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Smaller retailers have noticed the inflation crisis more than supermarkets. SUR
Retail - the economic backbone of the Costa del Sol
Top International Business Guide 2024

Retail - the economic backbone of the Costa del Sol

Retail & Distribution ·

There are more companies in Andalucía than ever before that have an online platform to grow their business to the next level and reach a wider audience

SUR

Monday, 3 June 2024, 12:20

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This year, the retail sector in Andalucía is hoping to recover from 2023, which was considered a “difficult year” for this industry. The Comercio Andalucía trade association hoped that last year would be one for the definitive recovery of sales after the pandemic, but external factors such as war conflicts that have caused an inflationary situation with the increase iof product prices and rises in interest rates have meant that sales “dropped in 2023 compares to 2022”.

According to a report by JLL España, this was reflected in consumers’ purchasing power, as these increases made them more selective when buying. As a result, the profitability of many retailers has been impacted, especially smaller operators with more limited financial resources.

Employment

Government data from 2023 shows that 29 per cent of employees in Malaga province work in the retail sector. This figure is only due to increase, on account of employment opportunities offered by businesses like the Spanish retail giant Mercadona, which has recently achieved a major employment milestone in Andalucía. The clicks-and-mortar supermarket chain had a workforce of 20,091 people on their payroll in the region at the end of 2023, which constitutes more than 490 new jobs compared to the previous year.

In addition, at the end of 2023 La Cala de Mijas opened its second Carrefour hypermarket, which meant the creation of one hundred direct and indirect jobs, the majority for Mijas residents, according to the general director of Costasol de Hipermercados, Aurelio Martín.

Shopping centres

Malaga is seeing the expansion and establishment of many shopping centres, which play an important role in the retail sector of the province.

For example, the El Ingenio shopping centre in Vélez-Malaga will be expanded by 4,850 square metres, which means a 10 per cent increase in its current size. Councillor for town planning Celestino Rivas said this extension “will generate employment and that it is necessary to adapt to the new commercial times”.

Moreover, the Malaga-based development company Suba is planning an investment of four million for a shopping centre in Nerja, which will have clothes shops, a supermarket, gym, and restaurants. José María García, project manager of Suba, said that the implementation of this project will lead to the arrival of “large firms” from the food distribution, catering, fashion, furniture and accessories sectors in Nerja.In Malaga city, there are also plans for a new shopping centre in El Mayorazgo-Limonar and in Cártama.

Andalucía has registered a new all-time record for exports in the first quarter of 2024, reaching 10.48 bilion euros thanks to a 1 per cent year-on-year increase in overseas sales, making it the region that “contributes the most” to Spain’s export industry.

According to the regional government, “the main cause of Andalucía’s leadership in the export trade in Spain is the diversification of sectors that we export from, symbolised particularly by the aerospace sector and the olive oil industry that together account for almost one in five euros of Andalucía’s total global sales.

Within the aeronautics sector, sales of aircraft and aerospace vehicles registered between January and March 2024 were more than double (+127%) the exports achieved in the first quarter of 2023. Moreover, it is the fastest growing category among the top ten for exports (+126%), up to 818 million euros or 7.8% of total exports.

Similarly, the olive oil industry has achieved its best-ever record at 1.15 billion euros. This represents a growth of 71%, which makes it Andalucía’s most exported product, representing 11% of the total exports, according to the latest statistics.

Digitalisation

Costa del Sol shops and small businesses are gradually turning to digitalisation to improve their sales and competitiveness. According to recent figures, 72.7% of Andalusian businesses are connected to internet and have a webpage. However, when it comes to selling their products via e-commerce, the percentage drops to 34.5%. The retail outlets that use the services of an ITC (Information Technology Consultant) to promote their service on internet and social media is only 9.3%.

According to Salvador Pérez, president of the Malaga Retail Federation, digitalisation is a “lifeline” for the retail trade. Companies are making progress but not as quickly as the federation would like. Pérez believes that innovation and digital transformation are “vital”, but says that some entrepreneurs are moving too slowly, mainly due to lack of understanding or financial support.

To help modernise and digitalise businesses, owners have several options: from grants, to guides offered by different government bodies and business associations. Kit Digital, a programme financed by the Spanish government, offers SMEs with fewer than 50 employees, 6,000 euros. Companies can choose from a wide range of services, including: website and presence in internet; social media management; e-commerce; virtual office services and tools; analytical and business intelligence; and, electronic billing, among others.

Regarding the growth of supermarket chain Mercadona in Andalucía, where it has 349 stores, this has gone hand in hand with the company’s transformation into a “more digital, productive and sustainable” business model, which began at the end of 2016. Since then, it has created over 2,800 new jobs in the region, representing a growth of 16 per cent.

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