How to develop a successful retail network in Italy in 2025
From selecting the distribution format to choosing the right locations, from flow analysis to operating models: these are the critical variables for building a solid and scalable retail presence in the Italian market.
Retail — Italy 2025
Italian retail is undergoing profound transformation. The chains that continue to grow are not those with the most stores, but those with the most solid operating systems: clear formats, methodically selected locations, and cost models that hold up even when traffic declines. Building a retail network that truly works requires much more than finding a vacant space on a good street.
In this in-depth analysis, we share the approach that VLV Capital has developed over more than two decades of direct retail development work: from initial analysis to opening, all the way to full-scale network management.
Choosing the format: the first decision that matters
Before looking for a location, you need to precisely define your distribution format. There are no universal formulas: there are formats suited to certain markets, certain average prices, and certain service models. A brand selling impulse-purchase products needs immediate traffic and visibility—so probably a shopping mall or a high-traffic strip. A brand focused on thoughtful purchases can afford a less central but more refined location.
The questions to ask yourself in the format definition phase are:
- What is the optimal size of the store in terms of surface area, layout and stock?
- What type of customer do I want to reach and at what time of day?
- Is the format replicable without losing operational quality?
- What is the break-even point of sale for a single store?
“"Successful retail isn't built by finding a location: it's built by defining a system that then needs to be replicated. The location comes later."”
— Fabio Pasquali, VLV CapitalLocation Analysis: The Parameters That Really Matter
The most common mistake in retail development is choosing a location based on instinct or appearance. "The street looks busy" isn't an analysis—it's an impression. The parameters to be measured methodically are diverse and often counterintuitive.
Flows and types of passage
Not all traffic is created equal. A clothing store located on a busy commuter street achieves low conversions: people walk quickly and don't stop. The same store on a busy shopping street achieves radically different results with the same number of passersby. Traffic flow analysis must include traffic composition, average speed, and peak times.
The mix of the commercial context
Adjacent businesses profoundly influence performance. A brand positioned near complementary brands (which attract the same customer but are not direct competitors) benefits from a significant indirect traffic effect. The tenant mix of a street or shopping center isn't a detail: it's an integral part of the business model.
To keep in mind: In Italian shopping centers, the choice of location within the structure (floor, corridor, proximity to the anchor) often matters more than the actual square footage. Two identical units in the same mall can perform very differently depending on their location.
The cost model: the equation that must add up
Every store is an independent economic entity. Too often, it opens with potential revenue in mind, without rigorously calculating the cost equation. The main drivers are: rent and ancillary costs, staff, initial setup and maintenance, logistics and inventory management, and local marketing costs.
The rule of thumb we use is that rent should not exceed 10-15% of expected revenue—but this threshold depends heavily on the industry and the product's margin. A luxury retailer can sustain higher rents thanks to margins; a mass-market operator cannot.
Scalability: Building to Grow
A scalable retail network is one where the second store costs less than the first—in terms of time, resources, and errors. This requires documenting and standardizing everything that works in the first store: operational processes, staff training, layout, inventory management, visual communication.
Scalability isn't something you automatically achieve as you grow: it's something you plan for before opening a second store. Companies that don't do this find themselves managing ten units with ten different ways of working—and the resulting problems grow exponentially.
Current opportunities in the Italian market
2025 presents some specific windows of opportunity for those looking to develop retail in Italy. The rotation of commercial space in the historic centers of secondary cities is creating opportunities to access locations previously inaccessible at competitive prices. First-generation shopping centers—built in the 1980s and 1990s—are undergoing repositioning processes that are opening up opportunities for new operators with updated formats.
Proximity retail—i.e., stores integrated into the daily life of residential neighborhoods—is experiencing a post-pandemic resurgence, offering attractive opportunities for those with a format suited to the local scale.
“The Italian retail market isn't saturated: it's selective. Those who arrive with a well-designed system find space. Those who improvise only face costs.”
— VLV Capital — Retail DevelopmentConclusion: first scale system
Developing a successful retail network isn't a matter of capital or entrepreneurial courage. It's a matter of method. Each opening should be confirmation that the system works—not an experiment. The time invested in defining the format, analyzing the location, and building the cost model pays off multiplied with each subsequent store.
VLV Capital supports companies and brands looking to develop or expand their retail presence in Italy, with a hands-on approach that combines analysis, negotiation, and operational management—not just theoretical consulting.
Let's talk about your project. VLV Capital operates in Italy, Switzerland, and Europe with direct experience in retail development.
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