The Spanish high street property market hit record highs in terms of retail investment in 2018. According to Savills Aguirre Newman Research – Spain Retail – published in May 2019, the worth of the market exceeded €1,000m for the first time since this metric has been tracked.
The Spanish retail landscape is evolving
A stand-out megadeal was completed at the beginning of the year comprising of the sale by Inditex of 14 of its shops to the German fund Deka for €366m. This shows how highly valued the high street side of Spanish retail is today and suggests lucrative future opportunities here. Around three quarters of total retail spend can be attributed to Spanish high streets (see statistics below) and ShopperTrak data also confirms the enduring popularity of Spanish high streets. Annual high street footfall remains strong despite growing competition from online and shopping centres.
The Spain Retail report highlights how the shape of the overall retail market is changing however, with 2019 likely to be a watershed year. New shopping centres that have been delayed in recent years are scheduled to finally open in Spain in 2019 and 2020 which could potentially tempt retail tenants away from high streets to new purpose built edge or out of town developments. Vehicle congestion and lack of parking in Spanish town and city centres makes shopping centres more attractive, the report suggests.
Savills Aguirre Newman says a pipeline of 10 new shopping centre projects totalling more than 260,000 sq m are scheduled to come onto the market this year. “If all the work deadlines are met, retail density could reach 380sq m by 2020, increasing the current density by 6.1%.”
Currently the retail market is split like this:
How does Spanish retail spend break down?
77% – High streets
12% – Shopping Centres
4% – Online
Source: Savilles Aguirre Newman/ CNMC/ INE 2017
Challenges on the high street
It’s clear that high streets remain the lifeblood of Spanish retail. However, retailers are under pressure to retain their customers in the face of competition from smart new lifestyle shopping and leisure centres in locations such as Seville, Madrid and Palma de Mallorca. Many are turning to traffic counting technology to help them understand how the market is evolving, and how their individual shops – whether on high streets or in shopping centres – are performing.
“Increasingly retailers in city and town centres across Spain are seeing the benefits of using store traffic metrics in their everyday business to improve conversions and better understand the behaviour of their customers,” says Ezequiel Durán, Regional Director Spain & Portugal, for ShopperTrak Traffic Insights. “In particular, with fashion and footwear such a key part of the nation’s retail spend, forward looking apparel retailers are tracking shopper traffic, and using insights around Power Hours and peak trading days to improve their staff planning and resourcing.”
He adds: “Optimising labour in stores reduces the risk of missed sales. When stores are busy, having the right Shopper-to-Associate Ratio can help boost conversions, simply because you are offering great service to customers, from the fitting rooms to the payment areas. The better the shopper experience, the more likely shoppers will keep visiting.”
Innovation on Spanish high streets
Trends are outlined in Spain Retail showing how retail high streets are adapting to change. New letting strategies are emerging designed to attract Millennials and Gen Z shoppers. One idea is to include fashion pureplay brands in the retail mix alongside traditional retailers and restaurants, broadening shopper choice and interest.
Experiential retail is on the rise too, as a means of attracting footfall into stores and increasing dwell time. Spain has seen a proliferation of new concept stores focusing on design excellence and new technologies. Examples include Ecoalf, the Madrid-based company which pioneers ecological and sustainable fashion; and the organic supermarket chain Véritas.
Take the guesswork out of real estate planning
Fresh challenges in an evolving retail market require an understanding of how stores are performing when compared to the rest of the market. This is particularly the case when new retail brands and shopping centre locations have entered the market.
That is why ShopperTrak is helping retailers to analyse and benchmark store performance with our Marketing Intelligence tool.
Our solution measures and cross-checks the KPIs like sales, transactions, units per transaction, and peel off rate, allowing the retailer to measure the impact of the store’s ability to attract traffic, as well as store performance. Most importantly it measures the potential sales improvement by using our Marketing Intelligence tool.
We are globally recognised as a people counting and traffic analytics specialist, with the unique benefit of offering a benchmarking index per country, and soon by sector. An added benefit is that benchmarking can be used in combination with other solutions to measure and improve performance further.
The next few years will doubtless see fast-paced change in Spanish retail. Winners will be those brands that succeed in keeping up with shopper needs, focus sharply on service and experience, and optimise their footfall and conversion performance every step of the way.
Contact ShopperTrak if you’d like to benchmark and improve the performance of your stores using traffic data insights.