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Spanish Market: Newcomers Continue To Bump Business Numbers

Despite a positive economic outlook, Spaniards are careful with their spending. The long-term health of the boardsports industry might require price harmonisation between online and brick & mortar offerings.
By Rocio Enriquez

Results of the second quarter marking a steady growth has lifted the mood of Spanish economists. Think tanks have elevated the 2023 GDP growth forecast to 2.4%. The rise in exports and tourism related spending has doubled the creation of employment. It is also maintaining the downward trend of inflation, now forecast at 3.4% for this year’s average. Unfortunately, other European economies keep much higher figures, prompting the Central European Bank to increase interest rates. This could impact the average Spaniard’s spending capacity. The political climate with snap general elections called for July does not help. A discourse of loom and gloom regarding recession is inviting Spanish consumers to spend more carefully. Recent research shows that Spaniards are booking their holidays much more in advance to secure the cheapest deals. They also shorten their stay and favour apartment rentals to save on meals out.

This mentality is noticeable in the boardsports scene too. People are spending less. The significant increase in prices does not help. “A wetsuit that cost 199 euros last winter will cost 319 euros the next one”, says Nacho Rotglá from Gondwana Surf Shop in Valencia. This could drive consumers towards cheaper options, whether it is lower quality products or seeking online discounts.

Boardsports keep generating a lot of interest. There is still a steady number of newcomers, especially to surf, skate, and the new popular wing foiling. Yet, winter has not been easy. The new pre-ordering deadlines, much earlier than they used to be, have forced stores to buy blindly. In an industry dependent on climate conditions, this can be tricky. Snow stores suffered from a very late snowfall, consequence of global warming. By the time resorts opened around or after Christmas, they were practically in sales season. That reduced their window for full margin sales to almost nothing.

Surf in the north of Spain was blessed with good swells, but the Mediterranean was not so lucky. Gondwana missed the sales that surf gear wear and tear produce. Tarifa, in the south, is blessed with wind and also a kind temperature, making it possible to live in unheated houses.

“Many northerners migrated to Tarifa for the winter to alleviate the cost of living”, says Benja Wesseling from Surco Shop. Yet, his biggest concern is that these perfect windy conditions stop due to climate change. The summer looks better for both. Surco, still in its first years in business, expects a 40% growth. Gondwana has put some measures in place to make this summer more manageable. He dropped his pre-order volume considerably last summer and has reduced advertising and staff costs. Online sales are residual, around 5 to 10% of total sales. The web is too filled with discounts of all sorts of products. Customers have the upper hand, with all options available in just one click. Stores are limited to the brands they stock and the margins they need to stay in business. Schools are the most profitable part of the business, simply because they have a lower investment. Surco offers kiteboarding, wing foiling and surfing courses, and he receives a steady number of newcomers. Gondwana does not own a school but collaborates with one.

The overstock situation has created a difficult scenario. Brands need to find solutions to clear stock, and some of them are to offer discounts online. This drives consumers away from brick-and-mortar stores, who are unable to clear their own stock. Stores that don’t clear stock do not order from brands, and so it goes… The best form of support for retailers at this point would be to regulate prices. Mainly, longer periods to sell at full price, without competing online discounts. The long-term health of the industry will require a balanced risk taking from brands and stores.