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Spanish Market Insight: Bricks & Mortar Face Strong Competition From Online Outlets

The global economic outlook is not a cheerful one as the year draws to a close. Growth has slowed down worldwide, with Europe getting the worst of it. Spain has averted recession and remains one of the driving forces of the Euro Zone economy. Yet, it is not immune to this deceleration trend.
By Rocio Enriquez 

Spain’s overall GDP growth for 2023 has been revised down from 2.1% to 1.6%. Inflation and the impact of rising interest rates keep household spending down. Boardsports shops have noticed this. “People’s salaries are already quite stretched to pay for essential things, and I don’t sell anything that is non-essential”, explains Miki Parets from Shine Skate shop in Palma de Mallorca. The aftermath of the post-pandemic stock bubble does not help. “Every surf fan is properly kitted up already. They are only attracted to heavily discounted products”, says Josina Zuazola, from FrusSurf Shop in Barakaldo.

The snow scene is a bit different. In Spain, snowsports fans tend to have a high spending power. When they go to a resort, they are aware of the costs involved and are ready to spend. Boardsports remain popular, though. The pandemic-induced influx of newcomers has resulted in some retention. Maybe not the 10-20% experienced in other surges, but then this one was so colossal that any percentage of remainers is a high enough figure.

Surf is steady business and SUP and skateboarding keep growing. Skateboarding, traditionally perceived as an urban activity, is now legitimised as an Olympic sport. In snowboarding, there was an expectation that back country disciplines would pick up. “There was a boost of backcountry riding during the pandemic that was very positive to create a mountain culture, similar to the one in other European mountains, but it hasn’t really stayed”, says Suso Rada from Frostrice shop in Sierra Nevada. Traditionally, Spanish snowboarding has been quite focused on freestyle, so this was a welcome expansion.

There are other observable trends, though, such as an increased interest in boarder cross and a comeback of carving. Sales haven’t been as good in 2023 as in previous years, but steady enough to throw a positive overall result. Good management of stock and purchase planning have contributed to this. Online platforms are a tough competitor for brick-and-mortar stores, but specialised shops remain important to skaters, surfers and snowboarders. “There is still a lot of people seeking the experience, not only the product”, says Suso. Miki shares the same view: “For hardware, consumers prefer a store where they can get the full service. We have become a social club”. However, the climate of extreme online discounts is visibly influencing the industry.

A seasonal sport like snowboarding is forced to clear stock over the summer, instead of waiting to sell it next season at a reasonably discounted price. Shops now attend outlet fairs in which they drop prices way below what is healthy for their business. It does not make much sense as a business model, but the driving philosophy is that what they don’t clear, a big online platform will.

There is a consensus about good margins being the best form of support a brand can offer. They give the shop oxygen to invest in local activities that promote the product and the sport. To achieve this, brands must refrain from competing with their retailers with heavily discounted products on their D2C platforms. They must also regulate prices on other big online platforms, so specialised stores are not out competed. As Josina from FrusSurf sums up: “We all win when a specialised store sells a brand”.