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Portuguese Market Insight: Shop Owners Opitmistic For Summer Season
Portugal has recently emerged from elections that gave a victory to an alliance of several right-wing parties, which has created a lot of political uncertainty within the country.
By Nuno Principe
Even so, there are reasons to be confident, as according to the latest Bank of Portugal economic forecast set out in March, the Portuguese economy will grow more than expected with an estimated 2% jump in GDP for 2024, having grown 2.3% in 2023 after a very positive fourth quarter.
The bank is also predicting an average growth of 2.3% until 2026 due to “economic activity benefits from the effects of lower inflation, the expansionary impact of the measures adopted in the State Budget 2024 and the acceleration forecast for external demand,” and there is also good news about inflation, which, currently at 2.6%, will decrease to 2.4% in 2024.
It’s worth noting though, that the European Commission (EU) points to different numbers, estimating that the Portuguese economy will grow just 1.2% in 2024 and 1.8% in 2025.
The price of essential goods rose 10% at the beginning of the year due to the return of VAT tax and updated food prices which pushed the cost of consumers baskets to new records. This rise in food prices combined with increases in rent, electricity, telecommunications and transport, has taken away purchasing power from customers, leaving Portuguese families facing hard times.
In terms of boardsports, the market faced difficulties over the winter, suffering a lower flow of tourism compared to the rest of the year, which affected the movement in stores and consequently sales. Furthermore, several storms affected the country also causing a lower circulation of customers who were still recovering from the Christmas hangover shopping.
But with Spring arriving, there’s a feeling of hope between retailers that they will recover business after those difficult months, since the sun is out, and people want to go outdoors and enjoy life.
For Waimea Surf & Culture in the north of Portugal “the negative aspects in this first quarter were the bad weather with several storms that made customers stay at home in Winter or preferred to buy online”, said store owner, Joaquim Oliveira. “Furthermore, customers have less purchasing power due to high interest rates and rising costs of living. And clothing prices have also increased significantly. Stores have overstock and several websites are selling many products at a discount, mainly hardgoods. The brands’ own websites had unbelievable prices to try to get rid of stock and this had a huge impact on street stores like ours and technical gear sales”.
Even though this scenario wasn’t easy to deal with there’s always options to reinvent reality thinking positively. Oliveira continued “On the positive side, this forced us to pay more attention to the market, be more demanding with brands and find alternative brands to be able to offer different products to our customers. Our strategy is to have a strong presence on social media, to build customer loyalty with small treats, making them feel like a person and not just someone with a credit card. And convince them to come to the store and have an experience purchasing the product as if they were part of a club.”
For Samadi Surf & Skate, “The negative aspect from these times has been a long period of bad weather and the consequent drop in sales”, commented store owner, Rico Moser. “On the positive side, we are balancing stocks in 2024, trying to control costs and arranging purchases of items with overstock…I think the best thing is to have a business that is as flexible and diversified as possible. We see the business recovery in the coming months with some optimism, as the good weather and good waves lead consumers to buy.”
The sun is out, people are happier, the tourists are back and hopefully that will help retailers in the next months with the new Spring/Summer collections. Enjoy.
Recap our last Portuguese Market Insight.
