MADRID — Spain’s economic picture isn’t a pretty one.
A 19 percent jobless rate has left 4.1 million unemployed; gross domestic product fell by 3.6 percent last year, the steepest drop in decades, and the deficit is a whopping 11.4 percent of GDP — yet prime minister José Luis Rodríguez Zapatero suggested recently that Spain is “on the threshold of recuperation.”
Not so fast, say major industry leaders.
“There is a huge consumer problem here. We are selling to 90 countries and Spain is the worst,” said Alberto Palatchi, president of Pronovias, the Barcelona-based bridal group.
Citing a 30 percent dip in the domestic bridalwear market, Pronovias’ sales were down 10 percent in units for the first time in company history, he confirmed. “The Spanish market represents 35 percent of our business; we operate 115 domestic locations here with an additional 500 points of sale in multibrand stores. We’re doing better than expected, generating the same volume in 2009 as 2008, but with lower prices per unit, which contributes to the drop.
“The most important issue is price — and how to convert traffic into sales. We [retailers] have to be quicker, more focused.The consumer isn’t dead. She reappears depending on the strength of the offer,” he said.
Predicting another year’s worth of recession, Palatchi said, “I don’t see a short-term recovery in Spain — and there won’t be anything new until there’s a change of leadership. The markets are not going to forgive Zapatero. The problem here is a political one. Spain is full of people willing to do things; the raw material is available. But it’s an anticompetitive country currently open to the whole world. A big part of Spain is obsolete with stupid labor laws. We need a change. I’m optimistic long term — but very long term,” he concluded. Spain’s elections, for instance, aren’t scheduled to take place until 2012.
Sales in Spain’s fashion industry slid 8 percent last year from 2008 — to 18.3 billion euros, or $24.9 billion at current exchange, according to figures released by Fecotex, Spain’s Commercial Textile Federation.
Key to the sector’s revitalization is an immediate boost in consumer demand, greater globalization and a more viable made-in-Spain image, especially in foreign markets, according to Angel Asensio, president of Madrid’s SIMM trade event.The biannual apparel fair has taken a hit in recent editions, losing roughly 50 percent of its vendors.
Major fashion players — including Inditex and Mango, footwear manufacturer Camper and sportswear label Custo Barcelona — are tapping more aggressively into online communications strategies such as ad campaigns, e-commerce and social networking. It’s too early to gauge results, according to company sources, but diversified Internet projects are one way to drive traffic and confront the downturn, they said.
“The moment is very opportune and we’re looking forward to the launch of an online Zara store [in six European markets for the fall season] with great excitement,” said Inditex chief executive officer Pablo Isla. The retailer will reveal details at a June presentation, he added.
Isla called 2009 “a stable year in Spain for both stores and sales,” although the domestic market’s share of Inditex group sales dropped 2 percent to 31.8 percent of the total. “The Spanish market is very important for us; we have everything here — headquarters, infrastructure, [four] distribution centers and a workforce of over 38,000. Spain has given us a lot of satisfaction,” said Isla.
As for the rest of the world, “Inditex is not reducing its retail presence in any country,” he added.
Yet while Inditex maintained momentum, several other established retailers posted losses for 2009, possibly the most traumatic being Burberry’s shuttering last month of its Spanish affiliate — leaving 300 employees out of work — based on a 24 percent decline in domestic sales.
Adolfo Dominguez reported nine-month losses for fiscal 2009 of 3.6 million euros, or $4.8 million at current exchange.The Galicia-based label closed 59 stores here and abroad.Dominguez said his goal is to cut Spain’s share of his group’s sales to 10 percent.
With a retail network spanning 42 countries, Tous lost 30 million euros, or $41 million, last year on sales that dipped to 300 million euros, or $413 million, from 330 million euros, or $454 million, “which we consider a positive result given current economic conditions,” said Rosa Tous, director of institutional relations for the Barcelona-based jeweler.
“We are not closing stores but restyling certain locations, particularly here in Spain, to accommodate newer retail concepts,” she added.
Upscale women’s and men’s wear brand Roberto Verino said domestic sales, particularly in smaller cities, slipped 6.9 percent last year. The company has closed six corporate stores throughout Spain and one franchise unit in recent months, said president Roberto Verino, who said the economy wasn’t the only culprit. Size limitation and inadequate locations were also considerations.
With international franchise agreements in Mexico, Greece and Latvia, the brand continues to target new markets, with spring openings in Damascus and corners in multibrand stores in Patras, Greece, and Amman, Jordan, according to Linda Heras, director of international expansion.
Recently Verino opened two discount stores in Spain. “In today’s economy, customers are very cost-conscious; they’re looking for luxury goods at reduced price points,” Heras explained.
Outlet shopping is on the rise, said Andrea Corcuera, senior manager of Las Rozas Village, a discount mall with more than 100 stores on the outskirts of Madrid. “We offer a high-end proposal [including prestige labels Diane von Furstenberg, CH Carolina Herrera and Loewe] because customers want quality brands at an accessible price.
“There is no bad news at the outlet, no closures and a stable workforce, but what’s going on here is not necessarily what’s happening in the market.There is a hunger for fashion worldwide but here in Spain that hunger is a little less,” she observed.
Further exacerbating Madrid’s shopping woes, yearlong construction on Calle Serrano, the city’s premier retail artery, has derailed highend purchasing, said informed sources. With an estimated 30 to 50 percent drop in footfall, “it looks like Godzilla walked down the street,” commented a neighborhood retailer ruefully.
Madrid-based designer Agatha Ruiz de la Prada reported sales at her Serrano store have dropped 22 percent. “People aren’t buying; but, to be fair, it may be more because of the crisis than the construction,” she said.
Store sales are down on average about 30 percent, Verino’s Heras confirmed. “With the noise from riveters and drilling machines, customers come into the store, and say, ‘Oh, I can’t stand the noise, I’ll come back,’ and of course they don’t. Traffic has stalled completely, taxis are hard to get, entrances to parking lots are blocked. It’s a real mess out there, and with another year to go, it’s not over yet,” she said.
Global luxury brands were reluctant to disclose details of their performance in Spain.For example, with three stores in the Serrano area, a spokesman for Prada said that “2009 was a challenging year but the Spanish market posted good results.” Based on the performance of the company’s global retail channel, which recorded an increase in sales of more than 14 percent, according to preliminary figures, “the company is continuing to pursue expansion opportunities for both brands (Prada and Miu Miu) in Barcelona and Lisbon — where Prada plans to open a store by the second quarter of this year,” he confirmed.
And not everyone is crying the blues. Custo Dalmau, co-owner of Custo Barcelona, said domestic sales increased “a little” last year because of store openings in Barcelona, San Sebastián and Lanzarote in the Canary Islands. “Also, we launched a kiddie line and the wholesale response has been really good,” he said.
The Barcelona-based brand’s global turnover reached 84 million euros, or $115 million, last year, an increase of 4 million euros over 2008, he said.
Custo has not reduced its workforce and, to date, no stores have closed. “We are actually opening new locations in the Middle East and Latin America. On the other hand, to control production costs, we are moving into [cheaper] countries like Thailand, Vietnam, India, Morocco, Peru — while still manufacturing in Italy and Portugal,” he said.
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye