Like most industries in Spain today, the apparel sector has not emerged unscathed from the deep recession that’s roiling the country.
Last year, sales fell 7.8% to EUR18.3bn (US$23.6bn) – bringing the numbers close to those rung up in 1998, apparel and accessories trade association (Acotex) has revealed.
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The results are far below the record EUR22.4bn achieved in 2006 before clothing consumption began to sag in the wake of 2007’s credit crunch.
According to Acotex, the sector lost 19,200 jobs to fall to 204,538 workers as 10,000 shops closed in the past two years, leaving the industry with 61,146 outlets.
As Spain plunged into one of Europe’s worst recessions, Spaniards tightened their belts, despite heavy advertising spending and eye-popping discounts from many retailers.
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Spending per family fell to EUR1,237, down EUR111 from 2008 with consumers in the Navarre and Madrid region spending the most.
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By GlobalDataHowever, not all was gloom and doom. In a Madrid presentation last Friday, Acotex president Borja Oria said first-half sales matched those in 2009, showing that sales are no longer in freefall. Similarly, aggressive summer-season sales have also helped keep turnover in line with last year’s numbers.
So far, 2010’s performance “makes us think that this could be a turnaround year,” Oria said. Further boosting retailers’ hopes, Spanish consumer confidence improved for the third consecutive month in July amid a “higher perception” that the economy will begin to turn the corner.
Yet consumers could still provide some surprises. Spain’s unemployment remains at 20%, while the economy is forecast to contract 0.6% this year. Though that’s better than a 0.8% earlier forecast and the Government insists the recovery has began, predicting GDP will fall just 0.3%.
Macrodata apart, Oria applauded Zara’s recent decision to launch online sales as a move that will help strengthen the industry.
“A very high percentage of online retailers have high-street shops so we think this is going to recharge the sector,” Oria noted, adding that he expects 45% of 2011’s apparel sales could be done on the Internet.
The country’s smaller chains will need to follow Zara’s model as the bulk of their turnover comes from domestic sales unlike the latter whose revenues – like those of other Iberian retailing giants Mango and Cortefiel – come mainly from outside Spain.
