ZDR

AI Is Reshaping Retail - But Perhaps Not in the Way You Think

Date: July 3, 2026

What does artificial intelligence mean for physical retail? For the grocery and value-oriented tenants at the core of our funds, the research suggests it strengthens their position rather than threatening it. Here's why.

At ZDR Investments, we invest in daily needs-based retail parks across stable markets in Central and Western Europe — properties anchored by grocery, discount and value-oriented tenants that people rely on regardless of the economic cycle. One question we're increasingly asked by our investors is what artificial intelligence means for this segment. Will smarter algorithms and AI shopping tools erode the value of physical retail space?

Based on the research we've been following, we don't think so — and the reasons why are directly relevant to how we build and manage our portfolio.

A Smarter Retail Ecosystem

AI is already being used to support:

  • Demand forecasting
  • Consumer behaviour analysis
  • Inventory optimisation
  • Dynamic pricing
  • Food waste reduction
  • Computer vision and shelf monitoring
  • Cashierless technology
  • Click & collect and micro-fulfilment operations

Together, these technologies have the potential to improve retailer productivity while creating a more seamless omnichannel experience for consumers.

Why Our Tenant Mix Is Well Placed

Grocery and value-oriented stores are core strategy of our fund — chains like Lidl, Müller, BILLA and Kaufland sit alongside discounters such as Action, Kik, and TEDi and specialists like Jysk and Teta drug store. This is precisely the segment where AI's impact looks most constructive rather than disruptive.

According to McKinsey and EuroCommerce, grocery retailers are expected to see a more modest AI-driven profitability uplift than categories like fashion — but a more durable one, rooted in demand forecasting, inventory optimisation, dynamic pricing and reduced food waste rather than discretionary spending trends. For landlords, that translates into a simple, useful outcome: tenants that operate more efficiently are typically tenants that can sustain rent and stay put. Grocery retailers across Europe grew sales 3.4% in 2025, and 47% of grocery CEOs now name AI and automation among their top two priorities for the year ahead — a sign that our core tenant base is actively investing in its own resilience.

Eugendorf Retail Park with Müller as the anchor tenant

What This Means for How We Invest

Our approach has always been to prioritise long-term-leased properties occupied by creditworthy tenants in politically and economically stable markets. AI reinforces that thesis rather than challenging it: as our tenants become more efficient operators, we expect that to support occupancy, longer lease terms (our weighted average lease length across recent acquisitions already exceeds 5.5 years) and stable, resilient rental income for our investors — whether they access our strategy through our European Master Fund or through the Singapore-domiciled ZDR Investments SG VCC.

Looking Ahead

Artificial intelligence is one of several structural trends we continue to monitor as part of our long-term investment approach. Combined with the fundamentals we see across our markets in Central and Western Europe — resilient demand for daily needs retail, constrained new supply relative to Western European density, and tenants investing in their own efficiency — we believe grocery-anchored retail parks remain a well-positioned, defensive part of a diversified real estate portfolio.

We look forward to sharing more of our insights as these trends develop.

Sources: Savills – Spotlight: AI and the Future of Physical Retail  ·  McKinsey & EuroCommerce – The State of Grocery Retail Europe 2026  ·  AEW – European Retail Parks & Shopping Centers Are Back (Feb 2026)  ·  Cushman & Wakefield – CEE Retail MarketBeat

This article is provided for informational purposes only and does not constitute investment advice or an offer to invest in any ZDR Investments fund.

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