Small business in freefall: an average of 22 shops a day have closed since July 2015

Shop closures in Spain have been intensifying year after year
Shop closures in Spain have been intensifying year after year / JESUS SIGNES
  • The loss of local businesses intensifies each year with the increase in online shopping and large stores with longer opening hours

Small business numbers have been gradually decreasing in Spain and the trend looks set to continue. The arrival of ditigal platforms such as Amazon and Alibaba on the retail scene, strong competition from huge companies like Inditex and El Corte Inglés and the fact that new generations are used to buying with a click of their computer mouse, are all causing serious difficulties for traditional shops such as hardware stores and haberdashers, to the point that many of them are disappearing.

The statistics show that in the past four years an average of 22 shops have closed every day. The number of self-employed people in this sector has also goen down by 31,300 since July 2015, which is a drop of nearly four per cent. The figures refer to workers paying into the Social Security system and have been collated by the Uatae association for the self-employed.

Shop closures in Spain have been intensifying year after year, as 2,693 companies de-registered from the Social Security system in 2016, 7,038 in 2017 and 10,032 in 2018. The annual figures run from July to July, and 11,537 shops have closed in the past year.

There is no sign of this improving, because Uatae predicts that by the end of December this year around 13,000 businesses will have gone, so the trend is expected to continue. This is of particular concern when considering that 25 per cent of all self-employed workers in Spain are in this sector, and total more than 3.2 million.

"The loss of self-employed people in the retail sector is very worrying, not only for the numbers but also the duration, and it is mainly because small shops are losing sales to the big stores with longer opening hours and online shopping," said María José Landaburu, the general secretary of Uatae, who is calling on the government to take measures to encourage people to shop locally.

Every region of Spain has lost shops in the past four years but in Catalonia it is particularly noticeable and may be associated with the conflict over independence. The number of small businesses there dropped by 7,320, which is a reduction of 5.6 per cent.

The second most affected region is Galicia, with 3,587 fewer traders, and then Castilla y León, which lost 3,455. At the other end of the scale, fewer shops have closed in the Canary Islands, Murcia and La Rioja, where the figures are 248, 277 and 414, respectively. In percentage terms Asturias (-8%), Cantabria and Aragón (- 7.9% in both cases) have all been badly affected.

In view of these figures, Landaburu says a plan to reactivate local shopping is necessary, "not only because the important volume and quality of employment that this generates, but also because it is a fundamental factor for balance, security and wellbeing in our towns and cities".

But it is not only trade that is suffering. In general terms there has been a clear slowing down in the creation of self-employment since the start of the year and July saw the biggest year-on-year fall in the number of people registered as self-employed since 2009: every day an average of 800 people dropped out of the Social Security system, according to Ministry figures collated by ATA, the association of self-employed workers. This loss of nearly 25,000 has devastated the growth in self-employment so far this year.

Between January and July 9,584 people joined the system, with which nearly 3.3 million people are registered, and that figure is well below that of last year, when 51,630 self-employed workers registered with Social Security, five times as many.

In fact, in the first seven months of the year ten regions of Spain saw a reduction in the number of self-employed workers: Aragón (-2.3%), La Rioja (-1.6%), the Basque Country (-1.5%), Asturias and Navarra (each -0.9%), Madrid (-0.7%), Catalonia (-0.3%), Castilla y León (-0.2%), Galicia and Castilla-La Mancha (each -0.1%). By sector, four regions have seen a fall: firstly in industry (down 11,748), then education (-6,053), retail (-3,000) and banking and insurance (-307).

"The number of self-employed registrations in July went into freefall," says Lorenzo Amor, the president of ATA, and he attributes this to the economic slowdown and political instability. However, in the same month sales went up by 2.9 per cent in small and medium-sized shops and although this was lower than the major chains (7%), it will have given them a bit of breathing space.