The Balearic Federation of Retailers, Afedeco, believes that the Easter period has not provided the expected boost for the islands’ retail sector, which has ‘held its own’ in terms of sales but is structurally weakening.
The holiday period has resulted in sales figures virtually identical to those of the previous year, reflecting ‘a worrying situation of stagnation against a backdrop of sustained cost increases’, the employers’ organisation states in a press release in which it warns of declining profitability.
Cumulative inflation and rising structural costs such as energy, rent, supplies and staff are progressively eroding margins, placing the sector in an increasingly fragile position, the organisation states. Afedeco’s president, Joana Manresa, has warned that local businesses “are not benefiting to the same extent from tourism growth” as other sectors that do receive this spending.
She said that Holy Week “has not been negative, but neither has it been the turning point that the retail sector needs”. The start of the season has been marked by temporary factors such as adverse weather and a less favourable calendar, as well as by a structural problem of changing consumer habits, with a reduction in purchases at local shops and a “growing preference for experiences over products”.
The sector is alarmed by “the ongoing closure of historic establishments”, in a process that Afedeco describes as “a steady trickle that never stops”. In recent months, iconic businesses such as the Palma haberdasheries Ca n’Angela and La Veneciana have closed their doors, “symbols of traditional trade that are disappearing without a commensurate response from the authorities”, the employers’ association claims.
Manresa has warned of the gradual replacement of traditional commerce, in which “every closure is not just an economic activity disappearing; it is identity, it is life on the streets, it is collective memory”.
Faced with the complex situation for local shops, where rising costs, stagnant sales, competition on unequal terms and a lack of effective revitalisation measures all converge, the president of Afedeco warns: “If no action is taken, we will lose not only the business fabric, but also the character of our cities.”
The sector is approaching the peak season with caution because, although this period has traditionally made up for the weaker months, in the current context there are no guarantees of a significant improvement. Spending restraint, international uncertainty and the evolution of the tourism model are raising doubts about the real impact the season will have on the retail sector. Afedeco points out that maintaining sales figures is no longer enough if margins are lost, closures mount up and the economic model leaves this key sector behind.