Investing.com -- According to RBC Capital Markets, European retail in 2025 is being reshaped by a flight to quality, with consumers increasingly trading up in both apparel and food. 

Premium segments are outperforming, while mid-market chains face headwinds. Affluent shoppers are prioritizing health, wellness, and convenience, while value-focused consumers continue to support discounters. 

Next (NXT) – “outperform”

Next is capitalizing on consumers’ willingness to pay for better quality apparel. While like-for-like selling prices increased only 1% year over year, average selling prices rose 4%, reflecting shoppers trading up to higher-end items. 

RBC notes that customers are “choosing to buy slightly fewer, but better items,” supported by Next’s investment in design and higher-quality fabrics.

Zalando (ZAL) – “outperform”

Zalando benefits from the premium clothing boom in Germany, particularly in womenswear. Industry data from Textilwirtschaft highlights that higher-quality assortments are driving growth, giving Zalando an edge over discount-focused competitors like Primark. 

RBC Capital Markets identifies this trend as a key factor favoring Zalando’s strong performance in 2025.

Marks & Spencer (MKS) – “outperform”

M&S continues to see strong momentum in premium food and apparel. In the U.K., premium fresh food is a key growth driver, with RBC noting that affluent consumers are increasingly prioritizing quality, health, and convenience. M&S’s focus on premium assortments positions it to capitalize on shifting spending patterns.

J Sainsbury (SBRY) – “outperform”

Sainsbury’s mirrors the trends seen at M&S, with its premium food segment performing exceptionally well. RBC highlights the widening gap in spending patterns: affluent shoppers are moving toward quality, while price-conscious consumers focus on discounters. Sainsbury’s positioning in the premium segment makes it a leader in U.K. food retail growth.

H&M (HMB:SS) – “sector perform”

H&M has raised its forecasts for fiscal 2026 and 2027 by 5–6%, increasing its price target from SEK145 to SEK175. RBC notes that this is driven by stronger full-price sales and gross margin improvements, demonstrating resilience in a market favoring premium and well-priced apparel. While H&M is rated "sector perform," it remains a notable contributor to European retail growth.