarly, the development of free or low-cost public transport schemes, particularly on weekends and during peak retail hours, can also facilitate access to commercial areas. For instance, the pedestrianisation of the city centre of Poitiers (France) made the central retail shops accessible on foot, via cycling infrastructure, and through public transport, which have been made free of charge on Saturdays. Since the implementation of these measures in 2020, footfall in the city centre has shown a consistent upward trend, rising by more than 30% between 2021 and 2024.
Redesigning parking policies to enhance commercial vitality in city centres
While facilitating sustainable and active mobility, cities can also reconsider the role of cars in their city centres. The provision of parking remains essential in most urban areas, particularly in small and medium-sized cities where public transport infrastructure is not yet fully developed. However, parking facilities can be reimagined to avoid degrading the urban environment or generating excessive negative externalities. Some cities – such as Bilbao (Spain) (see Box 4.6) – have implemented innovative, data-driven solutions to regulate unnecessary vehicle flows and optimise traffic management. The expansion of park-and-ride systems, fully integrated with metro and bus networks, could be pursued to facilitate multimodal access to retail areas. The deployment of real-time parking information systems is also essential to reducing traffic congestion, improving visitor navigation and minimising unnecessary vehicle circulation in city centres. Moreover, in some cities, the removal of parking spaces has led to beneficial outcomes for retail SMEs regarding foot traffic and retail sales. In Toronto (Canada), replacing on-street parking with a bike lane has led to higher monthly customer spending and an increase in the number of customers (Arancibia et al., 2019[81]). Conversely, a high supply of on-street parking in the same city negatively impacted retail rents, potentially due to the associated congestion and reduced pedestrian appeal. On-street parking could therefore be re‑evaluated to prioritise the development of off-street parking facilities, bike lanes, and public spaces, enhancing retail performance while advancing sustainability goals.
To strengthen its city centre commerce, Bilbao (Spain) has implemented its Strategic Commercial Development Plan 2025. One of the central pillars of this strategy focuses on promoting sustainable mobility to support local businesses. By improving accessibility to the city centre through environmentally friendly and efficient transport options, the plan aims to attract greater foot traffic to commercial areas, fostering economic vitality while aligning with broader sustainability objectives. The progressive development of a network of park-and-ride facilities, strategically integrated with metro systems and other public transport networks, aims to discourage vehicle entry into central urban areas. These facilities are planned to be located along key access corridors to the city, providing a seamless transition from private vehicles to public transport. This approach aims to support sustainable urban mobility, reduce congestion in central areas, and enhance the efficiency and attractiveness of public transport options for commuters. As a measure to further minimise disruptive traffic caused by visitors within the urban core, the development of an integrated parking information system is also proposed in the strategic plan. This system aims to provide real-time updates on available parking spaces, guiding drivers efficiently to suitable locations. By streamlining the parking process, this initiative will reduce search times, facilitate visitor access, and significantly lower unnecessary vehicular circulation within the city centre (see case study on Bilbao, Spain).
Source: Bilbao Economic Promotion Department (2025[82]), Bilbao Retail Strategy 2025, https://www.bilbaoekintza.eus/en/retail/retail-analysis-and-strategy-service.
Leveraging city centres’ spatial and historical assets to promote attractiveness and resilience
Multidimensional urban regeneration and mixed-use planning can limit retail vacancy and revitalise city centres
Urban regeneration can support the retail sector and enhance its competitiveness in the face of increased competition in e-commerce or changing consumer preferences, by revitalising economic activity, enhancing public spaces quality, and improving commercial viability. Large-scale retail developments in city centres, such as the Bullring shopping complex in Birmingham and West Quay in Southampton in the United Kingdom, have demonstrated how retail investment can increase foot traffic, boost local economies, and elevate a city's status as a shopping destination. In Korea, retail-led urban regeneration has shown that integrating traditional markets with cultural and tourism strategies significantly enhances their viability. Successful projects, such as traditional Jeju Olle Market in Seoul (Korea), leveraged nearby attractions and developed self-sustaining business models, reducing reliance on government funding. The revival of the Kusatsu River in Kusatsu City (Japan) serves as a strong example of how cities can leverage urban space to create a more welcoming and attractive environment for residents. The river, abandoned in 2002 and located near a major train station, has since been redeveloped into a high-quality park with shops and gardens (OECD, 2025[83]). Rather than relying solely on modernisation, effective regeneration policies could support infrastructure improvements, marketing strategies, and merchant training to ensure lasting economic resilience (Kim and Jang, 2017[84]).
Mixed-use urban planning3 is essential for revitalising city centres, with empirical studies demonstrating the positive impacts on health, social cohesion, economic vitality and environmental sustainability. Evidence from five UK cities (Edinburgh, Glasgow, Hull, Liverpool, and Nottingham) demonstrates that greater property use diversity – residential, commercial, transport, public services, etc. – enhances resilience, allowing retail urban centres to absorb economic shocks more effectively (Orr et al., 2023[85]). The programme Action Cœur de Ville in France (see case study on France – Action Cœur de Ville) co‑ordinates investments from national and local authorities as well as public agencies in fostering sustainable urban regeneration. Investments in high-quality public infrastructure – such as pedestrian-friendly areas, outdoor seating, green spaces, and event venues – help to create vibrant and accessible city centres that attract footfall and support the retail sector (see Box 4.7). Pleasant, mixed, and lively city centres strengthen local economies by creating appealing environments that encourage residents and visitors to spend more time – and money – in urban retail areas. Following the Action Coeur de Ville example, policymakers could therefore implement comprehensive urban renewal strategies that integrate retail, housing, and public space improvements to revitalise city centres. Upgrading zoning plans to promote mixed-use areas rather than single-use zones and enhancing co‑ordination across policies, ministries, and agencies, can support a more horizontal and integrated approach to city centre regeneration.
Cities can also address the issue of retail vacancies as vacant commercial spaces not only result in economic and commercial losses but also negatively impact the city’s image. In France, about 60% of citizens declaring lack of interest in visiting city centres say the main reason is due to poor attractiveness and vitality, including store closures in city centres (Centre-ville en mouvement, 2024[86]). In this context, implementing public policies aimed at revitalising these spaces is crucial. National and local governments could consider adopting integrated spatial and regulatory planning instruments to revitalise retail activity in medium-sized city centres while limiting administrative burdens for SMEs. This can include the designation of revitalisation perimeters where streamlined procedures and targeted exemptions apply, such as waiving commercial development authorisations for new retail in city centres, as experimented by France through its Action Coeur de Ville programme (see Box 4.7). Additionally, establishing public or semi-public real estate entities can help municipalities acquire, renovate, and lease commercial premises at affordable rates to support local entrepreneurs and strengthen the retail fabric of city centres. Local policymakers could also establish an appropriate regulatory framework – such as short-term commercial leases – to support the temporary reuse of vacant retail units for pop-up shops or cultural initiatives to foster business experimentation and help prevent urban decline. For example, the Puur Ghent programme (Belgium), supports such matchmaking by helping link retailers with available commercial spaces. In parallel, amending zoning regulations to allow for the easier conversion of retail units into mixed-use developments – such as offices or residential spaces – can be an effective strategy. However, such changes should be carefully managed to ensure active street-level uses are retained and the character of key commercial areas is preserved.
Ensuring accessible commercial spaces for local businesses in Koper (Slovenia)
The city of Koper in Slovenia has implemented several effective strategies to support local retail SMEs and revitalise its city centre. One notable initiative is the subsidised commercial rents, where the city offers a 30% discount on commercial premises to retailers that cater to the specific needs of the local population, such as clothing shops, technical tool stores, and bakeries. This approach helps shift the focus away from tourism-driven retail, which previously led to an overabundance of souvenir shops that did not serve the everyday needs of residents. Additionally, the city has restricted the conversion of ground-floor commercial properties to residential use in the city centre, ensuring that retail spaces remain available for local businesses. To further support entrepreneurial ventures, the municipality also facilitates pop-up shops by identifying vacant commercial properties, renting them at no cost to small retailers, who only cover utility expenses (see case study on Koper, Slovenia – Providing affordable premises and innovative planning solutions to enable retail SMEs to compete with digital and out of town outlets).
Combating retail vacancy in Bonn (Germany) through integrated urban policy
Following the COVID-19 lockdowns, footfall declined significantly in the city centre of Bonn (Germany) and only recovered gradually. As of 2025, pedestrian numbers have nearly returned to 2019 levels. Among its main retail centres, vacancy rates reached a peak after the pandemic, especially in the two shopping districts of Bonn City Centre (10%) and Duisdorf (10%). To address retail vacancy in its city centre, the City of Bonn has adopted a multifaceted strategy combining regulatory flexibility, targeted support services, and urban redevelopment. It has facilitated regular "Verkaufsoffene Sonntage" (Sunday openings) through a unique, locally negotiated agreement renewed every three years with business and civil society stakeholders. Through its Zentrenmanagement programme, Bonn supports business networking, events, and co-ordination between retailers and property owners, with funding from municipal, regional, and federal sources. The city’s Economic Development Office provides dedicated advisory services to retailers, acting as a one-stop shop for real estate, regulatory, and financial support. Additionally, Bonn has invested over EUR 16 million in climate-resilient urban redevelopment, including pedestrianisation and public space improvements, to enhance the appeal and accessibility of retail areas (see case study on Bonn, Germany – Co-ordinating with stakeholders to create a supportive environment for retail SMEs).
Source: Office for Economy, Agriculture and Development, Koper (Slovenia) and Economic Development Office of the City of Bonn (Germany).
Retail SMEs in cities can leverage green, cultural and social amenities as a comparative advantage to online retailers
Green infrastructure plays a critical role in enhancing urban environments, delivering environmental, health, economic and commercial benefits, and directly benefiting retail SMEs by increasing foot traffic and improving shopping experience in cities. Urban retail activity is influenced by climatic factors and urban design, as adverse weather – such as heavy rain, high winds, or extreme temperatures – can deter shoppers from visiting brick-and-mortar stores. Moreover, integrating green spaces and sustainable design elements can enhance the shopping experience, making retail areas more resilient to climatic stressors and more appealing to environmentally conscious consumers. Green infrastructure, including urban tree planting, contributes to promoting biodiversity, mitigating climate change impacts, and enhancing commercial property values. Urban greenery mitigates the urban heat island effect, preventing the decrease in pedestrian footfall during hot days. In addition, investments in urban green infrastructure offer significant economic and social benefits, enhancing both business performance and workforce wellbeing. To leverage these positive effects on economic and retail activity, policymakers could implement nature-based solutions by investing in green infrastructure to strengthen urban climate resilience and enhance the aesthetic and environmental quality of public spaces. In London’s Victoria Business Improvement District (BID) (United Kingdom), for instance, strategically integrated green improvements – such as green walls, street trees, and roof gardens – stimulate local economic activity by increasing consumer footfall and extending dwell times. Businesses in Victoria BID, particularly in the retail and hospitality sectors, leveraged green areas to differentiate their offerings, attract environmentally conscious consumers, and enhance the overall urban experience. Additionally, urban greening has been linked to improvements in workplace satisfaction, fostering higher employee morale, increased team cohesion, and a more positive corporate image (Cinderby and Bagwell, 2017[87]).
Enhancing the urban environment by preserving cultural and historical heritage in city centres plays a crucial role in urban economic strategies, contributing to the optimisation of retail performance and the enhancement of the customer experience. The urban environment and the visual aesthetics of retail shops are an integral part of retailers’ strategies to influence a consumer’s decision to visit a shop, enter it, and ultimately purchase a good or service. The distinctive architecture of city centres – whether medieval, as in Koper (Slovenia), predominantly from the 19th century, as in Barcelona (Spain), or partially shaped by 20th-century industrial heritage, as in Turin (Italy) – allows retailers to integrate their shop into the historical, symbolic, and heritage dimensions of the location. These cultural and heritage strategies, which emphasise both tangible and symbolic heritage, reinforce economic and commercial attractiveness by drawing in high-spending clientele, creating new jobs and revenues through increased local attractiveness for tourists, talent and firms (OECD/ICOM, 2019[88]). The restoration of historic buildings has increasingly been recognised as a strategic tool for urban and retail regeneration. Empirical studies, such as those conducted in Hong Kong’s Wanchai district (China), reveal that the conservation and adaptive reuse of heritage buildings can significantly enhance retail performance and property values. The rental premiums for ground-floor shops near revitalised heritage sites have been found to rise by up to 15%, reflecting the increased commercial appeal of heritage-led redevelopment (Jayantha and Yung, 2018[89]). Protecting distinctive cultural and architectural characteristics is essential to attracting both residents and visitors while countering the homogenising effects of mass tourism.
In Italy, Turin’s urban transformation underscores the strategic role of culture and tourism in fostering economic dynamism and revitalising retail ecosystems. Unlike Milan (Italy), where private sector investment was the primary catalyst, Turin’s renewal was predominantly public sector-led, with local authorities actively steering urban planning initiatives. Recognising the economic potential of cultural assets, the city undertook targeted investments in museums and heritage sites, notably the expansion and modernisation of the Egyptian Museum. Historic buildings were repurposed to host cultural events and exhibitions, enhancing the city’s attractiveness as a visitor destination. A pivotal moment in this trajectory was the 2006 Winter Olympics, which significantly bolstered Turin’s global visibility and catalysed long-term growth in its tourism sector. By leveraging its cultural amenities, Turin reinforced local retail activity and created a more vibrant urban environment conducive to retail SMEs growth.
Source: Torino Urban Lab (n.d.[90]), https://urbanlabtorino.it/?lang=en. .
Creating a vibrant and diverse city centre to engage and attract residents and consumers
Cultivating diversity and authenticity in urban spaces
Retail SMEs in city centres possess a distinct competitive edge over both online and out-of-town retailers by capitalising on local identity, community engagement and social cohesion. As e-commerce continues to expand, city centres can differentiate themselves by offering unique experiences to visitors. The character and uniqueness of urban spaces are critical factors influencing consumer behaviour. For cities to thrive, they must be viewed as destinations, offering distinct and authentic experiences. In cities such as Lisbon in Portugal and Koper in Slovenia, retail authenticity4 has become a key purchasing criterion for both locals and tourists, particularly in contrast to standardised or mass-market offerings. However, mass tourism has also undermined the unique character of these cities, replacing historic retail spaces that cater to local needs with businesses primarily serving tourists (Guimarães, 2022[91]). To address this issue and prevent tourism-led retail homogenisation, policymakers need to manage the trade-offs of such policies and could prioritise strategies that preserve retail authenticity by supporting locally rooted retail businesses. For example, some cities, such as Palo Alto in the United States, have banned or restricted the establishment of large chain stores in their city centres to preserve commercial space and market opportunities for smaller, independent, and local retailers. Such strategies need to be thought carefully and discussed with all the stakeholders while respecting national or supra-national rules, such as the freedom of establishment in the EU.
Retail SMEs can leverage local and physical competitive advantages to face online competition. While online retail has reshaped consumer behaviour, research highlights that face-to-face interactions remain essential for fostering relationships, trust, and customer loyalty (Reades and Crookston, 2021[92]). Physical retail spaces offer a distinct advantage by facilitating spontaneous social engagement and providing experiential value that digital platforms cannot fully replicate. Brick-and-mortar stores also generally provide a higher level of service quality across dimensions such as reliability, responsiveness, and customer engagement. Consumers tend to perceive physical stores as more trustworthy, particularly regarding product authenticity, as they can physically examine and try the product firsthand, and easily benefit from post-sale services, whereas online retail struggles with personalisation and trust (Sharma, 2015[93]).
Policymakers could prioritise the creation of unique and authentic urban retail experiences. Encouraging place-based retail strategies – those that celebrate the specific cultural, historical, and social characteristics of a city – can significantly enhance the attractiveness of city centres, making them more appealing to both residents and visitors. By doing so, cities can boost local businesses, support economic resilience, and create a sense of belonging and pride among their communities. These efforts will not only help retain consumer interest in urban retail but also contribute to the long-term vitality and sustainability of city centres.
Leveraging festive programming to drive city centre retail vitality
Event-related policies and programmes can contribute to broader placemaking strategies by improving place quality, increasing visits to the city centre, and providing positive marketing to the place as a destination (Richards, 2017[94]; Risselada, Warnaby and Weltevreden, 2019[95]). For instance, festivals generally contribute to a range of economic development outcomes, such as strengthening city branding, stimulating the night-time economy, attracting tourism, creating jobs, and supporting urban regeneration (OECD, 2025[83]). With a holistic understanding of the broader experience available in their city and town centres, policymakers can integrate retail SMEs into strategies aimed at enhancing the reach and engagement of residents and consumers. As such, experiences in city centres through cultural events, local markets, and fairs, can constitute unique offerings distinct from goods and services alone (Pine and Gilmore, 2013[96]). For example, late-night light festivals and Pride Parades in over 100 cities have shown their effectiveness being integrated as part of an economic development strategy (OECD, 2025[83]). To maximise returns for local businesses and turn footfall into spending, events could include strategies to engage local businesses to provide multiple consumption experiences and opportunities for residents and visitors alike (Risselada, Warnaby and Weltevreden, 2019[97]; Fernandes and Chamusca, 2014[98]).
Global events can also represent a significant opportunity to drive footfall to local retailers, as crowds are attracted to the event itself but are by the same occasion exposed to the local retail SMEs (OECD, 2024[99]). Recurring events can not only temporarily increase the number of visitors to city centres but contribute to broader place attractiveness and community development strategies (OECD, 2024[99]). However, lasting impacts on place branding and visibility, leading to sustainable activations in favour of city centre vitality, can also be achieved with effective city centre management through locally relevant animation and programming (Källström, Persson and Westergren, 2021[100]).
Overall, successful strategies for revitalising urban retail through the organisation of local events and cultural festivals hinge on fostering deeper connections between retail, culture, and community engagement. Events like Hannut’s artisanal market in Belgium (see Box 4.9) can transform city centres, boosting local commerce while cultivating a unique sense of place. These initiatives not only attract visitors but also enhance the cultural vibrancy of urban areas, creating opportunities for local businesses to thrive and supporting the broader local economy. By promoting such events, cities can encourage a dynamic retail environment that appeals to both residents and tourists, ultimately contributing to the economic resilience and sustainability of the area.
A successful example of event policies benefitting retail activity is that of Hannut’s (Belgium) local artisanal market. Initially a marketplace for artisans without a shopfront occurring every first Sunday of the month, the initiative has grown steadily since its first edition in 2010 and was subsequently relocated to the city’s Grand Place to accommodate growing numbers of shoppers and artisans from every corner of the country. Over 15 years of activity, this artisanal market has become a mainstay of Hannut’s city centre attractivity and animation. The exclusivity of handmade products only available at the marketplace has been a key attraction factor for local and regional consumers, as well as country-wide visitors. The popularity of the artisanal market programming has benefitted local retailers as visitors complement their market shopping with the broader commercial offer available in the city centre. In 2012, the city also piloted a Christmas market, reserved for small local artisanal producers. It has since become the largest interior Christmas market in Belgium, attracting over 20 000 visitors – a very significant turnout for a city of 17 000 inhabitants – and featuring over 225 stands. In its festive programming, such as Hannut’s yearly carnival celebrating the Belgian National Day, the city ensures the participation of artisans, boosting local retail activity.
Source: Observatory for City Centers (Observatory for City Centers, n.d.[101]), City Center Management, Commerce, Markets, and Crafts, https://citycenters.eu/downtownmanagement_commerce_markets_and_crafts/ .
Introduction
The management and governance of town and city centres plays an important role in overcoming challenges and leveraging opportunities resulting from the twin transition. A great diversity of stakeholders and functions comes together in town and city centres (e.g. work, leisure, culture, education, living, health, shopping and public services), which means that these stakeholders need to work together to develop joint solutions for the benefit of these places. For example, if town centres aim to enhance their digital infrastructure, this requires local businesses, community groups, local authorities and digital providers to co-operate in developing and implementing solutions (Peel and Parker, 2017[102]). Effective governance structures help fill co-ordination gaps and bring the different interests together to create integrated approaches to town centre revitalisation, which in many cases also help to better address the impact of the twin transition on retail SMEs in these places.
Monitoring and evaluation of retail SMEs trends, prospects and policies in cities is essential to drive informed policymaking. Systematic, granular and regular retail data collection is crucial to steer cities through the green and digital transitions. Monitoring gives SMEs operating in city centres clear market insights, for instance by letting them compete with chains and online platforms while adopting new digital tools. It also tracks trends and shifts in consumer behaviour – especially rising sustainability and ethical demands – so the retail mix stays diverse and appealing. For policymakers, city‑centre retail data reveal place‑specific hurdles such as digital or skills gaps, guide policies to support vitality in neighbourhoods that balance the needs of diverse city-users and increase the transparency and accountability of policies. Yet many cities still face monitoring and evaluation gaps, leading to incomplete or fragmented knowledge bases that hinder a holistic understanding of retail dynamics and their contribution to vibrant, attractive city centres. This chapter therefore sets out four key directions to strengthen monitoring and evaluation: mapping retail SMEs’ presence and trends at a granular level, adopting a citizen-centred perspective to assess how SMEs meet the needs of residents and other city users, providing a systemic view of the interplay between market dynamics and the urban economy, and leveraging novel tools and methods for data collection and analysis to support local governments.
Approaches to the governance and management of town and city centres
Across the EU, places adopt different approaches to the governance of their town and city centres. These approaches can be led by the public sector, for example through the establishment of “place managers” within local governments. This role can include, for example, helping to co-ordinate across the various departments that manage relevant policies, from planning and zoning to small business supports to communications and marketing. In other places, town centre management is led by the private sector, for example through business improvement districts (BIDs), which are a specific type of scheme where local businesses pay an additional tax or levy to finance place-based services and activities. BIDs first appeared in Canada in the 1970s and have since spread to other countries such as the Netherlands and Germany. However, in some countries, the legal framework prevents additional mandatory taxes or levies as is used in the BID model. This reflects the fact that across OECD countries, several different tools are used to finance local development (Clark and Mountford, 2007[103]). Overall, most of the different approaches to the governance and management of town and city centres can be classified as public-private partnerships, as both the local business community and local government are needed to effectively manage town and city centres (Coca-Stefaniak et al., 2009[104]).
Town centre management – a public sector led approach
Establishing roles within local authorities with a specific mandate for place management in local governments can help co-ordinate and formalise efforts. Such district managers, place managers, or revitalisation officers form a node between different departments within a local authority that would otherwise remain unconnected and act as mediators between the municipality, local retailers and the community, seeking to build networks and developing joint solutions (Horbliuk and Stepanets, 2021[105]). In practice, the role of such a place manager can involve tasks such as:
Development of a town centre revitalisation strategy in collaboration with the relevant departments and stakeholders
Organisation of events and placemaking activities
Marketing and branding of the town centre
Leadership development and training of local stakeholders
Authorisation of permits in the town centre
Ultimately, the place manager offers a one-stop-shop for any requests related to the town centre, from the revitalisation strategy to funding opportunities for small businesses to authorisations for installing signs or changing façades. In this way, they also seek to contribute to overall retail development as well as capacities for the twin transition among local retailers. For example, in Villeneuve-Saint-Georges (France), the occupancy of ground-floor retail spaces has risen from 348 to 514 between 2021 and 2024 (2021 marks the establishment of a city centre manager) (Métropole du Grand Paris, 2024[106]). Box 4.10 and Box 4.11 provide examples from Ireland and Germany of how such place managers can be established strategically through national policy.
Ireland’s Town Centre First Policy establishes a Town Regeneration Officer (TRO) in each of the participating towns to build a bridge between Town Teams, local authorities, and other stakeholders. Their primary responsibility is to ensure that the Town Centre First Plan is developed and implemented effectively, facilitating collaboration, securing funding, and supporting long-term regeneration efforts.
One of the key responsibilities of the Town Regeneration Officer is to support and guide Town Teams, which are made up of local residents, business owners, community representatives, and other stakeholders. These teams act as local experts, identifying the needs of their towns and developing tailored interventions. The TRO helps establish these teams where they do not yet exist and strengthens their capacity through training, skills development, and knowledge-sharing initiatives. TROs create a node within local governments, connecting departments and by working closely with Public Participation Networks, and Local Development Companies, they foster inclusive community engagement to ensure that the voices of diverse stakeholders are heard.
In addition to capacity building, TROs assist in data collection and analysis, overseeing Town Centre Health Checks to establish baseline data on local conditions. This evidence-based approach supports the formulation of TCF Plans, ensuring that interventions align with both local priorities and national policies. Furthermore, TROs work alongside multi-disciplinary teams within Local Authorities, including Vacant Homes Officers, planners, architects, and urban designers, to identify opportunities for regeneration, reuse of vacant buildings, and enhancement of public spaces. In this process, two of the main priority topics are climate change and adaptation and the digital transformation in town centres.
A critical function of the TRO is to help towns access funding. They assist Town Teams in identifying suitable funding streams, preparing applications for grants such as the Urban Regeneration and Development Fund, Rural Regeneration and Development Fund, and the Town & Village Renewal Scheme. This financial support enables towns to undertake feasibility studies, implement small-scale pilot projects, and ultimately deliver transformative projects that align with the TCF vision.
Beyond their local responsibilities, TROs are part of a national network, facilitating knowledge exchange and sharing best practices across different towns and regions. This structured approach ensures that TCF principles are implemented consistently while allowing flexibility for towns to develop solutions tailored to their unique challenges. By strengthening governance structures, fostering collaboration, and leveraging funding opportunities, the Town Regeneration Officer plays a pivotal role in driving the sustainable regeneration of Irish towns, making them more vibrant, resilient, and inclusive places to live, work, and visit.
Source: Government of Ireland (2022[107]), Town Centre First - A Policy Approach for Irish Towns, https://www.gov.ie/en/publication/473d3-town-centre-first-policy/, and see case study Ireland – Towns Centre First – An empowered, inclusive, community-led approach to tackle vacancy and promote economic vibrancy in Irish towns.
Similar to Ireland’s Town Centre First Policy, Germany’s Lebendige Zentren (Living Town and City Centres) programme also provides funding for the establishment of district managers. Created by the Ministry for Housing, Urban Development and Building, the programme seeks to help communities better manage the ongoing structural change in town and city centres. In 2021, the federal government provided a total of EUR 300 million funding for federal states and municipalities. Within this programme, part of the funding is directed at establishing a district management team (as opposed to single actors in Ireland) consisting mainly of partnerships between local authorities and external experts or local stakeholders (81%) – only 13% of the participating communities are managed exclusively by local authorities (Bundesinstitut für Bau-, Stadt- und Raumforschung, 2018[108]). The district management team forms an intermediary between public authorities, private actors, and local communities, often operating from a designated office which serves as meeting point and for information exchange. The team facilitates partnerships, manages funding allocations, and implements tailored regeneration strategies that address diverse areas such as retail, housing, culture, and mobility. Particularly in smaller towns, where local administrations may lack resources, external experts or planning agencies take on an important role in the district management.
With funding from the Lebendige Zentren programme, local stakeholders were able to take on management responsibilities for a high street in Leipzig. While the local government was still responsible for managing funds, the management team on the ground consisted of an externally commissioned planning agency, representatives of the Lindau District Association and the socio-cultural association kunZstoffe – urbane Ideenwerkstatt e.V. The team members were all specialised in certain areas, such as renovation of buildings, place making or work with associations. Paired with the team’s effort to mediate between associations, local retailers, property owners, private investors and representatives of politics and the city administration, this was a key success factor in reducing vacancy rates and creating a broader engagement and sense of ownership among the local community within the district (Bundesinstitut für Bau-, Stadt- und Raumforschung, 2018[108]). Thereby, the high street management team created the structures and partnerships for a long-term bottom-up management of the area beyond the funding period. The example from Leipzig shows how a national government programme can support community-led district management at the local level.
Source: Bundesintitut für Bau-, Stadt- und Raumforschung (2018[108]), Aktive Stadt- und Ortsteilzentren - Management der Zentrenentwicklung, https://www.bbsr.bund.de/BBSR/DE/startseite/_node.html; and see case study Germany – Lebendige Zentren – Revitalising urban cores as multifunctional, resilient, and identity-rich spaces.
Business Improvement Districts and other private sector led approaches
The management of town and city centres can also be led by local retailers themselves. This can be either done through informal partnerships among local retailers or through more formalised approaches, such as Business Improvement Districts (BIDs). Originating in North America, BIDs provide a model in which relevant property or business owners choose to make a collective contribution (in the form of a levy) to fund activities within a designated area. The BID model is most popular in anglophone countries, such as the United States, Australia, the United Kingdom or Canada, but has also reached EU countries like Germany and the Netherlands who have adopted a fully formalised legal framework for BIDs, as well as many other countries that are running voluntary private sector led initiatives akin to BIDs.
BIDs usually require a legal framework that allows the collection of such a levy – at least the consent of the local government. This levy is typically mandatory for all businesses within the designated area to avoid free riding and requires the creation of an association that is responsible for the management and implementation of activities. Once set up, BIDs usually focus on improvements in physical infrastructure (e.g. improvements and maintenance of public space and store fronts, including the creation of green spaces or cycling/pedestrian infrastructure), promotional infrastructure (e.g. marketing and policy advocacy) or safety (e.g. public space regulation and security) of a place (Ward, 2007[109]). In the Netherlands, the Business Improvement District Act (“Wet op de bedrijveninvesteringszones”) clearly defines how levies are collected, how decisions are made and in what activities BIDs can engage. Box 4.12 highlights how this plays out in practice, through the Netherlands’ biggest BID in Eindhoven.
Since its enactment in 2015, the Business Improvement District Act allows municipalities to impose a mandatory BID levy on non-residential properties within a designated area. The revenue generated from this levy is used to enhance liveability, safety, spatial quality, or economic development within the area. Depending on municipal regulations, the contribution can be levied on property owners, users, or both. A BID is established for a maximum of five years and can be renewed for an additional five years, provided there is sufficient support from the businesses. Additionally, the funds collected through the BID levy are allocated as a subsidy to a designated association or foundation, which is responsible for carrying out the agreed-upon improvement activities. The law ensures transparency and accountability, requiring these organisations to report on their expenditures.
The Business Improvement District in Eindhoven was established in 2017 as a collective effort by local entrepreneurs and property owners to invest in the city centre’s development. Within the BID, approximately 2 100 businesses and property owners contribute EUR 800 000 per year. The goal is to attract more visitors, encourage longer stays, and support local economic growth through joint investments in marketing, events, and infrastructure improvements. Among their projects, the BID focuses on creating new green spaces in the city centre and maintaining them, for example by providing watering cans to local businesses.
The BID operates in co-ordination with the municipality but remains independently managed by a board representing contributors. It funds both large-scale events like GLOW and the Dutch Design Week and smaller projects aimed at improving the local business environment. Additionally, it seeks to strengthen co-operation among entrepreneurs and advocate for their interests. The BID also works in close collaboration with related organisations, such as the Inner-City Foundation or other business associations.
To better co-ordinate collective efforts, the BID, the municipality of Eindhoven and the Inner-City Foundation have created the Inner-City Office. Founded in 2023, the Inner-City Office creates a node between local businesses, real estate owners and the various other stakeholders involved in the city centre. A main product of their work is a digital platform that hosts over 880 local stakeholders, which serves to share information on current and upcoming activities in the city centre and provide a platform for discussion and knowledge exchange, mainly for local business owners.
Source: RVO (RVO, 2015[110]), BIZ (Bedrijven Investeringszone) oprichten, https://ondernemersplein.overheid.nl/bedrijven-investeringszone-biz-oprichten/ and BIZ Eindhoven (2024[111]), BIZ Eindhoven - Voor het economisch belang van de Binnensatd, https://bizeindhovencentrum.nl/.
The state of Rhineland-Palatinate (Germany) not only provides a legal framework but also funding for BIDs. The state funding as part of their “CityBoost” programme mainly seeks to help establish a BID manager who co-ordinates the project on-site. The BID in Koblenz’s Schloßstraße is a pilot project with a total budget of approximately EUR 900 000 (83% funded by property owners and 17% by the state) over 5 years to demonstrate the viability of the BID model in Rhineland-Palatinate and serve as inspiration for other communities to adopt it. The BID proactively drives the twin transition by implementing and maintaining green spaces, developing digital infrastructure (such as public Wi-Fi), or installing charging stations for electric vehicles. Similar to the BID in Eindhoven, the BID Schloßstraße works in close collaboration with several local stakeholders, such as trade associations and the chamber of commerce, as well as with the local government to align priorities and work on common agendas.
BIDs harness the collective power of local businesses and can thereby become an active driver of the twin transition in town and city centres. BIDs provide a structured mechanism for businesses to contribute financially to local improvements, ensuring sustained investment in public space maintenance, marketing initiatives, and security measures (Ziebarth, 2020[112]). In this way, local businesses can become an active driver in the twin transition of town centres. In Canada, the Downtown Vancouver Business Improvement Association shifted from opposing to actively promoting and funding separated cycling lanes after recognising that such infrastructure attracts more additional customers than are lost through reduced car parking (Lovgreen, 2017[113]). Many other BIDs across North American cities such as New York City, Washington DC or San Diego (United States) are capitalising on such a paradigm shift towards walkable and bike-friendly downtown areas in an effort of inducing economic recovery (Surico, 2023[114]).
In places where the BID model is not used, other private sector led approaches can serve to pool resources, advocate for shared interests and develop strategic plans for town and city centre revitalisation. For example, chambers of commerce can act as intermediaries that facilitate dialogue between businesses, local authorities, and other stakeholders, strengthening collaboration and ensuring that business needs are reflected in policy decisions. Informal retailer coalitions can also be effective in mobilising resources for targeted initiatives such as events or advocacy efforts (Coca‐Stefaniak et al., 2005[115]). These private sector-led models can be particularly beneficial in contexts where public sector funding is constrained, as they allow local businesses to take an active role in shaping the economic and physical landscape of their town or city centre (Chamusca, 2014[116]).
However, private sector led governance approaches also raise concerns, for example related to free-riding and gentrification. Especially in informal partnerships, where contributions are voluntary, free-riding can become a challenge, meaning that businesses that do not contribute to the collective fund may still benefit from the improvements financed by others. This can potentially lead to conflict and ultimately underinvestment in shared initiatives (Coca-Stefaniak et al., 2009[104]). Another concern is the risk of gentrification, where BID-driven improvements and increased property values lead to the displacement of smaller, independent businesses and vulnerable residents that can no longer afford rising rents (Yingyin and Lombardi, 2023[117]). This dynamic can reduce economic diversity and alter the social fabric of town and city centres, making it crucial for private-sector initiatives to link their efforts with those of the local authorities and civil society organisations in order to make investment decisions that benefit the broader community.
Public-private partnerships, networks and collaboration form the essence of successful town centre management
Both public and private sector-led approaches to the governance of town and city centres rely on strong public-private partnerships. All the examples of public and private sector-led approaches presented above highlight the importance of strong collaboration between the different actors that have a stake in the town or city centre. Whether that is the collaboration of Town Regeneration Officers in Ireland with local Town Teams, or the shared district management responsibilities among local stakeholders in Germany’s Lebendige Zentren programme, the governance of town and city centres is a multi-stakeholder effort and inherently based on public-private partnerships between the business community and local authorities. Such partnerships can further ensure the longevity and legacy of town centre management. As all the introduced examples work under specified time restrictions (e.g. BIDs in the Netherlands are limited to 5 years with a maximum extension of an additional 5 years), forming partnerships with local stakeholders helps to maintain ownership and engagement beyond funding or project cycles.
Identifying and mobilising the right stakeholders is crucial for the success of town centre management. Effective collaboration across local authorities, business networks, and civil society groups helps bridge gaps in expertise, access funding, and ensure broad community buy-in. Local governments may face resource constraints and lack the necessary technical knowledge to implement complex projects, such as nature-based solutions or business decarbonisation. Policymakers can overcome these challenges by working across public agencies and departments, as well as with business networks and civil society groups to tap into a broader pool of knowledge and expertise, access external funding and sponsorships, and spread the word to build buy-in and engagement (OECD, 2023[118]). Additionally, engaging the local community from the outset fosters a sense of collective ownership, increasing the legitimacy of interventions and improving long-term sustainability (e.g. by transferring responsibilities to the local community, such as the maintenance of green spaces) (OECD, 2023[119]).
Higher levels of government and network organisations play an important role in the governance of town and city centres, not only by providing funding and legal frameworks, but also by creating platforms for peer-learning and incentives for good practice. For example, the Centres-Villes Vivants (Living Centres) programme of the Greater Paris Metropolis hosts an annual conference for the exchange of best practices, sharing research and broader trends, as well as awarding communities for special achievements. Similar approaches also exist outside of the European Union, such as the MainStreet Australia Awards or Scotland’s Towns Conference. The main value of hosting such events is creating an additional incentive for local communities to champion town centre revitalisation in the form of awards, as well as creating a platform for peer-exchange and learning, which can spur innovation and lead to the initiation of grassroots initiatives (van der Heijden, 2014[120]).
Strengthening monitoring and evaluation of retail SMEs trends, prospects and policies in cities
The role of monitoring and evaluation in empowering retail SMEs for thriving city centres: Mapping indicators in city and national initiatives
Most cities with initiatives for local retail have also adopted indicators to monitor retail trends or evaluate the impacts of their policies either on “firms”, “people” or “places”. To understand what it means to measure small retail, as well and its role for citizens’ wellbeing and adaptation to the green and digital transition in the urban environment, the OECD has conducted a review of indicators related to retail across 19 cities and national initiatives from 2 countries targeting retail in city centres. The sample has been selected to be representative of the diversity of European cities across countries. The sample considers cities across 11 countries: Belgium (Bruges, Brussels, Ghent), France (Poitiers, national initiative “Action Coeur de Ville”), Germany (Bonn), Ireland (Dublin, Waterford), Italy (Bari, Florence, Milan, Turin), the Netherlands (Amsterdam), Portugal (Braga), Slovenia (Koper), Spain (Bilbao), Sweden (Stockholm), and the United Kingdom (Birmingham, Bristol, Norwich and National initiatives “Future High Streets Fund”, “High Streets Task Force”, and “Town Deals”) (see Table 4.2). The sample also considers the diversity of European cities in terms of size: the sample is composed of seven cities with more than 500 000 inhabitants (35% of the sample), six cities between 250 000 and 500 000 inhabitants (30%), four cities between 100 000 and 250 000 inhabitants (20%), and three cities below 100 000 inhabitants (15%). The indicators applied by initiatives can target either “firms”, i.e., monitoring the supply side of the retail SMEs market, “people”, i.e. monitoring the local demand, or “places”, i.e. monitoring wider urban characteristics related to the “proximity economy” and city vitality. The mapping exercise found that 19 out of 21 initiatives (90%) also include indicators for their monitoring and evaluation.
Note: *national initiatives.
Source: Based on OECD Local Data Portal and OECD Data Explorer.
While types of indicators adopted differ, most initiatives target the “firms” dimension, while the “places” and “people” dimensions are less monitored. Less than half of the cities embrace all the three dimensions. 18 out of 21 initiatives (86%) target “firms”, while indicators on “places” and “people” are used respectively by 13 (61%) and 12 (57%) initiatives (Figure 4.1). Additionally, less than half of the initiatives (8 – 38%) use a set of indicators referring to firms, places and people, and one quarter of initiatives (5 – 24%) focuses only on one dimension, most often “firms”. A limited focus on "places" and "people" dimensions risks providing an incomplete picture of SME retail in city centres, potentially hindering the development of holistic policy interventions able to address the complex interplay between SME businesses, their physical urban environment, and the community they serve. While commercial vacancies and information on firms are largely used, indicators on people and places are more fragmented, thus hindering cross-city comparison (see Table 4.3).
Note: Count (N=21).
Source: Based on the review of indicators related to retail used by a sample of 19 cities and 2 countries.
Main challenges in monitoring and evaluation faced by cities
Cities struggle to set effective, timely and granular M&E of retail due to limited financial, human, and technological resources (see Box 4.13). Financial constraints hinder the ability to invest in sophisticated data-collection tools or to hire expert personnel to manage and interpret the data. Human resource challenges arise from the limited capacity of municipal staff, who often juggle multiple roles and therefore cannot devote sufficient time to the detailed analyses required for retail trends. Technological limitations, such as outdated or inadequate infrastructure, make it more difficult to gather and process relevant data efficiently. As a result, cities may struggle to effectively monitor retail trends, thereby impeding their ability to make informed decisions. These limitations are especially pronounced in smaller cities, which often lack the scale of large urban centres that can allocate dedicated resources to advanced data collection and analysis.
Financial limitations:
In Bonn (Germany), in 2020 and 2022, the Economic Development Office commissioned the Institute for Retail Research (IFH Koln) to survey pedestrians’ access to city. These surveys contributed to the IFH study "Vital City Centres" (METRO AG and IFH Köln, 2021[121]), but due to budget constraints, the study was not commissioned again by the city in 2024, and its continuation in 2026 remains uncertain5.
Human resources limitations:
Koper (Slovenia) faces challenges in evaluating the impact of their current policies due to the lack of data collection and analysis capacities. While the city reports success stories from its grant allocation scheme, there is no comprehensive data to measure the actual improvements these policies bring. One key monitored indicator – the municipal support for lease payments – indicated that smaller entrepreneurs struggle to sustain their business long-term, resulting in high turnover. This highlights the need for more monitoring and evaluation initiatives. Indeed, the city foresees an analysis of its central streets to identify buildings that could be rented to the municipality from private property owners to enlarge their availability of municipality owned/ rented spaces.6
In Brussels (Belgium), despite several teams working on data collection and analysis, the city faces capacity challenges to sustain the current comprehensive and effective level of analysis with regular updates and comparison studies.
Technological limitations:
In the United Kingdom, vacancy rates are an important and reliable data source at a granular level. However, footfall measures are less reliable, due to different providers of data, utilising varied methodologies, posing difficulties for comparability and joint analysis between cities.
In Bilbao (Spain), while programmes on monitoring of retail have been implemented, precise and holistic measurement of their economic impact remains difficult due to varying external factors.
Source: Based on interviews conducted with cities and national governments.
Cities often lack data and indicators for understanding retail SMEs alignment with city-centre residents’ needs. As shown earlier in Figure 4.1, existing M&E frameworks used by cities and national initiatives less frequently target the “people” dimension. Consequently, cities may not gather crucial information on the demand side of the retail market. Furthermore, a significant challenge is not necessarily the complete absence of data, but rather that the available data and indicators are not granular enough to reflect demographic profiles, spending habits, and specific preferences. The consequence is that available indicators may fail to adequately capture how well retail supply meets the actual needs of the local population. Without this information, small retailers cannot effectively tailor their offerings to meet local demand, and local administrators face a bias in taking action to support retail. Similarly, indicators used by cities may be misaligned in terms of understanding how well the retail align with residents' needs, or for instance, whether it is more oriented toward other city users, like tourists or visitors – and their potential trade-offs e.g., increased prices for locals, seasonal fluctuations, or a product range that does not meet local needs. This data gap not only hampers the competitiveness of SMEs but also limits the ability of local governments to design policies that support businesses in meeting the evolving needs of their communities. As consumer demand may shift with the green and digital transitions, for instance due to sustainability preferences or digital trends, it becomes even more crucial for cities to track how retail SMEs align with those changes. Therefore, the absence of this data makes it harder to assess the effectiveness of policies designed to support small retail or to address mismatches between supply and demand.
Constraints in achieving a holistic understanding of retail SMEs generate a broader impact on the urban “proximity economy”. While retail SMEs are a fundamental component of urban success, particularly its “proximity” dimension (OECD, 2024[68]), and the “proximity economy” – the local economic ecosystem that thrives on face-to-face interactions, innovation, knowledge transfer and services close to residents in “small, accessible areas where activities like retail thrive” (European Commission, 2024[35]) – current M&E efforts often narrowly focus on retail activity itself. Despite the crucial role of retail SMEs in fostering future-proof, vital, and successful cities, many M&E systems are limited to assessing either the supply side (e.g., number and types of retail outlets) or the demand side (e.g., consumer foot traffic). Critically, these systems often fail to capture the intricate relationships and broader impacts of retail SMEs on urban success, vitality, and the proximity economy. This fragmented approach neglects how the interaction between retail supply and demand influences crucial community outcomes such as job creation, social cohesion, access to essential services, and the overall vibrancy and attractiveness of city centres. This incomplete picture hinders the development of holistic policies that could optimise the retail environment to strengthen the local economy, enhance urban appeal, and improve citizens’ quality of life. A comprehensive M&E framework that explicitly connects the monitoring of retail with broader indicators of urban success and the proximity economy is therefore essential.
The fragmentation of city-level M&E frameworks, particularly regarding SME retail, significantly hinders comparability and the development of systemic approaches for cross-city analysis. While many local governments collect and analyse data relevant to SME retail, efforts specifically targeting retail SMEs often lack standardisation in indicators, definitions, and methodologies. As a result, data on retail SMEs remains inconsistent across cities, making it difficult to assess sector-specific trends, evaluate the impact of urban policies, or benchmark performance. Cities may invest substantial resources into M&E – often involving specialised teams or external providers – but the absence of harmonised frameworks undermines the value of these efforts when it comes to retail SMEs. This lack of comparability limits shared learning and prevents cities from identifying best practices or common challenges in supporting retail SMEs. These challenges underscore the importance of regional and national coordination in developing consistent, scalable M&E frameworks that are tailored to the retail SME sector.
Directions to strengthen monitoring and evaluation of retail SMEs
Urban policies can take four key directions to strengthen the monitoring of trends and the evaluation of the impacts of actions:
Going granular in mapping retail SMEs presence and trends through detailed spatial analysis of retail distribution and diversity in neighbourhoods.
Gathering citizen-centred evidence on how retail SMEs matches the needs of residents.
Measuring the role of retail SMEs on cities’ vitality and the proximity economy.
Supporting local governments and leveraging digital tools for monitoring and evaluation.
Going granular in mapping retail SMEs presence and trends
Creating and analysing data and indicators at a detailed sectoral and geographical level is essential to monitor the evolution of the retail supply in cities. To inform place-based policies targeting the improvement of thriving retail, quantitative and qualitative data could prioritise challenges and opportunities of retail SMEs. To effectively inform this monitoring and evaluation, several indicators might be produced, encompassing a broad range of dimensions such as economic performance, business demography, labour markets, skills among others. For instance, indicators on economic performance can provide insights into the economic health of retail SMEs, while labour market metrics can shed light on the sector’s ability to create jobs and align skills with market need.
M&E needs a dedicated focus on small and micro retail. In the face of large retailers and international companies, smaller retailers often struggle to stay competitive, including in terms of monitoring and analysis of trends and local market evolutions. This necessitates policy support to understand demand due to financial, human resources, and technological limitations. First, as compared with larger firms, small retailers lack the financial resources to invest in advanced market research. Furthermore, data available externally may be expensive to purchase, scattered, and partially available, making analysis difficult. Specifically, granular and geographically detailed data (e.g., referring to neighbourhoods where the retailers are located) might often be unavailable or scarce. Small retailers also suffer the most from a lack of dedicated human resources and expertise to conduct market analysis. Finally, the digital gaps characterising smaller retailers hinder data-driven monitoring. A direction of mapping the specificities of small retail is provided by the city of Turin (Italy), which has set a platform mapping retail presence by distinguishing based on firm size (proxied by retail surface area), and has a dedicated indicator and mapping of “neighbourhood shops” (“negozi di vicinato”, i.e. shops with a surface less than 250 square metres), which allows them to disentangle the spatial distribution of small retail (Torino Urban Lab, 2020[122]).
National and local governments can better understand retail SMEs trends in cities through detailed spatial analysis of retail distribution and retail diversity in neighbourhoods. A key direction is to strengthen the monitoring of business turnover or retail vacancy at a geographically detailed spatial scale, which allows preventing commercial desertification of some parts of the city. For instance, the city of Milan (Italy) maps areas at risk of commercial desertification. By combining data analysis with field surveys in collaboration with trade associations and municipal districts (City of Milan, 2024[123]). This allows not only to understand the current but equally to forecast future commercial offer in a given neighbourhood, an important predication to estimate resilience, future needs and anticipate the rapid changes.
Monitoring frameworks could consider the variety of retail types and their location. To achieve this, cities could develop monitoring indicators that measure the variety of retail types within different geographical areas, going beyond surface-level classifications and track their spatial distribution. For instance, Ghent (Belgium) monitors the distribution of activities in neighbourhoods (between beauty stores, leisure, clothing, food, services, and HoReCa) to identify clone retail – i.e. repetitive, undiversified activities commonly present in touristic city centres where commercial activities are tailored to tourists (“tourist shops”). By analysing retail diversity and distribution, the city addresses the lack of unique offerings and promotes a more balanced commercial mix. Also, Bruges (Belgium) identifies main commercial streets and commercial cores and measures the state and type of retail as well as the distribution of activities present in those sites, as compared to national averages through a platform developed by a private company specialised in conducting observatories of the commerce sector (Codata, 2022[124]).
Implementing a dynamic monitoring process is essential for tracking retail SME trends over time. To truly understand the evolving dynamics of retail SMEs, monitoring efforts need to be viewed not as one-off events, but as continuous processes that track changes over time to capture evolutions and shifts. Bilbao (Spain) provides a good practice in this field by conducting a structural biennial study on retail, which maps businesses (including shops and restaurants) at the district and neighbourhood level and analyses business turnover (tracking closures and openings), with the strategic aim to better integrate commerce into the urban model (Bilbao Ekintza, 2025[125]). This frequency allows the city to monitor the dynamics of retail over time and highlight structural changes in the retail offer.
Effective monitoring requires cities to consider both absolute indicators of retail vacancy and measures of progress towards their desired commercial potential. This allows for a more nuanced understanding of the retail and helps identify areas that are underperforming or have opportunities for growth. Norwich (United Kingdom) goes in this direction by monitoring retail vacancy with a detailed breakdown of vacant floorspace versus vacant available floorspace (excluding spaces under refurbishment), the number of vacant units, and the change in total retail floorspace (Norwich City Council, 2024[126]). This detailed data helps the city not only track the absolute levels of vacancy but also identify zones seeing decreases in commercial renting and an increase in vacancy, thus highlighting areas that are losing their potential as commercial cores, and simultaneously highlighting areas where retail is growing, and the potential is being realised.
Gathering citizen-centred evidence on how retail SMEs matches the needs of residents
Enhancing public participation and collecting granular data is essential to ensure that small retail aligns with the evolving needs of urban residents. According to the OECD Trust Survey, about 41% of people in OECD countries believe that they should have a say in community decisions that affect their local area (OECD, 2021[127]). It is imperative for governments to enhance citizen’s voices in policymaking as a vehicle for promoting democratic values, ensuring the representation of diverse perspectives, fostering transparency and enhancing legitimacy of decisions. Enhancing the local retail sector offer in a city centre and its environment is an area where citizen participation can have a tangible impact, influencing not only economic vitality but also social cohesion and community wellbeing.
Collecting citizen-based subjective indicators helps complement objective measures of retail SME vitality in city centres. The national policy Action Coeur de Ville, in France, conducts satisfaction surveys on the attractiveness of city centres – including commercial presence – to identify areas for improvement. Within the action, the Baromètre du centre ville (Barometer of city centre) conducts yearly studies on the residents’ attachment to their city centres, frequency of visits, the attractiveness of commercial offer, and concerns regarding overall urban vitality of the city centre in question (Centre-Ville en Mouvement, 2024[128]). For instance, a dedicated question in the survey asks whether residents are attached to their city centre, finding that in 2024, 64% of residents expressed attachment. The survey also makes a distinction between demographic, social and economic features of citizens: for instance, it found a higher level of attachment among people under the age of 35. The initiative also examines public perceptions of city centre modernisation efforts, with mayors, municipal councils and local businesses identified as the major potential actors and drivers of change. Such surveys are a way of identifying challenges in city centres, with a focus on responding to the needs of inhabitants first – positioning inhabitants as stakeholders in the present and future of the city centres.
Creating disaggregated indicators of retail demand – based on the demographic, social, and economic profiles of residents and other city users – is essential for supporting retail SMEs. A detailed analysis of demand allows for identifying market gaps, revealing unmet consumer needs in terms of products, locations, offer – for instance, identifying urban retail deserts where access to retail services is scarce. As an example, in large cities like Paris (France), Berlin (Germany), or Rome (Italy), it is often low-income neighbourhoods that lack easy access to fresh, affordable products, underscoring the geographical and economic divides that characterise unequal access to food, even within prosperous urban areas. Moreover, changing demographic trends with ageing populations brings rapid changes in customer needs, wants and ability, increasing the demand for a more supportive environment and easy access to affordable food products and retail facilities for older residents. Analysing the demographic profiles relevant to retail SMEs – as well as other relevant characteristics like the status (e.g. workers, students, retired, etc.) – helps to optimise locations, marketing and inventory based on market demand. It helps SMEs to target specific retail audiences, providing them with data which otherwise would not have been available to them and consequently to differentiate themselves through pricing, quality or unique offerings to attract customers. To address these gaps, getting the data firsthand at the level of the consumer can directly enhance liveability and quality of life of residents by providing necessary services. For this reason, some cities conduct studies on the shopper profile or retail profiling:
Leveraging demographic and consumer data to optimise retail locations and retail diversity. Brussels (Belgium) collects data on the social profile category (i.e. manager, unemployed, retired, self-employed, student), household status (i.e. couple with child/ren, single person, living with parents), desired shops (i.e. supermarkets, dietary foods, bakeries, clothing) as well as average monthly income and average spending per visit to determine purchasing power in the neighbourhood and potential needs of the residents (hub.brussels, 2024[129]).
Investing in data-driven tools. Braga (Portugal) has a centralised platform, which aggregates data from street sensors, mobile network, and municipal systems to create dashboards for local business. This data-driven tool provides insights on foot traffic and customer demographics and can be used for improving marketing actions and creating targeted campaigns
Analysing the impacts of tourism on urban SME retail is essential to balancing the needs of both residents and visitors. Intense tourism flows can have negative impacts on people and places, negatively affecting local consumption spaces, adapting to tourist demand, while potentially eroding feelings of place attachment among residents. Retail and leading to their avoidance behaviour in visiting the inner centre or certain areas of their city. This changing demand requires entrepreneurs to strike a careful balance between a local authentic offer and atmosphere and recognisable products in a familiar setting satisfying the demand (I.W. Hagemans, 2024[130]). The city of Amsterdam in the Netherlands has conducted an “Inner City Survey 2024”, set out to make the city centre a place that residents like to frequent and spend time in. By asking what draws Amsterdam’s residents to the heart of the city – whether for culture, dining, or shopping – and uncovering the reasons they might avoid it (i.e. retail standardisation, “touristification”), the survey provides critical insights for urban planning and policy, to ensure it remains a vibrant and welcoming space for residents, not just tourists (Municipality of Amsterdam, 2024[131]).
Going beyond sectoral measurements to provide a comprehensive understanding of market dynamics, and their impacts on urban economy and society
Cities could apply a systemic approach in measuring the linkages between retail market trends and the “proximity economy” to effectively capture the role of retail SMEs in driving urban vitality and attractiveness. Cities tend to use sector- and supply-based indicators (e.g. commercial vacancy, market trends, density of firms etc.) to assess the performance of small retail. Nevertheless, retail activity is not isolated, but embedded in a physical, local context, which impacts the overall attractiveness of attending retail SMEs and can discourage visitors and residents from visiting stores or restaurants. City governments that aim at enhancing the success of retail SMEs could in parallel aim at improving the living environment, seeing the inner-city centres as ecosystems in which retail SMEs operate and improving their overall economic vitality, accessibility and vibrancy. A holistic analysis is therefore necessary to fully understand the impact of retail on cities and vice versa.
Collecting all-encompassing data on retail and urban indicators is essential for understanding the interplay between retail SMEs, consumers, and city dynamics. In the United Kingdom, the Consumer Data Research Centre produced the “Retail Centre Boundaries”, an openly available suite of data on the location, extent and function of retail agglomeration areas (Consumer Data Research Centre, 2024[132]). The datasets cover a large number of indicators, such as the spatial boundaries of commercial areas, catchment zones measuring accessibility by walking and driving, and retail typology of most cities of the country, taking into account the composition (e.g. presence of convenience stores, services, or leisure retail), diversity (to identify clone retail areas), and vacancy (including current vacancy rate, long-term vacancy rate and change in vacancy rate). Importantly, they have developed indicators regarding online exposure and e-resilience measures7, to estimate impacts of online shopping on high streets across England, assessing the extent of vulnerability and whether it is spatially differentiated across the country. Amsterdam in the Netherlands, for instance, analyses spatial changes in the retail structure, but also in the consumer spending behaviours, considering many relevant indicators that can be considered, such as the number of stores, the sector composition, vacancy rates, rental levels and purchasing orientation of consumers. Brussels (Belgium) developed a comprehensive dashboard of data encompassing retail supply, demand, and city characteristics by systematising different data sources, which therefore provides a valuable source of knowledge to monitor linkages between the three dimensions of “firms”, “people” and “places” (Box 4.14).
Brussels (Belgium), through its public organisations hub.brussels and perspective.brussels, conducts annual retail observatories to monitor commercial activity and to better manage retail nodes in the city and across the region. Data is gathered at various levels, primarily at the "noyaux" (commercial district) level, although street-level analysis is possible when necessary. The process is led by an in-house R&D department, with a dedicated field team responsible for data collection and a research team conducting analysis. Retailers are categorised as "large" if they operate seven or more stores globally. Furthermore, they analyse types of retail activity with a mono-functionality index based on category, sector, nature as well as the commercial standing. The latter is the degree of the luxurious character of the points of sale, which in turn reflect the socio-economic characteristics of the clientele frequenting the neighbourhood, distinguishing between the high (photography, haberdashery) and low-standing (wasserette, phone stores) in each territory. This equally helps to see the spending power per neighbourhood density.
Four key datasets are collected:
A full inventory of points of sale (POS), updated at least once a year since 2016, capturing location, type, and additional details such as payment methods.
An inventory of public markets, conducted annually since 2019, documenting stand numbers, sizes, and types for each market day.
Shopper surveys, covering 10-12 commercial districts per year (on a rotating 4 to 5-year cycle), to profile visitors' behaviours and motivations.
Pedestrian flow data, historically gathered manually but now tracked continuously via sensors at 55-60 sites, with records available since 2022. Data is further enriched using urban planning geodata from perspective.brussels, as well as mobility data from parking.brussels and Bruxelles Mobilité. The latter has used new and existing urban planning permits issued to commerce to analyse turnover and longevity of business SMEs. While hub.brussels does not automatically conduct impact studies on pedestrianised zones like Le Piétonnier, its historical data allows for comparative analysis of POS trends, pedestrian traffic, and shopper profiles before and after such changes. The collected data is publicly accessible through the Brussels retail data platform and published annually in a comprehensive report, with a target audience of potential business owners, as well as residents.
Source: hub.brussels, hub.brussels - Agence bruxelloise pour l’Entrepreneuriat.
Monitoring footfall accessibility and pedestrian flows in city centres is a key strategy for assessing urban vitality and supporting retail planning. One of the most used strategies for determining the dynamism of city centres is the monitoring of pedestrian flows. About half of the cities conduct footfall analysis in their city centres and beyond.8 Retailers can use pedestrian traffic data to determine the best potential locations for new stores and understand peak traffic moments to determine opening hours (if not regulated). Such data can be collected manually – through research teams present on the spot, or in by integrating digital tools (i.e. cameras or sensors). For example:
Poitiers (France) purchases external data (MyTraffic) to monitor monthly pedestrian flows and analyses visitor demographics, enabling a precise mapping of footfall per street. This data strengthens the case for city centre investment, in case of low footfall in a given area.
Norwich (United Kingdom) monitors footfall as the number of people going into a shop or business, as not all footfall will result in purchase (Norwich Business Improvement District, 2022[133]).
Stockholm (Sweden) measures activity at a granular density of movement (within 20 metres areas, on a street level) giving a very clear depiction of users’ movement and footfall (Stockholm Chamber of Commerce, 2023[134]).
Bilbao (Spain) monitors foot traffic in key commercial areas to understand consumer behaviour and the effects of pedestrianisation strategies.
Integrating indicators that monitor transport modes, mobility flows, and urban logistics is essential to supporting retail SMEs and improving accessibility in city centres. Shopping malls on the outskirts have caused large competition to retail in city centres and their success is linked to a high automobile accessibility and fast access from the suburbs and surrounding areas, further encouraging urban sprawl. Helping SMEs with the green transition encompasses the ways in which people access to points of sale. For retail SMEs in city centres to stay competitive, they need to stay accessible through diverse and convenient means of transport to meet diverse population needs, while shifting to greener mobility and encouraging public transit. For this reason, traffic data can be a telling indicator. Dublin (Ireland), through its “Retail Strategy for the Greater Dublin Area, 2008-2016” (RSGDA), analysed commuter modes of transport to the centre. Its focus lies on access to retail and supporting retail through transport options. The city aims to create “drop-points”, ensure car park is maintained on the periphery of retail core, while improving the pedestrian environment within the retail core. It conducted an analysis of key routes from offices and culture clusters to main retail clusters of the city, to identify most used routes and further identified key retail centres and cores in the Greater Dublin area together with main access roads. This strategy allows for monitoring flows alongside missed opportunities in terms of diverting traffic or retail densification opportunities (Dublin Regional Authority and Mid-East Regional Authority, 2008[135]). Regarding mobility, retail SMEs are also changing their logistics in city centres. Local governments can help SMEs shift to greener mobility (delivery options) by proposing areas of improvement and identifying missed opportunities by data collection and analysis. For instance, Brussels (Belgium) estimates that 50% of deliveries in the city could be made with a cargo bike.
Measuring the diversity and uniqueness of commercial activities in city centres – along with the contribution of retail SMEs to cultural heritage – can help cities preserve local identity and foster sustainable development. Globalisation also enhances similarity of highstreets and commercial cores, with a small number of large chain retailers present in a majority of city cores in larger urban centres. In this environment, strengthening local identity by supporting local artisanal activities and SMEs showcasing historical architecture, traditions and cultural landmarks can foster a sense of place and pride, creating an environment that attracts both visitors and local communities. Additionally, stimulating the performance of local stores and production promotes sustainable development and favours shorter supply chains, a key strategy of the EU Proximity Economy (European Commission, 2024[35]). Moreover, cities might be faced with urban decay, especially of historical buildings. Revitalising heritage buildings enhances visual attractiveness and boosts renovation strategies, associated with a more sustainable use of resources. In consequence, some cities focus on data monitoring with a direct aim of preserving local SMEs and local heritage. For instance, Florence (Italy), in its project “Commerce for the liveability in the historic centre”, determined “efficacy indicators” to measure the historic and traditional shops offer within its UNESCO World Heritage city centre. These indicators include the turnover rates (percentage of decrease in the number of openings of vicinity food and beverage shops); number of activities involved in the sale and serving of food and beverage and artisanal food-related businesses; number of commercial authorisations renewed; number of kiosks, newsstands and florists surveyed; or total number of traditional and historical activities (Municipality of Florence, 2022[136]). Similarly, Braga (Portugal) collects information on “Shops with history” and “Workshops with history” (based on self-application by retailers) aiming at showcasing the activity and supporting the preservation of establishments and entities recognised as of collective value, such as ceramics and pottery stores – an artisanal activity famously maintained in Portugal, but equally cafés present in historical buildings.
Supporting local governments in overcoming challenges of data collection, analysis and evaluation
National initiatives are essential in enabling local governments to address their M&E gaps and effectively foster thriving retail SMEs economies. The need for comprehensive M&E systems for city administrations to support SMEs and inform policymakers is critical, particularly to address larger, systemic challenges and emerging trends. Effective M&E allows policymakers to identify not only immediate retail challenges but also long-term trends and shifts in consumer behaviour, technological advancements, and economic disruptions (such as the rise of e-commerce or changing sustainability concerns). By understanding these larger trends, policymakers can design targeted interventions that help SMEs adapt to changing market conditions, such as providing digital tools, supporting skill development, or ensuring equitable access to resources. Furthermore, M&E can highlight regional disparities, enabling more tailored policies that support SMEs in areas with unique challenges. Ultimately, M&E systems can provide a robust foundation for both strategic decision making at the firm level and for designing public policies that foster long-term competitiveness, inclusivity, and resilience of retail in cities.
Leveraging digital tools is central to understanding the challenges of a given place and conducting assessment of policies. For instance, data from participation in training and digitalisation programmes is used to assess effectiveness and monitoring foot traffic is used to understand the effects of pedestrianisation strategies. Therefore, to overcome these challenges, leveraging digital tools (e.g. point-of-sale data, mobile data or sensors), specifically tailored to the local context, is crucial. For instance:
In Bilbao (Spain), data from participation in training and digitalisation programmes are used to assess effectiveness and digital adoption rates (Entrepreneurship Programme Metrics).
The city of Braga (Portugal) enhances the shopping and tourism experience through the creation of the website “Visit Braga” and an app “Braga Smartguide”. Data analytics from website traffic and app usage can be of further value for monitoring and evaluation.
Engaging higher education institutions and other local stakeholders can enhance data collection and analysis capacity while fostering collaboration and transparency. Engaging existing local knowledge and entities (e.g. chambers of commerce, universities, research institutes, NGOs or private consultancies) can be an effective strategy, to delegate data collection and analysis, helping to alleviate capacity issues of local and national governments. It also fosters stronger relationships with local stakeholders, while increasing transparency. Several local governments are currently collaborating with existing entities to overcome data collection, analysis and evaluation constraints:
Engaging directly with retailers to identify challenges and barriers: Koper (Slovenia) actively engages with business owners and entrepreneurs through direct outreach and scheduled meetings to understand their needs and barriers (e.g. financial constraints), specifically the digital barriers (i.e. lack of digital skills). This feedback allows to identify bottlenecks on the way to remaining competitive and sustaining long-term profitability.
Creating specific urban bodies in charge of boosting retail: For instance, Norwich Business Improvement District (not-for-profit organisation) is a responsible body for retail and business districts improvements, engaging experts and local stakeholders. They are funded, managed and led by local businesses, to represent their needs and deliver a comprehensive programme of projects that benefit the city.
Collaborating with chambers of commerce: The monitoring on the relationship between retail and behavioural patterns in Stockholm (Sweden) has been conducted by Stockholm’s Chamber of Commerce with data collected by Infostat specialised in market analysis (Stockholm Chamber of Commerce, 2023[134]).
Collaborating with real estate actors. For small retailers, access to affordable commercial spaces is a major concern. Analysing market rent growth for commercial spaces and their vacancy can be an indicator of their wellbeing, while also providing governments with evidence to justify rent or mortgage support measures. The municipal database of Poitiers (France), which tracks commercial vacancies, updates it in collaboration with local commercial real estate agents, which facilitates matchmaking between owners of vacant units and prospective entrepreneurs.
England – Future High Streets and Town Deals – Creating structures for urban centre renewal through partnerships, expert bodies and co-funding models
What are the objectives?
Structural changes in the retail sector, particularly the growth of online retail and competition from out-of-town shopping centres, have posed significant challenges for England’s High Streets and Town Centres. Specifically, urban centres have experienced reduced footfall and increased vacancy rates, issues further exacerbated by the COVID-19 pandemic. In 2019, the UK government developed the Towns Fund, a GBP 3.6 billion package of policy interventions to support retail in High Streets and Town Centres. This sought to address several issues in urban centres: physical and digital disconnection, outdated land use and built environment, insufficient skills and business support and a lack of strategic, local economic management. Three core interventions of the Towns Fund (GBP 3.6 billion) are examined below: Town Deals (GBP 2.6 billion), the Future High Streets Fund Allocations (FHSF – GBP 0.8 billion), and the High Streets Task Force (HSTF – GBP 10.7 million).
How does it work in practice?
Town Deals (TD)
Announced in 2021, TDs are a GBP 2.6 billion allocated fund which targets longer-term economic and productivity growth in 101 urban centres. Towns were encouraged to apply for funding of projects that address local challenges, and which cover one (or more) of the following themes:
Urban regeneration, planning and land-use: Boost economic growth by increasing density in town centres and strengthening local economic assets
Connectivity (transport and digital): local transport infrastructure and digital connectivity
Improve skills and enterprise infrastructure: drive private sector investment and ensure towns can support skills and small business development
The Town Deal Boards are core to the TDs funding and set the overall vision and strategy for the local area. The Boards ensure that TD projects align with the broader urban renewal objectives of an area. The Boards must be comprised of a diverse range of local stakeholders including from the private sector and other local investors, the areas Member of Parliament (MP) and other local government officials, community and voluntary sector representatives. Over the course of a project the boards are responsible for developing the Town Investment Plan, signing off each stage of a Town’s Investment Plan, overseeing project delivery through regular performance reviews and adjusting the projects if necessary to ensure alignment with strategic goals.
Future High Streets Fund Allocations (FHSF)
The Future High Streets Fund is part of the UK Government’s GBP 3.6 billion Towns Fund which aims to renew and reshape high streets and town centres to improve user experience, drive growth and ensure long-term sustainability. In 2020, the FHSF allocated GBP 0.8 billion in funding for 72 places in England via a competitive bidding process. It aims to transform high streets and meet the changing needs of businesses and communities. The fund co-financed projects which fall into the following themes:
Enhance physical infrastructure including housing, commercial spaces and public spaces
Acquire land and vacant buildings to support mixed-use developments
Improve transport access and connectivity including traffic flow and circulation in the area
Support the adaptation of technological advancements in retail including with digital connectivity
High Streets Task Force (HSTF)
The High Streets Task Force (HSTF) was launched in July 2019 by the UK government as part of the broader High Streets strategy to revitalise town centres and address challenges faced by high streets due to changing consumer behaviour. With an initial GBP 10.7 million budget over five years, the Task Force aimed to provide expert guidance, training, data, and tools to local authorities and place leaders, helping them build capacity for high street regeneration (Public Accounts Committee, 2023[137]). Delivered by a consortium of 13 organisations, including the Institute of Place Management (IPM), professional bodies, and data partners, the HSTF focused on placemaking skills, stakeholder collaboration, and evidence-based decision making. Over its duration, it directly supported 151 town centres, trained 1 000+ place leaders, facilitated 50+ workshops, and engaged a network of 150 experts, offering hands-on guidance and strategic planning support. The Task Force played a crucial role in COVID-19 recovery efforts, advising on safe reopening and adaptation strategies. High street revitalisation efforts also focused on event programming, improving public spaces, and supporting business adaptation. Housing-led developments include curated cultural and leisure offers, sometimes subsidised by housing developers to help businesses establish themselves. In parallel, regulatory changes allow cities to designate core commercial areas for protection while facilitating residential conversions elsewhere. By 2024, the HSTF programme had enhanced local economic resilience, improved governance of high streets, and influenced national policy, leaving a legacy of strengthened expertise and best-practice frameworks for high street transformation.
What has the impact been?
A 2024 early process evaluation of the Towns Fund found that strategic design and local engagement have been key elements to success:
Effective partnerships between local authorities and stakeholders ensured that projects aligned with broader local priorities, ensuring alignment with housing, transport, and sustainability goals. Town Deal Boards played a crucial role, bringing together representatives from diverse sectors to build consensus on funding allocations.
Inclusive decision-making processes, facilitated by Town Deal Boards and Future High Streets Task Forces, fostered local ownership and consensus on regeneration priorities.
The fund offered flexibility to focus on land use, transport, or digital upgrades allowing urban centres to address specific local needs.
While monitoring mechanisms were in place, the evaluation stressed the need for long-term tracking of outcomes to assess the sustainability of investments.
What can other cities learn from this example?
Foster collaboration between the private sector, public sector and community groups
Effective regeneration requires partnerships between local governments, businesses, and community stakeholders. The establishment of inclusive governance structures, such as England’s High Streets Taskforce and Town Deal Boards, can help cities ensure that revitalisation efforts meet diverse needs and secure broad support.
Tailor solutions to local contexts
Recognising that no two cities face identical challenges, England’s approach highlights the value of adaptable funding that can meet the needs of a specific area. Urban centre revitalisation support could consider policies that allow for flexibility in prioritising digital infrastructure, transport, or energy efficiency, depending on local conditions.
Invest in capacity building
Alongside the specific revitalisation funding, providing technical support, training, and evidence-based tools to local authorities can improve the success of urban regeneration initiatives. The role of England’s High Streets Task Force offers a replicable model for other cities.
France – Action Cœur de Ville – A programme to lead global action to revitalise the heart of medium-sized cities
What are the objectives?
Launched in 2018 and extended until 2026, the Action Cœur de Ville (ACV) programme is a national initiative designed to address urban decline in 245 medium-sized cities across France. Led by the National Agency for Territorial Cohesion (ANCT), the programme takes a comprehensive and integrated approach to revitalising city centres by tackling multiple urban challenges simultaneously, including vacant and deteriorated housing, heritage conservation, commercial revitalisation, and the enhancement of public spaces, all while aiming to curb urban sprawl.
The programme is built on three core principles:
A holistic territorial strategy that considers all key dimensions of urban regeneration, from housing and public space improvement to commercial revitalisation.
A multi-stakeholder approach leveraging contributions from key public institutions, including Action Logement (social housing), the National Agency for Housing Improvement (ANAH) (housing retrofit and degraded housing rehabilitation), and the Banque des Territoires (investment in local economic development).
Direct financial and technical support from the French government to empower local authorities, enabling them to implement tailored city-centre regeneration strategies.
How does it work in practice?
The French government, through the National Agency for Territorial Cohesion (ANCT), provides a combination of financial aid, technical expertise, and capacity-building support to local governments. This includes:
Funding
The total programme budget amounts to approximately EUR 10 billion over eight years, pooling resources from multiple public institutions to ensure a coordinated approach to city-centre revitalisation.
Technical assistance
Each participating city benefits from the support of a dedicated project manager responsible for the local implementation of ACV initiatives. Cities are also assisted by a city centre manager, funded through the national recovery plan, who acts as an intermediary between local authorities and retail SMEs, facilitating the redevelopment and reoccupation of vacant commercial spaces. In addition, the My Shop 2030 (Mon Commerce 2030) initiative provides cities with access to expert-led territorial diagnostics and strategic planning studies aimed at optimising the local commercial landscape and strengthening retail dynamics. These efforts are complemented by a structured knowledge-sharing community, including training programmes and the establishment of a Commerce Managers’ Club Association, which promotes peer learning and the dissemination of best practices across cities. Finally, the ANCT actively monitors retail vacancy rates to track changes in commercial activity and assess the evolution of city-centre dynamics over time.
Commercial revitalisation through real estate interventions
In partnership with the Banque des Territoires, around 100 commercial revitalisation real estate entities have been created, enabling cities to acquire, renovate, and repurpose commercial properties. These properties are then either rented to entrepreneurs at below-market rates or reintroduced into the private market to stimulate economic activity.
Fiscal and Regulatory Tools
Targeted fiscal and regulatory measures have been implemented to encourage commercial property rehabilitation, including:
Taxation on commercial wastelands to incentivise property owners to sell or redevelop vacant spaces.
Urban planning regulations that define priority commercial development zones to guide investment decisions.
The right of pre-emption on commercial leases, allowing local authorities to influence property use in strategic locations.
The "Territorial Revitalisation Operation" (Opération de revitalisation du territoire – ORT) framework has been introduced in all ACV cities, defining a legally designated perimeter where specific fiscal and regulatory incentives apply, such as:
Exemptions from Commercial Development Authorisation (Autorisation de développement commerciale) to facilitate new retail openings in city centres.
The ability of local authorities to oppose CDAs for out-of-town retail developments that could undermine city-centre businesses.
Related Programmes
The “Entrées de Ville” (“City entrance corridors”) programme expands the scope of Action Cœur de Ville by targeting the redevelopment of peripheral commercial zones in 130 cities. It aims to promote more efficient land use and land conservation, improve urban design and landscape quality, and adapt these areas to evolving retail models and consumption patterns.
In parallel, the Green Fund, established under the national recovery plan, supports the ecological transition of urban centres by financing projects that mitigate urban heat islands, increase urban greenery and enhance the overall city-centre experience for residents and consumers. To date, the fund has supported projects totalling more than EUR 4 million across 220 municipalities.
What has the impact been?
The ACV programme has actively monitored key performance indicators to assess its effectiveness since 2018.
Financial impact:
EUR 10 billion invested in revitalisation efforts.
EUR 25 million allocated to renovate or create 251 commercial premises.
529 commercial premises acquired and refurbished through dedicated real estate structures.
30 000 housing units purchased for rehabilitation.
260 000 housing units renovated through energy retrofit subsidies.
Key indicators of urban revitalisation:
Commercial vacancy rate: 12.1% in 2024, down from 13% in 2020.
Housing vacancy rate: Stable at around 4.7% since 2022.
Resident attachment to city centres: 70% of ACV residents report feeling connected to their city centre, compared to 60% in 2020.
What can other cities learn from this example?
The Action Cœur de Ville programme demonstrates the effectiveness of a comprehensive, multi-stakeholder approach to city-centre regeneration.
Adopt a comprehensive, place-based strategy for city-centre revitalisation
The success of the Action Cœur de Ville (ACV) programme largely stems from its multi-dimensional approach, which simultaneously tackles housing, commercial activity, urban design and the enhancement of public spaces. Building on this experience, cities could develop integrated territorial strategies that not only support economic activity but also strengthen residential attractiveness, helping to ensure a balanced and resilient urban ecosystem.
Mobilise a mix of financial, technical, and regulatory tools
A key innovation of ACV has been the creation of commercial revitalisation real estate entities, which enable cities to acquire, renovate and lease commercial premises at below-market rates to support priority retail activities. Fiscal instruments, such as taxes on commercial wastelands, can further discourage prolonged vacancy and incentivise property owners to reinvest. These measures can be complemented by regulatory tools, including rights of pre-emption on commercial leases, allowing local authorities to better steer retail development towards strategic locations. Urban planning instruments can also be used to limit commercial expansion in peri-urban areas that may undermine the vitality of city centres.
Provide tailored technical assistance to local authorities
While direct funding is necessary, it is often insufficient on its own; cities also require access to technical expertise, guidance and knowledge-sharing platforms to design, implement and scale effective regeneration policies.
Leverage data to monitor and adapt revitalisation strategies
Finally, leveraging data to monitor and adapt revitalisation strategies is key to ensuring long-term effectiveness. ACV systematically tracks both commercial and residential vacancy rates to assess the impact of its interventions. Building on this approach, cities could establish clear and measurable performance indicators – such as retail vacancy rates, footfall trends and resident sentiment – to continuously refine their policies based on timely and evidence-based insights.
Ireland – Towns Centre First – An empowered, inclusive, community-led approach to tackle vacancy and promote economic vibrancy in Irish towns
What are the objectives?
Launched in February 2022, the Town Centre First (TCF) policy is built on a cross-government initiative, developed by Ireland’s Department of Rural and Community Development (DRCD) and the Department of Housing, Local Government and Heritage (DHLGH). It builds on the 2018 Town Centre Living Pilot Initiative, which explored strategies to address vacancy and encourage residential and economic activity in six pilot towns.
The Town Centre First (TCF) policy aims to tackle vacancy and combat urban dereliction by promoting experience-led retail and supporting the regeneration of public spaces. It also seeks to encourage more people to live and work in town centres, notably by leveraging digital transformation and supporting new ways of working and living. In addition, the policy supports the sustainable regeneration of towns by addressing challenges related to climate change mitigation and adaptation, sustainable mobility, demographic change and the diversification of housing options. Finally, TCF is designed to align closely with Ireland’s broader spatial and sectoral strategies, including Project Ireland 2040 – National Planning Framework, Housing for All and Our Rural Future, ensuring policy coherence across levels of government and policy domains.
The TCF contains 33 actions to achieve national objectives including social and economic revival, housing provision, environmental protection and the development of heritage in Ireland’s towns.
How does it work in practice?
Phased implementation
Phase 1 – 2021: In December 2021, EUR 2.6 million in funding was allocated to 26 towns nominated by Local Authorities to develop Town Centre First Plans.
Phase 2 – 2024: A second phase started in February 2024, involving 26 additional towns and villages. Each place received EUR 30 000 to prepare a Town Centre First Plan, with completion expected by mid-2025.
Community engagement and support structures
Town Teams: Comprising local community and business representatives, these teams are responsible for developing and implementing the TCF plans.
Town Regeneration Officers (TROs): Dedicated officers appointed within Local Authorities to support Town Teams and drive the implementation of TCF policies at the local level.
National Town Centre First Office: Established to co-ordinate the TCF initiative nationally, providing guidance, resources, and oversight.
Funding and resources
In February 2024, a Suite of Supports Fund worth EUR 4.5 million was launched, comprising:
Town Team Support Fund: Up to EUR 10 000 each for three towns per Local Authority to establish or develop Town Teams.
Town Centre First Plan Funding: EUR 30 000 per Local Authority to support the development of TCF plans.
Project Development Measures: Up to EUR 50 000 each to support two projects per Local Authority, with an additional third EUR 50 000 application available for the Region in Transition: North-West Counties.
Additional funding streams aligned with TCF include the Rural Regeneration and Development Fund (RRDF), Urban Regeneration and Development Fund (URDF), Croí Cónaithe (Towns) Fund, and the Town and Village Renewal Scheme.
The Digital Town Blueprint
A cornerstone of TCF policy is the integration of digital strategies through the Digital Town Blueprint. This framework assists town leaders and policymakers involved in TCF by embedding digital programmes and action plans grounded in empirical data. Digital towns are defined as those that adopts and integrate information and communications technologies across aspects of town life. The Digital Town Readiness Framework is used to evaluate a town’s digital capabilities across eight dimensions including connectivity, digital public services and digital economy. Towns assess their readiness on a scale from 1 (non-existent) to 5 (leading), facilitating targeted digital action plans that address specific strengths and weaknesses. This approach enables towns to make informed decisions, optimise resource allocation, and enhance their digital infrastructure and services.
What has the impact been?
Outcomes from Phase 1, highlight strong engagement and planning development:
25 finalised Town Centre First Plans
344 Town Team members engaged
630 public engagement events conducted
7 595 citizen responses collected
749 projects identified for implementation
Phase 2 is now underway and builds on the learning from the Pilot Phase including Town engagements. Phase 2 also integrates Digital Blueprints and expanding associated funding streams – the THRIVE Scheme and with strengthened involvement of large urban centres.
What can other cities learn from this example?
Community-led development and collaborative governance
Key to the success of the programme is unique Town Centre Plans reflecting the unique needs and aspirations of each community. These plans are underpinned by national and supra-national (Irish and EU) strategies and funding streams that support local decisions, allowing for effective holistic, community-driven town regeneration
Integrated physical revitalisation with digital transformation into planning
To create resilient, future-ready towns a combination of improvements to physical spaces and infrastructure alongside digital programmes like the Digital Town Blueprint is key to future-proof town revitalisation and support local economies
Data-informed development
Underpinning decision making with requirements for data measurement, digitalisation skills using outcomes from the Digital Town Blueprint facilitates evidence-based policymaking in towns.
Canada – My Main Street – A national platform to sustain inclusive local business growth and promote vibrant community-centred public spaces
What are the objectives?
Main streets are key locations for Canada’s small businesses, which make up over a third of national GDP generated by the private sector. Providing 1.9 million jobs nation-wide, about a fifth of small brick-and-mortar businesses are located on Canadian main streets. In 2020, independent businesses represented 75-80% of total Toronto’s main street establishments. As long-standing and new challenges of location affordability, clientele mobility and shopping habits, and changing business property ownership models exacerbated by the COVID-19 pandemic have shaken the vitality of main street communities, Canada’s My Main Street programme aims to preserve and renew their legacy as community meeting grounds and hubs of local entrepreneurship.
Kickstarted in 2021 by an initial investment of CAD 23 million from the Government of Canada and delivered through the Federal Economic Development Agency for Southern Ontario (FedDev Ontario), My Main Street programme provides assistance to main street communities and businesses across Southern Ontario for revitalisation, recovery and stabilisation efforts from pandemic-related shocks9. Renewed in 2024 by a federal investment totalling CAD 15 million, the programme extended its focus to direct-to-business and community supports to sustain inclusive local business growth and promote vibrant community-centred public spaces.
How does it work in practice?
Delivered through FedDev Ontario, the first round of the My Main Street programme was administered in partnership with the Canadian Urban Institute (CUI)10 and the Economic Developers Council of Ontario (EDCO)11 through two streams respectively targeting business support and placemaking during the 2021-2023 period. The Economic Developers Council of Ontario led the “Local Business Accelerator Program” which focused on main street community revitalisation initiatives and direct business grants complemented by market research and business support services. During the second iteration of My Main Street in 2024,12 this first stream became the “Business Sustainability” stream, doubling the initial CAD 10 000 direct contribution amounts to five existing and five new businesses (to be created with programme support) in participating communities. For example, the initiative supported the restoration and beautification of Little Italy’s main commercial strip in Ottawa, boosting the dynamism of the area prompted by a local cultural festival.
The “Community Activator Program” stream overseen by the Canadian Urban Institute across both programme rounds aims to support economic activity on main streets by funding placemaking projects piloted by non-profit organisations, Business Improvement Associations, and municipalities to attract visitors and increase foot traffic. Prioritising projects with commercial and community importance aiming to minimise barriers to participation for equity-seeking13 groups, the 2024 programme structure provides incentives up to CAD 250 000 through reimbursements for a wide range of events and activations, community enhancements and streetscape improvements. In 2022-2023, the stream delivered CAD 10 million to placemaking initiatives such as local community events and activities as well as main street enhancements through one-time contributions ranging from CAD 25 000 up to CAD 250 000. For example, the initiative supported the restoration, beautification and animation of the city of Ottawa’s Little Italy commercial district streetscape.
Throughout 2022 and 2023, the “Local Business Accelerator” programme components were administered through the appointment of Main Street Ambassadors in participating main street communities. Up to six14 Ambassadors with entrepreneurial aptitudes and backgrounds were locally hired based on the size of each municipality to conduct free business-support consultations with small businesses along their assigned main street and support those applying for direct financial support from the programme. Ambassadors were also tasked with completing their main street(s) Community Market Profile(s), identifying missing products and services from the community and understanding local demographics, mobility, and consumptions habits through primary and secondary market research. To address localised needs and opportunities for programme participants, My Main Street obtains census information from Statistics Canada and partners with a data, analytics, and marketing services firm for proprietary licensed marketing data. In My Main Street’s second iteration, approved applicants in both programme streams receive data insights from a Market Research Report for their community, in consultation with the Canadian Urban Institutes’ Portfolio Managers.
What has the impact been?
From the initial target of 150 projects in 65 main street communities, 170 initiatives across 88 towns and cities were supported by the Community Activator stream in 2022 and 2023. One of these is the main street community in downtown Kitchener, a 285 000-inhabitant midsize city in Southeastern Ontario. A placemaking ice rink project in the city centre’s marketplace in 2021 benefitted 110 local businesses inside and adjacent to the Market and drew in the participation of fifty new local small businesses in its winter programming. Furthermore, insights from the Canadian Urban Institute found that the Kitchener BIA patio programme supported by My Main Street generated a 3.4 return on investment, with CAD 3.2 million, which amounts to 9% of a total CAD 37 million of credit and bank card sales over the 2021 and 2022 summer months. The patio initiative has since become a hallmark of Kitchener’s warmer months, with the Downtown Kitchener BIA funding the programme and the city streamlining administrative processes to facilitate business participation. The additional space helps businesses expand their capacity, while community patios further enhance the overall appeal of public spaces, attracting more visitors to the city centre.
On the business support side, the programme equips business owners with in-depth, customised local market research insights to gain an understanding of their customer base’s general market behaviour, demographics, and media communication and consumption habits. With these insights, programme beneficiaries have been able to fill existing market gaps and develop an online presence through advertising, social media, and by bringing part of their inventory online. In the first programme round, these insights also benefitted localities at the municipal level as trade area mobility data was used by historically tourism-driven small-town communities such as Stratford and Wiarton to diversify their main streets’ offerings and capitalise on changing local shopping patterns brought about by population shifts towards rural communities as a result of the pandemic.
What can other cities learn from this example?
Regional focus, local support
The programme shows how federal investment can support main streets and the small businesses that locate there by enabling tailored, data-driven local action that combines business support, placemaking, and capacity building. Through a data-driven approach and on-the-ground main street ambassadors, the programme can address hyper local realities and challenges. Mobilising granular insights mediated by programme agents from strong data partners operating at a broad scale, communities and businesses alike can operationalise concrete strategies according to their needs and unique opportunities. By dedicating a substantive portion of its resources (25%) to rural communities, it also to aspires for a more equitable geographic reach across diverse local contexts.
The value of a holistic scope
By approaching retail and community infrastructure as interlinked components of local vitality, the programme supports both economic activity and the social fabric of main streets. This integrated perspective strengthens local entrepreneurship and initiatives with bottom-up buy-in, helping to sustain their impact over time.
Braga, Portugal – Digital neighbourhoods redesign how retail SMEs work in the city
What are the objectives?
As part of a national programme funded by the European Union, the City of Braga (Portugal) launched the "Braga Smart Retail" initiative in 2024, committing over EUR 1.5 million to accelerate the digitalisation of more than 900 local retail businesses. Initially designed during the COVID-19 pandemic to support food delivery services, the programme has since evolved to address structural challenges facing local retailers. These include heightened competition from e-commerce platforms, shifts in consumer behaviour exacerbated by the pandemic, and the increasing presence of multinational brands in the local retail market.
The initiative aims to strengthen the digital capabilities of small and medium-sized enterprises (SMEs) in the retail sector, integrate commerce, tourism, and services into a cohesive digital ecosystem, and equip entrepreneurs and employees with the necessary skills for digital transformation. Its strategic goals include:
Positioning Braga as a premier shopping destination in the Northern Euroregion (Portugal-Galicia) and a key player in the Iberian retail landscape.
Enhancing Braga’s attractiveness as a historical and cultural hub for living, tourism, and investment.
Improving urban accessibility and business competitiveness through digital transformation, leveraging advanced technological infrastructure.
Creating an integrated and seamless consumer experience - both online and offline - by aligning the city's commercial, cultural, and tourism offerings.
How does it work in practice?
The City of Braga has adopted a comprehensive digital strategy to enhance the competitiveness of local retail SMEs. This approach addresses multiple dimensions of digitalisation, customer experience, urban logistics, and data-driven decision making.
Enhancing digital infrastructure to support retail SMEs
Rather than investing in entirely new digital infrastructure, Braga is optimising and expanding its existing Wi-Fi network to provide cost-effective, high-coverage connectivity for retailers and customers.
A new digital platform, "Visit Braga," comprising a website, mobile application, and online marketplace, has been launched to increase visibility for local businesses and promote Braga as a tourist destination.
Improving the digital consumer experience
The introduction of the "Braga Smartguide" app, directly integrated with Google Maps, enhances the visitor experience by offering real-time navigation and shopping recommendations.
Augmented reality (AR) features have been implemented in select retail stores, creating immersive and engaging shopping experiences for both tourists and local consumers.
Developing efficient and sustainable urban logistics
New urban logistics solutions, including smart delivery lockers and bike delivery services, have been introduced to facilitate click-and-collect services and reduce the environmental impact of urban freight transport.
The initiative aligns digital transformation with green mobility objectives, contributing to more sustainable last-mile delivery solutions.
Leveraging data-driven intelligence for business growth
A centralised data platform aggregates insights from street sensors, mobile network data, and municipal systems.
Businesses have access to dashboards displaying footfall patterns, consumer demographics, and purchasing behaviours, enabling data-informed marketing strategies and operational decisions.
What has the impact been?
The "Braga Smart Retail" initiative has significantly enhanced the digital visibility of local businesses, equipping retailers with the tools to navigate and leverage digital technologies effectively.
The data collection system implemented by the municipality has provided a detailed analysis of city-centre foot traffic, contributing to more targeted urban and economic policies. In 2024, Braga recorded its highest visitor numbers to date, surpassing 80 000 tourists. The increased tourist influx has directly benefited local businesses, reinforcing the city's retail and service sectors.
What can other cities learn from this example?
Develop a holistic digital strategy
Braga's approach demonstrates that digitalisation in the retail sector should extend beyond individual businesses to encompass the wider urban ecosystem. By integrating tourism, culture, and commerce into a unified strategy, cities can enhance their attractiveness and economic resilience.
By leveraging augmented reality, mobile applications, and interactive tools, Braga has improved the consumer experience both online and in physical stores. Other cities can adopt similar strategies to revitalise retail districts and enhance their global appeal.
Invest in data collection and centralisation
A key factor in Braga’s success has been the ability to collect and analyse urban and consumer data. Cities could implement similar initiatives that allow retailers and policymakers to access, interpret, and act upon strategic insights.
Align digital and environmental transitions
Braga has demonstrated that digitalisation can be harnessed to address environmental challenges, particularly in urban logistics. The implementation of sustainable last-mile delivery solutions highlights how cities can reduce carbon footprints while supporting retail SMEs competitiveness.
Koper, Slovenia – Providing affordable premises and innovative planning solutions to enable retail SMEs to compete with digital and out of town outlets
What are the objectives?
Koper is a strategically significant port city in Slovenia, with an economy largely driven by tourism and port-related industries. The city has a population of approximately 55 000 residents and attracts a substantial number of visitors annually, including 70 000 cruise ship passengers alone. However, by 2010, the combined effects of suburbanisation and the proliferation of out-of-town shopping centres had led to a decline in footfall and economic stagnation in the historic city centre. To counter this trend, the municipality has prioritised engagement with local entrepreneurs, introducing targeted interventions to foster business development, including through the appointment of a city centre manager.
In response to growing competitive pressures from e-commerce and large-scale retail developments outside the city, Koper has implemented a suite of policy measures aimed at revitalising its local retail ecosystem. These include rent subsidies for businesses operating in municipally owned premises, with a particular focus on those catering to local needs, such as clothing retailers and household goods stores, rather than those primarily targeting tourists. Additionally, the city is actively supporting the establishment of temporary “pop-up” retail spaces to lower barriers to entry for new businesses and stimulate consumer engagement within the city centre. These initiatives form part of a broader strategy to enhance the economic resilience of Koper’s retail sector while reinforcing the city’s attractiveness as a commercial and social hub and aiming more specifically at:
Revitalising the city centre retail sector by addressing declining footfall and economic stagnation
Enhancing the competitiveness of local retailers in the face of e-commerce and out-of-town shopping centres
Prioritising businesses that serve local needs to create a more sustainable and resilient commercial ecosystem
Fostering a vibrant urban environment that strengthens Koper’s identity as a dynamic economic and social hub
How does it work in practice?
Policies to support retail SMEs in Koper
Subsidised commercial rents: the city owns some city centre commercial premises which they offer at a 30% discount to retailers which serve specific needs of the local population (clothes shop, technical tool shops, bakeries). Actively pivoting away from a tourism-focused retail development, which led to the proliferation of souvenir shops that did not serve local needs.
Restricting conversion of buildings to residential use in the city centre: implementing regulation preventing the ground floor of commercial buildings within the city centre from being converted into residential use.
Pop-up shops: the municipality organises and facilitates the launch of pop-up shops. After identifying vacant properties in streets that they want to regenerate, the municipality rents these premises from their owners, making them available at no cost to the retailers, who only have to pay for the cost of utilities.
Upskilling local businesses: Inova tour provides education programmes for entrepreneurs looking to learn how to find customers, digital marketing and new product development. This is provided through workshops, training sessions and personalised guidance. Also includes a competition for the best new solution for improving the tourism offer in Koper. The first two years of the programme focused on tourism enterprises specifically but will now be enlarged to focus on the broader business community in Koper.
Policies to boost Koper’s urban retail environment
City centre parking: city centre parking lots renovated two years ago, with free parking for one hour available. Future policy is expected to expand this offer for up to 2-3 hours for those who have made a purchase in the city centre.
Park and ride: On-demand shuttle available for visitors to the city centre. Users can stop it anywhere on the street and get off at the place that is most convenient for them.
KoperCard plus: A contactless payment option which can be used for paying for public transport as well as providing discounts for local retailers, attractions, dining or guided tours.
What has the impact been?
A focus on tourism has resulted in higher city centre footfall but also reduced the retail options for local residents and may have driven the conversion of retail premises into short-term accommodation.
Subsidised pop-up shops have successfully revitalised high-vacancy rate streets, with successful retail businesses requesting to take over permanent leases in previously vacant properties.
What can other cities learn from this example?
Evaluate and adapt city centre regeneration strategies
Koper initially pursued a tourism-led regeneration approach, aiming to boost footfall by increasing cruise ship arrivals. While this strategy successfully attracted visitors, it also resulted in an overconcentration of souvenir shops and retail outlets catering primarily to tourists, without meeting the everyday needs of local residents. Recognising this limitation, Koper has since recalibrated its approach to prioritise local economic resilience. The city now incentivises businesses that serve the local population, such as clothing retailers, technical tool shops, and bakeries, by offering subsidised commercial rents in municipally owned properties.
Understand the appeal of out-of-town retail and compete strategically
One of the primary advantages of out-of-town retail developments is their accessibility and convenience, particularly for consumers travelling by car from suburban and peri-urban areas. Acknowledging this competitive pressure, Koper authorities have taken proactive steps to enhance city centre accessibility. In 2022, the city renovated its central car parks and introduced an initiative offering one hour of free parking, with plans to extend this to two or three hours for visitors who make purchases in city centre shops. Furthermore, Koper has expanded park-and-ride facilities outside the urban core, complementing these with a free, on-demand electric shuttle service to improve connectivity and encourage greater footfall.
Cork, Ireland – Supporting retail SMEs green and digital transition through expert advice and tailored grant funding
What are the objectives?
Cork, Ireland’s second-largest city, has a historic city centre that serves as a cultural and economic hub for the region. Facing challenges from competition with larger retail chains and the rise of e-commerce, the city has prioritised supporting small retailers with their digital and green transitions through expert consultants and tailored grant funding.
To support these goals, Cork City Council, in collaboration with the Local Enterprise Office (LEO), has introduced targeted initiatives to help retail SMEs with their green and digital transitions. Since 2021, this has included distributing Green Energy Efficiency Grants, a national scheme available to businesses with 1 to 50 employees, offering financial support for energy-efficient improvements such as smart energy controls and renewable energy adoption. Since 2015, digital support has been available through funding to support SMEs trading online and other enhancements to digital systems. These policies aim to reduce operational costs, improve environmental sustainability, and strengthen Cork’s retail sector’s competitiveness in a rapidly changing market landscape.
How does it work in practice?
Energy efficiency grant
Launched in 2021, the Energy Efficiency Grant supports small businesses with fewer than 50 employees by providing funding to invest in energy-efficient technologies and equipment. Coming out of a context of reduced COVID-19 support, eligible businesses could initially receive up to EUR 5 000 towards the costs of energy-saving measures, with the requirement of a 50% of costs to be covered by the business. From 2024, the maximum grant was raised to EUR 10 000 and the contribution from business reduced to 25%.
A two-step approach is taken by businesses receiving the grant. First, a consultant assists businesses to conduct an energy audit to identify potential improvements. Then, the consultant provides personalised recommendations for how businesses can improve their energy efficiency and the options for receiving grant funding, for example through LED lighting or energy-efficient heating systems.
Digital for Business Scheme
Launched in 2022, the scheme provides expert consultancy to help businesses analyse and enhance their digital systems, aiming to improve efficiency and competitiveness. Funding of up to EUR 5 000 is provided for businesses for tools such as specialist software or digital marketing strategies.
Participating SMEs receive personalised consultations to assess their current digital capabilities. Consultants recommend and assist in implementing digital tools and strategies tailored to their needs.
Trading Online Voucher Scheme
Running from 2015-2024, the scheme offered financial assistance to small businesses for them to develop or enhance their trading capabilities. A grant of up to EUR 2 500 with a 50% of eligible costs covered. The grant could be used to support activities including website development, e-commerce platform integration and online advertising.
Key to the uptake of all schemes in Cork, is raising awareness for eligible businesses that the support is available. The city’s Local Enterprise Office (LEO) do this through lunch and learn sessions, collaboration with the Cork Business Association, and directly approaching businesses in the city centre to inform them about the benefits of the scheme. Working with experts in Cork Technical College, the LEO has been able to create tailored information campaigns for the Energy Efficiency Grants, adapted to specific industries highlighting the way in which the funding can be used to cut their business costs.
Eligible businesses could submit applications detailing proposed digital projects. Once approved, funding could be received to enhance their online presence, including through e-commerce functionalities and digital marketing campaign. Although launched in 2015, Cork city found that the pandemic significantly increased uptake of the scheme which rose around ten-fold in 2020.
What has the impact been?
Energy-efficient upgrades have resulted in reduced utility bills for businesses, improving overall profitability. Following the increase in the funding available and the larger share covered by government, Cork’s LEO has seen an uptick in applications and greater interest in the scheme. The impacts of these improvements also feed into Cork’s wider environmental goals associated with its ambition to be carbon neutral by 2030. The digital initiatives have supported the adoption of digital technologies by Cork’s retailers, enabling them to reach a larger customer base and offering vital support during the Covid pandemic.
What can other cities learn from this example?
Combining funding with expertise for greater impact
A key lesson from Cork has been the effectiveness of pairing financial support with expert consultancy. Providing grants alongside professional guidance helps retail SMEs access the resources needed for improvements but also understand how to effectively implement them. The combined approach ensures funds are used strategically, maximising impact.
Leverage specific expertise and evidence to drive engagement
Experience in Cork has shown businesses responded more positively to taking up energy efficiency grants when expertise was both targeted to their sector and backed by evidence of previous success. In Cork, collaborations with institutions like the Technical University helped design sector-specific campaigns with clear, actionable results such as specific cost savings associated with a fridge upgrade in a food retailer. Demonstrating credentials and past successes, has been important to building credibility and encouraging greater SME participation.
Poitiers, France – Revitalising a historic city centre with a data-driven and sustainable approach to urban commerce
What are the objectives?
Poitiers, a mid-sized city in western France with approximately 90 000 residents, faces unique urban and commercial challenges due to its historic city centre, situated on a hill with narrow streets limiting vehicle accessibility. Following an extensive pedestrianisation initiative in the late 2000s, the city centre has transformed into an open-air shopping district, structured around two main commercial streets connecting two retail squares, encompassing over 700 retail units. While commercial vacancy in Poitiers remains controlled at 7-8%, significantly below the 12% average observed in other mid-sized cities participating in the Action Cœur de Ville programme, the city contends with several economic and commercial challenges, including:
A predominance of food-based businesses and fast-food outlets, limiting retail diversity.
Shortened business lifespans post-COVID, reflecting economic uncertainty and changing consumer habits.
Competition from large shopping centres on the city’s periphery, attracting consumer spending away from the city centre.
Despite these challenges, Poitiers benefits from a strong local economy dominated by the public sector, with the university hospital, the municipality, and the university serving as the largest employers. Furthermore, with 30 000 students, Poitiers boasts the highest student-to-population ratio in France, offering unique commercial opportunities.
How does it work in practice?
City centre commercial revitalisation
A “pop-up shop” programme enables entrepreneurs to test retail concepts in a municipality-owned commercial unit under short-term, below-market leases (typically one to three months), where retailers pay only service charges (10-20% of market rent).
Collaboration with local commercial real estate agencies facilitates matchmaking between owners of vacant units and prospective entrepreneurs.
The ongoing renovation and repurposing of the central market hall aims to create a more diverse commercial destination, integrating more restaurants to attract visitors throughout the week.
Increasing city centre animation
Financial and logistical support for local festivals and events – such as a responsible fashion festival, basketball championships, and the Urban Trail – to enhance city centre attractiveness.
Post-COVID, the municipality doubled permitted terrace spaces for cafés and restaurants, increasing footfall.
Digital transition support
Training sessions and workshops provided local retailers with digital skills in customer relationship management (CRM), website development, and social media marketing.
The municipality established a network of trusted digital professionals, offering tailored support for retailers.
Green transition and logistics
Poitiers is developing a cyclo-logistics hub for sustainable deliveries in the city centre. However, finding suitable locations and accommodating the city’s hilly terrain remain key challenges. The initiative draws inspiration from La Rochelle, a city that has successfully implemented similar measures.
Data-driven decision making
The city purchases external data (MyTraffic) to monitor pedestrian flows and analyse visitor demographics, enabling a precise mapping of footfall per street. This data strengthens the case for city centre investment.
A municipal database tracks commercial vacancies, updated in collaboration with local commercial real estate agencies.
What has the impact been?
Enabling retailers to establish long-term businesses
Since 2020, the city-owned pop-up shop has facilitated the long-term establishment of at least one retailer per year. This model allows retailers to test their business concept, build a customer base, and familiarise themselves with retail operations, particularly benefiting new entrepreneurs emerging post-COVID. Many of the businesses involved belong to the social and solidarity economy, including second-hand and antiques stores.
Increasing city centre footfall
While establishing a direct causal link between municipal initiatives and rising city centre footfall remains challenging – particularly given post-COVID shifts in consumer behaviour – data indicates a sustained increase in foot traffic since 2021, with spikes of up to 40% in early and summer months (see Figure 4.2)
Source: Grand Poitiers’ open data portal, Portail de données ouvertes Grand Poitiers.
What can other cities learn from this example?
Data collection for strategic insights
Systematic data collection on foot traffic and commercial vacancy is critical for measuring trends, assessing policy impact, and guiding strategic urban planning.
Supporting entrepreneurs in testing business models
Entering the retail sector remains challenging, particularly given competition from e-commerce and large retailers. By allowing entrepreneurs to pilot their business concepts in low-risk environments, cities can encourage long-term retail investment and city centre vibrancy.
Dedicated retail support services
Poitiers has created a dedicated municipal service for retailers, leveraging expertise developed through the Action Cœur de Ville programme. This initiative provides a single point of contact for businesses, helping them navigate urban planning, signage regulations, and waste management, ensuring a more business-friendly city centre.
Bilbao, Spain – Implementing a multidimensional strategy to support retail SMEs
What are the objectives?
Retail SMEs in Bilbao (Spain) face several challenges, particularly due to their small size. Many are sole proprietors or very small businesses with limited capacity to invest in innovation, sustainability, or digital transformation.
Challenges
The retail sector has been affected by a combination of structural and cyclical challenges. The COVID-19 pandemic led to a sharp decline in retail activity and consumer footfall, forcing many businesses to close or to operate under prolonged financial strain during the recovery period. At the same time, rising inflation and higher operating costs have reduced profit margins, making it increasingly difficult for small retailers to remain competitive. Demographic factors also play a role, as many shop owners are ageing – often with an average age of around 50 – which can limit the adoption of digital tools and more modern business practices. These challenges are compounded by the predominance of one-person businesses and micro-retailers with limited financial and managerial capacity, further constraining their ability to invest in innovation, including digitalisation. Finally, shifts in consumer behaviour, notably the growth of online shopping and changing preferences among younger generations, have intensified competitive pressures on traditional brick-and-mortar retail.
Objectives
The strategy seeks to revitalise the retail sector by addressing the decline in local commercial activity driven by digitalisation, demographic change and evolving consumer behaviour. It aims to improve business competitiveness by supporting digital transformation, compliance with sustainability requirements and the adoption of more modern business practices. At the same time, the approach emphasises the integration of commercial considerations into urban planning decisions, notably to enhance mobility, accessibility and the overall attractiveness of retail areas. The strategy also seeks to encourage business succession and innovation, responding to the ageing profile of many shop owners and the limited generational renewal observed among small retail businesses. Finally, it prioritises stronger collaboration between local governments, business associations and urban planning bodies in order to develop and implement a coherent and comprehensive retail strategy.
How does it work in practice?
Bilbao’s city council, in collaboration with a wide range of public and private stakeholders, has implemented a comprehensive set of policies to support retail SMEs. Central to this approach is a strategic retail plan for 2020–2025, developed jointly with business federations and experts in urban planning and mobility, which sets out a shared vision for the future of the city’s retail sector. To support this vision, the city has invested around EUR 2 million in digitalisation programmes for small businesses, offering training and consultancy services to help retailers adopt and integrate digital tools. These efforts are complemented by targeted training and mentorship initiatives focused on management, business strategy, digital transformation and customer service, enabling SMEs to adapt to evolving market conditions.
In parallel, Bilbao provides financial support to both new and existing small businesses to strengthen entrepreneurship and enhance competitiveness. Urban policy measures also play a key role, notably through the development of pedestrian-friendly commercial corridors and improved accessibility, including vertical mobility solutions such as elevators in high-altitude districts. To ensure that interventions remain evidence-based, the city conducts biennial studies to monitor business dynamics, including openings and closures, as well as levels of digital adoption. Finally, regular multi-stakeholder coordination meetings, held every six months and involving representatives from commerce, urban planning, mobility and security, provide a platform to review progress, share insights and adjust policies as needed.
What has the impact been?
Mechanisms to evaluate the impacts
A range of mechanisms has been put in place to evaluate the impacts of retail support policies. A biennial study on retail commerce provides a detailed mapping of businesses, analyses openings and closures, and assesses levels of digital adoption. This is complemented by the monitoring of key economic indicators, including inflation, business closures, employment in the retail sector and rates of digital uptake. Additional evidence is drawn from participation data and performance metrics associated with entrepreneurship, training and digitalisation programmes. Urban mobility and commercial footfall data are also used to monitor consumer behaviour and to assess the effects of pedestrianisation and other public-space interventions in key commercial areas.
Impacts
These monitoring efforts point to several observable impacts. Surveys suggest that pedestrianised commercial corridors have contributed to increased foot traffic and improved the overall quality and attractiveness of the urban environment. Some SMEs have made progress in integrating digital tools into their business models, although the pace of digital transformation remains uneven, partly reflecting the older age profile of many business owners. Policy implementation has also strengthened collaboration between municipal services, business federations and urban planning bodies, contributing to more coherent and effective interventions. At the same time, measuring the precise economic impact of individual programmes remains challenging, given the influence of broader external factors such as inflation, changing consumer behaviour and macroeconomic conditions.
What can other cities learn from this example?
This experience offers several lessons for other cities. Integrating retail considerations into urban planning – particularly through the development of pedestrian-friendly commercial corridors – can have a significant influence on retail performance and city-centre vitality. Strong stakeholder co-ordination, supported by regular multi-sectoral meetings, helps ensure that policies remain responsive and well aligned across policy domains. Data-driven decision making, notably through recurring retail studies, is essential to track progress and adjust strategies over time. Finally, policies should be adapted to local demographic characteristics, as older business owners may require more tailored and sustained support to engage effectively in digital transformation.
Bonn, Germany – Co-ordinating with stakeholders to create a supportive environment for retail SMEs
What are the objectives?
The City of Bonn, in Germany, hosts approximately 333 000 inhabitants, and serves as a key commercial hub for the Bonn/Rhein-Sieg-Kreis region, with a catchment area of 1.2 million people. It has a central retail hub – Bonn City Centre (135 000 square metre of retail floor space) – complemented by three smaller secondary centres in Bad Godesberg, Beuel, and Duisdorf. The retail vacancy rates in Bonn’s shopping districts are higher in Bonn City Centre (10%) and Duisdorf (10%) than the two other districts (Bad Godesberg: 8% and Beuel: 1%). The city centre hosts around 450 retail establishments and 60 gastronomy businesses. During the COVID-19 lockdowns, footfall declined significantly and only recovered gradually. As of today, pedestrian numbers have nearly returned to 2019 levels. Overall, Bonn City Centre – and its secondary hubs – have seen a recovery in footfall, and retail vacancy rates remain at manageable levels. However, retail sales have declined, with consumers spending less than before. Like other urban centres in Germany and Europe, Bonn has faced challenges in maintaining the vitality of its retail sector. The city's retail policies aim to:
Mitigate the impact of the COVID-19 pandemic, which significantly reduced visitor numbers and weakened retail revenues.
Reduce retail vacancy rates, especially in the main key commercial district of Bonn City Centre
Enhance co-operation among stakeholders, including businesses, property owners, and municipal authorities, to facilitate a coordinated approach to urban retail development.
How does it work in practice?
Collecting data
The Bonn Economic Development Office conducts regular footfall analyses using data from Hystreet.com. Laser scanners, installed in August 2018, continuously monitor pedestrian activity at Poststraße, Remigiusstraße, and Sternstraße. These long-term data sets provide nearly seven years of continuous insights into retail footfall trends.
In 2020 and 2022, the Economic Development Office commissioned the Institute for Retail Research (IfH Cologne) to survey 1 000 pedestrians. These surveys contributed to the IfH study "Vital City Centres", but due to budget constraints, the study was not commissioned in 2024, and its continuation in 2026 remains uncertain.
Stakeholder engagement
Since 2020, the Economic Development Office has hosted the Annual Bonn City Conference, providing a structured platform for key stakeholders to discuss retail sector challenges and opportunities.
The City has established regular consultation forums with property owners and businesses, addressing location-specific concerns such as storefront aesthetics, outdoor advertising regulations, and commercial zoning policies.
Retail-friendly policy adjustments
For the past 15 years, Bonn has successfully facilitated “Verkaufsoffene Sonntag” (special Sunday openings) through a locally negotiated city-wide agreement, overcoming Germany’s restrictive Sunday trading laws.
Unique in Germany, this agreement is renegotiated every three years with key stakeholders, including business communities, city marketing associations, churches, the Chamber of Industry and Commerce, the district craftsmen’s association, and the retail association.
Zentrenmanagement (centre management programme)
The Zentrenmanagement (centre management programme) is funded through a combination of municipal, regional and federal sources and allocates between EUR 110 000 and EUR 150 000 per centre over a three-year period. The programme focuses on strengthening local retail ecosystems by enhancing business networking, organising events and promotional activities, and improving co-operation between retailers and property owners. Since 2021, a private consulting firm has been contracted to co-ordinate marketing campaigns, event programming and business engagement initiatives. In parallel, the Economic Development Office acts as a liaison between local businesses and municipal policymakers, helping to ensure that business needs are reflected in policy design and implementation.
Dedicated retail support services
Bonn’s Economic Development Office operates as a one-stop support hub for retailers, providing a range of tailored services. These include real estate advisory support for the acquisition and leasing of commercial spaces, guidance for start-ups and business development, assistance with funding applications and access to grant opportunities, as well as support in navigating regulatory and administrative requirements related to urban and commercial policies. This integrated support structure aims to reduce administrative barriers and strengthen the viability of retail SMEs.
Climate-resilient urban redevelopment
In parallel, Bonn has implemented major urban regeneration projects aimed at improving public spaces, enhancing pedestrian accessibility and revitalising retail centres. The city has invested around EUR 8 million in its central areas, including the Rhine promenade and key commercial streets, and a further EUR 8 million in the pedestrianisation of Bad Godesberg. These investments have contributed to creating a more attractive, accessible and climate-resilient urban environment, supporting both retail activity and broader quality-of-life objectives.
What has the impact been?
Bonn’s targeted interventions have had a stabilising effect on the city’s retail sector, particularly in mitigating the longer-term consequences of the COVID-19 crisis. Foot traffic in key commercial areas has recovered to pre-pandemic levels, although overall consumer spending remains below earlier benchmarks. The introduction of retail centre management has proved especially effective, notably by improving communication and co-ordination between businesses, property owners and municipal policymakers, thereby strengthening the coherence and responsiveness of local retail support measures.
What can other cities learn from this example?
Stakeholder co-ordination is critical
The city has successfully facilitated dialogue between businesses, property owners, and policymakers, ensuring that retail strategies are well-integrated.
Flexibility in policy implementation is beneficial
The city’s unique approach to negotiating special Sunday opening arrangements demonstrates how regulatory barriers can be addressed through stakeholder consensus.
Métropole du Grand Paris, France – Supporting city centre vibrancy and local commercial dynamism through innovative partnerships
What are the objectives?
The Centres-Villes Vivants (“Living Downtowns”) programme, initiated by the Métropole du Grand Paris, aims to revitalise urban centres within its jurisdiction in the Île-de-France region. Active since 2018, it supports 131 municipalities including Paris that fall outside of the scope of the nation-wide Action Cœur de Ville programme targeting medium-sized cities across France. Although the number of active businesses in Île-de-France grew by 2.1% between 2021 and 2023 in Île-de-France, the commercial vacancy rate also rose to between 12 and 13% during the same period – suggesting that while new businesses are emerging, they are not necessarily occupying previously vacant premises. This trend is further compounded by sectoral shifts, with a decline in businesses related to personal equipment and a simultaneous pivot toward food and drink establishments, as well as discount and second-hand retail, in response to the rise of e-commerce and reduced consumer purchasing power due to inflation.
As some city centres also remain vulnerable from lingering impacts of the COVID-19 pandemic, the authority has renewed its commitment to mitigate intermunicipal disparities and address challenges of declining foot traffic and commercial diversity with a third wave of personalised and continuous support to municipalities announced in autumn 2024. Since its inception until October 2024, the programme has supported over 90 municipalities, awarding 76 grants through its dedicated fund, the FIMACS (Fonds d’Intervention Métropolitain de soutien à l’Artisanat, au Commerce et aux Services), totalling EUR 28.5 million.
How does it work in practice?
Centres-villes-vivants is the fruit of collaboration between the Métropole du Grand Paris and several partners, including the Paris Île-de-France Chamber of Commerce (CCI), the Île-de-France Chamber of Trades and Crafts (CMA), Les Canaux,15 the Paris Region Institute,16 and the Centre-Ville en Mouvement association17. The Banque des Territoires,18 the Paris Urbanism Agency (Apur),19 and the National Agency for Territorial Cohesion (ANCT)20 are also key partners. The first edition of the programme, set between 2018 and 2021, took the form of a call for proposals (Appel à Manifestation d'Intérêt). It gathered interest from 55 municipalities and supported revitalisation projects in 26 of them through a EUR 8 million budget. Through strategic, technical, judicial and financial support for municipality-led projects, the FIMACS has since been the core of the programme and focuses on a range of actions:
Commercial animation and activations
Storefront improvements and urban logistics
Outdoor and indoor marketplaces
Commercial space acquisitions, leasing and renovations
Public space development, cultural urbanism and place marketing
City centre management recruitment
Pop-up shops, third spaces, greening, local service provision
Investment and operationalisation studies.
Recognising the need for sustained and comprehensive support in 71 municipalities, especially given varying financial resources between smaller and larger towns, the programme enhanced its scope during the second iteration starting in 2021. In addition to increasing its project-financing endowment (FIMACS) to EUR 15 million over three years, new initiatives included:
Network and collaboration: Organising a metropolitan city centre manager network in collaboration with the Paris Île de France Chamber of Commerce
Events, Training, and Conferences: Providing training, thematic workshops, and platforms for exchange and peer-learning among elected officials and city centre technicians
Wrap-around technical and financial support: Creating a landed property mixed enterprise corporation, enabling local authorities to acquire and manage holdings of business premises and assets
Data and analytics: Setting up an Observatory on commercial offering (available for use since spring 2023), an interactive monitoring tool developed by the Paris Ile-de-France Chamber of Commerce to support municipal decision making in managing commercial diversity. It namely comprises the mapping of existing businesses and identification of vacant premises, property ownership and sectoral business data, along with information on zoning, population, and transport.
In 2023, the programme authority, along with the Banque des Territoires and its partners (CCI Paris Île-de-France, CMA Île-de-France, SEMMARIS and Crédit Agricole Île-de-France), created the Foncière Centres-Villes Vivants, a commercial real estate tool aiming to support municipalities with sustainable funding for revitalisation efforts by acquiring commercial land on their behalf and decreasing speculative pressures on business properties. With an acquisition target of EUR 150 million over ten years – representing around 400 commercial premises – the Foncière operates along three axes: acquiring and renovating vacant or underutilized commercial spaces to encourage tenant investment; diversifying the commercial offer in city centres to better meet local needs; and ensuring stable, moderated rents to support long-term business sustainability.
What has the impact been?
Between 2019 and 2024, Centres-Villes Vivants supported 96 participating municipalities, 76 of which received a grant since the programme's second iteration. Single grants have reached up to EUR 500 000. 50 municipalities have set up a profile on the commercial observatory platform, which represents a 40% adoption rate of the service. It equips municipalities to update their databases on commercial premises, which proves particularly useful for those who previously had no system in place to monitor this data.
Out of 402 projects, an assessment of the programme showed that the most financed themes and services were:
renovations and modernisation of indoor and outdoor markets (EUR 9.05 million, 48 actions)
public placemaking projects (EUR 3.14 million, 59 actions)
public space events and activations (EUR 2.5 million, 48 out 59 co-financed projects dedicated to events programming)
storefront improvements (EUR 1.4 million, 36 projects)
urban greening (EUR 759 808 across 10 projects)
place promotion, including branding and marketing (EUR 301 040, 26 actions)
Supporting and enhancing the skills of a metropolitan network of retail and city centre managers, along with improving the range of services available to them, such as information, networking opportunities, training, and expert advice has also been a renewed focus of the programme to shift from sole funding provision to comprehensive strategic and technical assistance to invigorate city centres. As such, Centres-Villes Vivants has supported the recruitment of nine city centre managers in the regions with EUR 286 300 attributed to co-financing the positions. In Villeneuve Saint-Georges, the appointment of one such manager has been a crucial factor of success as a contact point between the city and its shop owners, ensuring administrative efficiency and regulatory compliance thus facilitating commercial activity through proximate support. In other cities, this measure received positive feedback as it enabled them to implement transversal action plans with the help of a professional liaising between the municipality, public partners and the private sector.
The evaluation and measuring of impact of co-financed projects is another recent development of the programme’s third iteration. At the outset, municipalities are now required to define indicators to assess the success of their initiatives. During the final stage, they will be expected to report results based on these initial indicators. In parallel, smaller working groups are exploring effective methods for measuring impact, particularly through the Cities@Heart project carried out at the European level.21 The Métropole du Grand Paris has contributed by offering a footfall measurement service, allowing 89 municipalities to access basic data on flows within their city centres.
What can other cities learn from this example?
The importance of Innovative partnerships and robust governance networks
Communities with well-established local or regional governance structures may be uniquely positioned to leverage wider networks of collaboration as exemplified by the programme. Partnerships are a cornerstone of the initiative as it unites a diverse array of stakeholders, including public institutions, financial entities, and community organisations to collectivise expertise and resources to help sustain city centres in direct collaboration with municipalities. For example, two key partners, the Paris Île-de-France Chamber of Commerce and the Île-de-France Chamber of Trades and Crafts, support municipalities by helping identify local entrepreneurs and opportunities for market development and conducting public works impact studies. The Chamber of Trades and Crafts specialises in the artisanal sector, while the Chamber of Commerce offers legal support to commercial managers and provides data and analytics tools to the programme. This multifaceted partnership framework ensures that revitalisation efforts are comprehensive and robustly informed by actionable experience. The programme’s focus on collaboration and partnerships at the local level is also mirrored in European-level initiatives like Cities@Heart, which highlight their importance.
The Foncière Centres-Villes Vivants is also a wide-ranging collaborative effort rallying five key founding partners that provide strong financial backing, strategic planning, and operational capabilities. It innovates on the land holding front of city centre revitalisation as a semi-public real estate entity, aiming to promote the diversity and vitality of retail offerings and provide stability for commercial tenants. Compared to other interventions with shorter or medium-term scopes – like pop-up stores– this initiative provides a longer-term intervention arm for municipal governments to act upon commercial vacancy and retail diversity in city centres.
Iterative feedback to better address needs
One of the programme’s strengths is a continuous feedback loop across its different iterations, prompting adaptations to better meet local needs. Initially launched as a purely financial support scheme, the first edition highlighted the need for more hands-on guidance and technical support. Building on this foundation, the second edition introduced a rolling call for applications and tailored assistance provided by three dedicated staff, each covering a different area of the Metropolis. This structure enabled the co-construction of robust action plans enriched by the input of key partners. The third edition evolved further to prioritise the most in-need municipalities, adding evaluation tools and dedicated networks – such as for pop-up stores – to ensure long-term project viability despite tighter budgets.
Stockholm, Sweden – Reclaiming outdoor public space to promote urban vibrancy
What are the objectives?
Part of Stockholm's broader city animation and attractiveness strategy, Living Stockholm (Levande Stockholm) emphasises the flexible and changing uses of public space throughout the year and aims to complement the city's accessibility strategy, which focuses on mobility, traffic and balancing trade-offs between different modes of transport. As Stockholm’s urban environment is continuing to shift from the ripples of the pandemic and a changing retail landscape, for instance with shifting business activity from the city centre to the suburbs and suburban centres, the city is looking to enhance its public spaces to keep its streets vibrant.
From late spring through fall, select streets in the city transform into pedestrian meeting grounds with extended outdoor food and drink service from its resident businesses, while squares come alive with cultural programming and adorned with furniture, installations and greenery encouraging passersby to stay a while. Like many places across the OECD, Stockholm has seen a shift towards hybrid work models, and Living Places encourages residents to reclaim the outdoors while making the city attractive to visitors. Given evolving perceptions of security related to rising levels of crime in Sweden, Living Stockholm also seeks to create safer and inviting outdoor environments for all.
How does it work in practice?
What started as a pedestrianisation pilot of two streets in the Södermalm quarter in 2015 has developed into a full-fledged programme led by the Living Stockholm team in collaboration with the Stockholm Transport Office. The programme now transforms over 50 public spaces – streets, squares, and quays – each year into lively, car-free areas. These “summer places” span central neighbourhoods and, increasingly, suburban areas, and more recently include seasonal winter sites as well. The programme is shaped through collaboration between traffic planners, landscape architects, liaison agents, and permit officers: a team of ten who oversee both the spatial design and the planning process throughout the year. Notably, it aims to promote vibrant street life by restricting car access between 6 am and 11 am to allow for full pedestrianisation during peak hours.
Funding for the programme is provided through Stockholm’s annual budget. In 2024, the budget was increased from SEK 23.5 million to SEK 31.5 million (approximately EUR 290 000 annually). The initiative operates on a three- to four-year rolling plan and is accompanied by mandates to ensure cultural programming and equitable geographic distribution – for instance, by requiring at least one “summer place” in each of the city’s 11 suburban districts. Streets are selected based on several criteria, including commercial activity, the proximity of restaurants and shops, and potential to complement existing public life. Locations can be proposed by elected officials, or even residents, and are refined through a planning process that begins each October with the arrival of the municipal budget. Planning is continuous and coordinated with the city’s Transport Department management team, with street-level activations typically rolling out from April to October. Squares often remain open slightly longer into the fall, while winter places use light and winter-hardy greenery to promote comfort, security, and slower movement through space.
While there are no formal private or community partnerships, the city maintains close working relationships with businesses, entrepreneurs, and large real estate owners. Over the first three years of a “summer street” opening, pamphlets are distributed to businesses on targeted streets to explain permit processes and encourage participation in outdoor patio expansions. Cultural programming is also an important part of the summer places experience. In collaboration with the city’s Culture Department and Stockholm Art, around SEK 3 million is allocated annually for cultural activations, including around 100 events by 50 artists ranging from theatre to jazz performances and site-specific public artworks.
What has the impact been?
Pedestrianised streets and lively public spaces are gaining importance as a recognisable feature of the city, whereby the Stockholm Business Region has been able to rely on the branding provided by Living Stockholm to help guide tourism throughout the city. The response from the business community has been a positive one with the widespread adoption of outdoor restaurant permits – which significantly increase business numbers from April to September – and participation from some restaurants evolving into co-creating parklets, hosting open-access food festivals, and spontaneous business-led initiatives like furniture installations or cultural events. Real estate owners – especially those managing office buildings – have become more involved in the last five years, acknowledging that the quality of space between buildings is as critical as the interiors.
The social benefits of the programme have been more systematically assessed since 2020. Through the Medborgarpanelen (Citizen Panel) and pilot street studies, the City has captured a range of social outcomes: increased dwell times, greater feelings of security, and a heightened sense of joy and belonging in shared public space. Citizen Panel surveys are now administered on a bi-annual basis to focus on gathering insights about the opening of new summer places. In one study of Sätra square, one in five people reported visiting more frequently since the transformation of the area. Nearly three-quarters of respondents said the changes increased their desire to stay and socialise, while just over half felt that safety had improved. These findings were echoed in pilot interviews conducted across three suburban squares, which revealed long-term engagement across diverse target groups, including families with children. Before-and-after comparisons for new superblocks, such as in the Old Town, also point to more sustained and enjoyable visits.
What can other cities learn from this example?
Internal coherence and agile external relations
A key success factor in Stockholm’s case is the strong internal coordination of the initiative and its project team, which garners strong political support and prioritises horizontal collaboration between the Transport, Culture, and Sports departments. The programme maintains open channels with actors beyond the administration – such as cultural services, real estate owners, and local elected officials – positioning it as a “spider in the net” weaving together different urban agendas. It demonstrates that successful implementation relies not only on good design, but on sustained cross-departmental collaboration and effective communication with stakeholders.
Piloting and scaling urban solutions
Living Stockholm shows the importance of adaptability and experimentation in local initiatives. The city uses the summer places as a testing ground to pilot street designs, adjust street furniture, and assess user experience before committing to more permanent changes beyond the scope of the programme. This approach lowers the risk of large-scale investment and encourages public support through visible short-term benefits. However, as the initiative expands, Stockholm is increasingly focused on maintaining quality and aligning the programme with long-term environmental goals. While early results point to social benefits and positive outcomes for businesses, further work is needed to assess environmental impacts and integrate the programme more directly into broader sustainability strategies.
Germany – Lebendige Zentren – Revitalising urban cores as multifunctional, resilient, and identity-rich spaces
What are the objectives?
Across Germany, town and city centres historically serve as vital spaces for commerce, culture, and community life, but face mounting pressures from changing consumer behavior, demographic shifts, and the accelerating impacts of climate change. Municipalities throughout Germany are contending with a range of spatial and socio-economic issues. These include declining foot traffic and rising vacancies in retail spaces, particularly in small and medium-sized towns, underused or decaying historical buildings, and urban heat islands exacerbated by dense construction and limited green infrastructure. In metropolitan areas, rising property values and use conflicts threaten social diversity and accessibility.
To support cities and communities in navigating these complex challenges, the Federal Government of Germany launched the Lebendige Zentren programme in 2020. As part of the broader federal urban development support (Städtebauförderung), Lebendige Zentren focuses on revitalising urban cores as multifunctional, resilient, and identity-rich spaces. The programme seeks to safeguard architectural heritage, enable adaptive reuse of existing buildings, enhance public spaces, foster mixed-use developments, and promote inclusive, climate-adapted urban environments. The programme is a continuation of the Aktive Stadt‑ und Ortsteilzentren programme which ran from 2009 to 2019.
How does it work in practice?
The Lebendige Zentren programme operates through a tailored series of activities designed to revitalise town and city centres. Municipalities begin by developing integrated urban development concepts (ISEK), identifying local priorities, such as vacancy reduction, public-space enhancement, and heritage conservation. These plans guide the implementation of projects ranging from façade restoration and adaptive building reuse to the redesign of streets, plazas, and green infrastructure. Each locale often employs a dedicated “Zentrenmanagement” team, hosted by the municipality, whose function is coordinating stakeholders, supervising project progress, securing permits, and maintaining public engagement. Regular transfer workshops and expert groups foster knowledge exchange among municipalities, planners, and funding agencies.
Governance is multi-tiered: the Federal Ministry of the Interior provides strategic direction and funding in cooperation with the Länder (states), while municipalities manage local implementation. A cost-sharing model typically applies, involving roughly one-third each from the federal budget, Länder, and municipal contributions – though municipal shares may be reduced to 10 % for some local authorities. Municipalities may also leverage private investment and contributions from local business owners, generating a multiplier effect whereby every euro of public subsidy stimulates four to five euros in broader investment. In addition, the federal “Transferstelle Lebendige Zentren” (administered by Plan & Praxis GbR) plays a key role in providing technical assistance, coordinating workshops, and disseminating best-practice guidance.
At the local level, partnerships involve city governments, heritage and planning authorities, local businesses, cultural organisations, and civic groups. The programme’s beneficiaries range from individuals seeking improved public spaces to private actors undertaking property renewal. Specific support efforts such as grants for mixed-use refurbishment, public-space interventions, and heritage restoration aim to re-establish town centres as vibrant, multifunctional hubs suited to contemporary social, cultural, economic, and environmental needs.
What has the impact been?
While the project is still missing an in-depth evaluation of its impacts at this point, the establishment of dedicated centre-management teams (Zentrenmanagement) has begun to yield benefits in stakeholder coordination, project delivery, and community engagement. Municipalities like Aachen have reported that their centre managers have streamlined collaboration between local authorities, business associations, and citizen groups, ensuring that green-transition interventions and other revitalisation efforts are adapted to local needs. This structured approach has facilitated quicker launch of small-scale projects and helped maintain momentum through regular coordination. Green infrastructure projects, such as seen in Coburg through the retrofitting of public plazas with enhanced green-blue infrastructure has helped improve climate resilience and biodiversity in the city’s historic core.
An evaluation of the predecessor programme (Aktive Stadt‑ und Ortsteilzentren) from 2015 demonstrated similar dynamics. It found that public-space upgrades, façade improvements, and multifunctional usage contributed to stronger retail stability and enhanced civic pride. Crucially, it also underscored that the presence of local coordination teams and flexible funding instruments (like discretionary grants) significantly improved project continuity and responsiveness to community input – lessons now embedded within Lebendige Zentren’s design. However, both programmes also noted that municipalities with limited administrative capacity may experience delays or challenges in meeting planning and implementation targets, leaving some expectations for rapid, systemic change unfulfilled.
What can other cities learn from this example?
The Lebendige Zentren programme offers several transferable lessons for municipalities aiming to revitalise their urban cores in a socially inclusive and climate-resilient way. Key strengths of the programme lie in its integrated planning approach, structured local coordination via Zentrenmanagement, and flexible funding tools such as the Verfügungsfonds, which empower local stakeholders and support incremental improvements. Particularly relevant for small and medium-sized towns – many of which face commercial decline and resource constraints – is the programme’s emphasis on adapting existing structures rather than pursuing large-scale redevelopment. The modular, stepwise implementation format enables local governments to align renewal strategies with their own administrative capacity and context.
However, success depends heavily on a few critical enablers: strong interdepartmental coordination, early and consistent civic engagement, and well-resourced local teams. The 2015 evaluation of the predecessor programme and current implementation guidance both stress that without qualified Zentrenmanagement and clear project prioritisation, municipalities may struggle with slow execution or fragmented efforts. Potential areas for improvement include developing more robust systems for long-term impact monitoring, particularly around environmental and digital transformation goals, and ensuring continued support for capacity-building at the local level. For other communities, replicating the approach will require adapting these structural elements to local and national governance contexts.
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← 1. Unit of measurement representing the movement of a vehicle over one kilometre. The distance to be considered is the distance actually run. It includes movements of empty vehicles (European Environment Agency, 1997[138]).
← 2. Electricity price statistic (Eurostat).
← 3. Mixed-use urban planning refers to a strategic approach to land use and development that integrates residential, commercial, office, cultural, and recreational functions within a single neighbourhood or development.
← 4. In the context of tourism studies, retail authenticity refers to the perception that retail environments – such as shops, markets, and commercial streets – genuinely reflect the local culture, heritage, and everyday life of a destination.
← 5. Fact reported through a questionnaire completed by the city of Bonn on 17/02/2025.
← 6. Fact reported during an interview between the OECD and the city of Koper held on 13/12/2024.
← 7. E-resilience is computed as a series of variables summarising the relationship of retail centres to online shopping, including the index of supply vulnerability, online exposure index, and an e-resilience index (created by the other two indices). The e-resilience is assessed on a scale: most vulnerable, vulnerable, e-resilient, most e-resilient.
← 8. The cities in the sample for indicator mapping (18) were: Amsterdam, Bari, Bilbao, Birmingham, Braga, Bristol, Bruges, Brussels, Dublin, Florence, Ghent, Koper, Milan, Norwich, Poitiers, Stockholm, Waterford.
← 9. The current iteration of the programme now includes Toronto.
← 10. The Canadian Urban Institute is a national nonprofit organisation active since 1990 as a cross-sectoral platform for research, advocacy and events on Canadian urbanism.
← 11. EDCO is a membership-based nonprofit association of economic development professionals.
← 12. The Canadian Urban Institute became the sole operator of the programme for 2024.
← 13. According to the Applicant guide, equity-seeking groups include Francophone, women, Indigenous, racialized groups, Black communities, newcomers, youth (39 and under), people living with disabilities, unhoused, low-income people, Trans or non-binar 2SLGBQIA+.
← 14. The number of Main Street Ambassadors focused on a corresponding number of Main Street neighbourhoods was broken down according to municipality population size as follows: 4 – 6 Ambassadors above 500 000 inhabitants, 2 – 4 between 100 000 and 500 000, 1 – 2 between 50 000 – 100 000, and 1 under 50 000 (A minimum of 25 percent of the Main Street Ambassador contributions were reserved for communities with populations less than 50 000).
← 15. Les Canaux is a Paris-based association that promotes an engaged economy – local, social, solidarity-based, and circular – by training and raising awareness among citizens, businesses, and communities about social and environmental innovation.
← 16. The Paris Region Institute is a regional planning agency that provides expertise in urban development and public policy to improve quality of life and guide sustainable growth in Île-de-France.
← 17. Centre-Ville en Mouvement, an association of elected officials and parliamentarians, brings together local stakeholders in conversation around cross-cutting dimensions of city centre vitality based on knowledge-sharing and expertise.
← 18. Banque des Territoires is a French public investment bank for local and regional development
← 19. The Paris Urbanism Agency is a non-profit association that conducts urban research and planning to support strategic decision making for the City of Paris and its metropolitan area.
← 20. The National Agency for Territorial Cohesion is a public body that co-ordinates and supports public policies aimed at reducing territorial inequalities and fostering local development across France.
← 21. The Métropole du Grand Paris is leading an EU-funded initiative entitled Cities@Heart that brings together ten European cities to revitalise their city centres through a shared, data-driven methodology focused on governance, sustainability, inclusion, integrated policies, and decision-making tools. Aimed at urban planners, policymakers, and stakeholders in sustainable and inclusive development, this URBACT project explores how proximity-based approaches, such as the 15-minute city, can foster dynamic local economies, social cohesion, and greener urban environments. By addressing the structural challenges of today’s urban cores, the network aims at tackling this key question of city centres revitalisation at the European scale.