The Spanish retail market: What do retailers need to know?

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As Poundland launches its first Spanish store in the Costa del Sol, Retail Week looks at the country’s retail market.

Why are we talking about this now?

Poundland is hitting the Spanish market with 10 stores planned for the next two years. The value retailer has opened its first store in Torremolinos on the Costa del Sol, a place best known in Britain for budget holidays.

At the other end of the scale, British favourite Cath Kidston has picked Spain as the launch market for its expansion into continental Europe. It recently opened a flagship concession in Madrid’s El Corte Inglés department store.

The main overseas entrants into the Spanish market are French and German, although this could be changing as British retailers eye up Spain, which had a GDP of £868.56bn in 2013.

How is the Spanish retail market faring?

Spain was hit extremely hard by the economic crisis after its property market was crippled and unemployment skyrocketed. However, after six years of ongoing economic crisis, the economy is now showing signs of a slight pick-up, and economic growth is expected to be between 1% to 1.3% this year.

Online is growing fast, but only in non-food categories - the online share of food sales is negligible. Price has become central as a consequence of the crisis because shoppers have less disposable income, according to Planet Retail analyst Carlos Hernández.

Who are the big retail players?

Spain’s retail sector is open and there is a mixture of strong local players such as Mercadona and El Corte Inglés and their international counterparts.

The main overseas players in Spain are French retailers Carrefour, Auchan and Leclerc and German retailers Lidl, Aldi and Metro. UK names present - including through franchise deals - include M&S, Arcadia’s Topshop and Topman, Carphone Warehouse, Body Shop, Iceland and Kingfisher’s Brico Depot.

What are the risks?

Spain is already a very competitive market with a lot of established players, both domestic and international. New entrants might find it difficult to carve out a piece of a market that is still pretty stagnant. It would be particularly hard for those entering on a small scale and especially so if they are not a recognisable brand to local shoppers.