Published
Sep 22, 2013
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Spain cautiously optimistic on consumer spending

Published
Sep 22, 2013

Summer sales gave Spanish retails a bit of a break. According to data from Acotex (Business Association of Textiles and Accessories), sales during the annual summer sales period posted a slight growth of 1.5% compared to the same time last year, for an increase of more than 2.6 billion euros. This is the only strong figure on a national scale, which also vary from region to region.

El Paseo de Gracia, one of the busiest shopping streets in Barcelona


This "slight improvement" will not be enough to rescue the spring-summer 2013 season, which ultimately posted a 9% drop from February to June. The bad weather in May and June did its part to exacerbate the effects of the economic crisis and decline in purchasing power. And retailers say another contributing factor is the Spaniards' overflowing closets, a result of the preceding economic boom.

"Consumers think carefully when they shop. They compare and in the best case, they make the purchase," commented many persons interviewed. And the late arrival of sunny weather this summer may have helped many consumers stay patient until the start of the annual "traditional" sales and their deep discounts.

The data, acquired through disparate methods, shows positive sales in July, with an estimated growth of 4.8%. Excess inventory in stores (often up to 50%) spurred the increase, creating a large selection of sizes and styles on par with merchandise at the start of the season.

After two weeks of euphoria, the situation calmed down. August finished with a decline of -4.4%. Moreover, it was only the first summer under new laws for deregulating the summer sales. Independent industry figures and Acotex say that these liberalized rules damage the sector. They argue that consumers are now aware that discounts can be offered all year long and that they know the market situation.

According to data from the regional textile trade group in Catalonia, sales in their region dropped 5% during the annual summer sales, which they consider positive, given the bad winter and market conditions in Spain.

The start of the summer sales offered steeper discounts than in the past and was very strong. But consumption in the second phase slowed sharply despite price cuts of up to 70%.

Corbis


Overall, from January to August, business for clothing stores dropped 6.7% across the country. The only increases were in April (+7.9%) and July (+4.8%)!

According to a survey of 210 footwear retailers conducted by the Global Fashion Export magazine, 60% of the respondents have stronger turnover during official sales than in normal periods. The large influx of upper-midrange retailers attending the Micam trade show (September 15-18) signals some optimism for spring-summer 2014.

Retailers do say there have been drastic drops in orders in recent seasons due to lower consumption and also that they "need to combine a quality range with lower prices to retain regular customers."

Most textile and clothing retailers also stress the importance of foreign tourism to boost sales. Oria Borja, president of Acotex, says that forecasts for the rest of the year are positive, "in part, due to increased spending at Christmas. It is more than likely that the numbers will be better than in 2012, which was negatively impacted by the increase in the VAT to 21% in September, and by civil servants losing their bonuses, which led to a rather strong decrease in the public's midrange purchases."

Retailers and associations interviewed by FashionMag base their cautious optimism on the development of the global economy, salaries of white-collar workers and possible additional tax measures the government may implement to meet requirements stipulated by the European Union.

Manufacturing associations believe that "the worst of the crisis is over. From now on, we can only move forward."

Another positive sign for the apparel business is the recovery of online sales. From January to March, they jumped 24.1%, according to IMS. E-commerce fashion posted record sales in the first quarter, up 15.1%.

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