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Portuguese Market Insight: Tough Winter For Surf & Skate But Retailers Optimistic For Summer Tourism

The Portuguese market is currently in a period of struggle with increasing difficulties due to high inflation and loss of purchasing power.
By Nuno Principe

Despite the fact that inflation has fallen for four consecutive months and is now at 8.2%, mainly due to the decrease in energy prices, essential food prices however, continue to rise, which has created serious problems for the livelihood of thousands of families. This scenario of uncertainty, distrust and pessimism is having a negative effect on the consumer market. The consecutive rise in interest rates by the European Central Bank, now at 3.5%, has asphyxiated Portuguese families who currently have mortgages. The Government has launched a support program for families to minimize the impact of rising interest rates by providing up to 200 euros/month on rents and up to 60 euros/month on mortgage payments on loans of up to 250,000 euros. The European Commission’s forecast for the Portuguese economy indicates a 1% growth in 2023 with inflation of 5.4%.

Portugal saw a drop in tourism during the winter season which had serious consequences for stores and retailers across the country, with the National Institute of Statistics reporting that between November 2022 and January 2023, an average of 18 stores were closed per day in the country. Spring is around the corner, but boardsport retailers have mixed feelings towards the season. Christmas wasn’t what they expected, not even last-minute shopping saved the holiday season for many. Due to inflation and consequent loss of purchasing power, consumers chose to spend as little as possible and wait for sales campaigns in the following months.

Stores are struggling with surf and skate hardgoods overstocking, opting to run big promotions to sell off product. Apparel and footwear had better results during ‘sales season’ and the few retailers in Portugal who stock snow equipment said that sales went well as well.

Kate Skate Shop is a core skate shop that was founded in 2006 by partners Nuno Gaia and Rita Garizo. With a “do-it-yourself” spirit, they’ve created a solid structure based on a skate team with a family vibe and is one of the most influential skate shops in the North of Portugal.

For them the Christmas period and first quarter of 2023 was much more complicated than previous years. “Instead of buying over Christmas people preferred to wait for sales season, they bought more online and looked for products on second-hand websites”, explained Nuno Gaia. “Also, tourism fell, making a difficult January/February but was just enough to pay our bills. We had a sales drop of around 30% compared to the previous year. Now in March with the improved weather conditions the store movement has already increased”, he added.

Kate Skate Shop ran clothing and footwear sales campaigns at the start of the year. “Most retailers are hugely overstocked. And they’re selling product off with discounts of up to 50% that we can’t compete with. This ends up spoiling and unbalancing the market because customers get used to these prices and it becomes difficult to convince them to go back to normal prices. The same skateboards that used to cost 60/70 euros now cost 37 euros. The profit margins are minimal”, he warned. The store even stopped working with certain brands since shoes that previously cost 75 euros have risen to 95 euros per pair. “In footwear the trend points towards greater demand for products resulting from collabs between brands with special releases in addition to pro-model shoes.”

Nuno Gaia maintains a positive outlook for the future as tourism should begin to increase from now on until the end of summer, and with prices in Portugal cheaper than in most countries, consumption by foreigners should be high. It’s clear that in Portugal the Spring and Easter season is going to be a very important period for retailers in order to recover from a difficult Winter and get rid of overstock. Let’s hope everybody can make it through these hard times we’re living.