Consumer spending levels to contract in Spain

14 December 2009

MADRID: Consumer spending in Spain is likely to fall by almost 10% over the holiday season this year, with the climate unlikely to improve substantially in 2010, according to new figures.

Deloitte, the consultancy, has predicted that expenditure levels in the country will decline by 9.1% over the festive period, compared with an average of 6.3% across Western Europe as a whole.

Miguel Angel Fraile, general secretary of the Spanish Retailers Association, suggested that shoppers may be postponing making purchases in the hope that prices will fall further.

"People are going to buy more at the last minute, thinking that there will be better offers," he argued, adding that certain gift items are already 15% cheaper than at the same time last year.

Figures from the Institute of Economic Research, based in Madrid, also indicate that trading conditions are set to be challenging.

Gregorio Izquierdo, head of research at the organisation, said "I think this Christmas season will be better than last year, not because it'll be particularly good, but because last year was especially tough."

In response, El Corte Inglés, the nation's largest department store group, is discounting some goods by as much as 70% in an effort to attract shoppers.
Carrefour, the hypermarket giant, has also cut prices by up to a quarter on 10,000 of its products over the course of this year, with recent reductions including savings of 20% on toys.

Enric Casi, general director of Mango, the apparel chain, argued the environment in Spain, where the company derives 20% of revenues, is "the worst of all" the markets in which it operates.

Unemployment in Spain currently stands at 19%, and is predicted to reach 20% in 2010, while GDP is set to contract by 0.8% over the same period, according the European Commission.

Data sourced from Bloomberg; additional content by Warc staff