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Portuguese Market 2022 Annual Roundup: Stormy Weather Brings Postives & Negatives, However Tourism Down

When we are just one week away from Christmas retailers in Portugal aren’t happy with the way things are going so far.
By Nuno Principe 

Latest economic reports keep bringing bad news and people keep losing purchasing power at the same pace. In general, this means less customers in the physical stores compared to last year ending in a lower demand and sale drops. The expectation and hope for stores is to see if customers manage to “save Christmas” with last minute shopping in order to avoid losses. But consumers are also already thinking about waiting for January to take advantage of the sales season discounts. With the decrease in tourism, November and December have been difficult months on the boardsports industry but some stores managed to mitigate the negative trend with Black Friday or Black Week discount campaigns.

Latest OECD ‘Economic Outlook’ for Portugal mentions that real GDP growth is projected to decline from 6.7% in 2022 to 1% in 2023 and 1.2% in 2024. Inflation in December is now at 9.9% and Portugal is the third country in the European Union with food inflation above the general inflation rate, just behind Germany and Sweden. The government is taking some measures to support the population to face this situation having announced a cheque of 240 euros in December for those families most in need (in addition to the 150 euros that was transferred in October to everyone whose wage was up to 2700 euros). And also, a minimum wage increase by 7.8% from the current 705 to 760 euros.

Surfing and skateboarding hardgoods are on shelves and warehouses due to a slump in consumption in the last few months. Delivery delays that should have come in summer are now arriving but stores are short on cash flow. Consecutive storms brought bad weather and heavy rain and floods for several weeks keeping people at home (no surfing and just indoor skateboarding). Still the cold temperatures made people search and buy Fall/Winter clothing shaking the apparel market in a positive way.

G3 Store was founded in 2008 out of a desire to share the passion for the ocean and the land that is Peniche, a city that breathes surfing, bodyboarding, fishing and diving. The store evolved from a surf shop to add a tattoo studio and a surf centre that includes a surf school and surf, bodyboard, SUP and skate rentals and also a surf camp. The main store has surfwear and skatewear by brands such as Volcom, Globe, Santa Cruz, Quiksilver, Billabong, among others. This business growth has only been possible mainly because the WSL’s Championship Tour event arrived in Peniche in 2009, and since then an exponential growth in tourism. “Our main target turns out to be surfing as it is undoubtedly where we feel the greatest tourism outcome whether it’s surf lessons, accommodation or rentals,” said G3 Store owner, João Carinhas. But at this time of the year in November/December the seasonality effects are being felt in Peniche and the store had to adapt with a strategy. “Taking into account that the purchasing power in Portugal is not comparable with those who visit us, the strategy is to reduce investment this season by reinforcing it for the Spring/Summer collections,” he explained.

As it happens in some other Portuguese stores the biggest issue is the lack of stock. For surf and skate products G3 Store has chosen to adapt to the “new normal”. “One of our strategies is to manage stocks “on-the-go” purchasing products as we sell them in the store. However, the product price increase and reinforcing the idea that in these months we live a little more dependent on the national customers. We felt a sale drop around 15% compared to the same period last year,” he said.

Despite the unpredictable situation due to the war in Europe and rising inflation, João is confident that 2023 will be a good year with growth opportunities. “Our biggest focus for this season and the ones to come will be to reinforce rentals because that segment in bikes, skateboards and surfboards has increased exponentially. As for skate and surf wear, the idea will be to reinforce the brands that have the best results in our store such as Volcom and Salty Crew,” he finished.