Are You Being Served? Spanish retailing

Ten years ago I splashed out 1500 euros on a decent digital camera. Having parted with the cash, the camera soon developed a fault. It turned out to have been just one of those things. The replacement was perfectly ok and served me for several years until it was stolen.

There had been no difficulty in obtaining the replacement from the retailer. I explained that there was a fault. There were no questions, there was no examination of the camera, and no quibbling whatsoever. The sales assistant got a new boxed-up camera and handed it over.

The point of this story is that the camera was bought at and then replaced by the main El Corte Inglés department store in Palma. El Corte Inglés doesn't do cheap. But what it does do is quality and service.

Gripes about service in Mallorca are legitimate, but there are many examples which disprove a widely-held belief that service is universally lousy. El Corte Inglés is one, and it is an example from a sector - retail - that is often damned for its unreliable opening hours and apparent lack of interest in the customer.

A while ago I mentioned the fact that it was hard to think of really world-class Spanish businesses. A correspondent referred to a handful which had escaped my attention, one being the Zara fashion store chain. Being strictly accurate, Zara is just a brand; it is one part of a suite of stores that comprise a company called Inditex. And Inditex has something in common with El Corte Inglés; they both feature in the list of the world's top 50 retailers.

The consultants at Deloitte are a busy bunch. They churn out surveys left, right and centre. Coming hard on the heels of one of Spanish travel agents, Deloitte has issued, in collaboration with Stores media, its 2012 "Global Powers of Retailing" survey.

This ranks, in order of sales, the leading 250 retailers across the globe. Dominating the top 30 are US companies - Wal-Mart is way out on its own at number one, but the UK's Tesco is number three in the world - but just under these real powerhouse companies comes a trio of Spanish retailers. El Corte Inglés is at 47, Inditex is at 49, but beating them both, and therefore Spain's leading retailer, is Mercadona, which is ranked at 42. There is only one other Spanish company in the 250, and that is Eroski (98).

It's when the list is broken down according to style of store that Spanish performance becomes more significant. Mercadona can't really compete with fast-moving consumer goods giants like Wal-Mart and Tesco, but El Corte Inglés is the world's fifth largest diversified retailer (beating Marks and Spencer into sixth place) and Inditex is the fifth largest fashion goods retailer.

The growth of Inditex has been impressive, despite economic conditions. It hasn't relied on acquisition but on expansion into new geographic markets. So well has it been doing that it is likely to overtake two well-known US companies, Kohl's and J.C.Penney, and is not so far behind Macy's, the world's number one fashion retailer.

Zara and Inditex's growth is in keeping with the fact that the most profitable of the retail sectors is fashion, but Inditex's success could also be a cause of competition. The Chinese, now developing quality brands but at lower prices, have been moving in, the likes of Mulaya seeking to take on Zara. But as with El Corte Inglés, a reputation for quality is likely to maintain Zara's strong position. However, where Inditex can expand into foreign markets, so can others.

Of UK (Irish) stores that many an expat has expressed a desire to have in Mallorca, Argos and Primark are names that regularly crop up. Argos would find it difficult, and the fact that at number four in the world's list of so-called hardlines and leisure goods retailers is Amazon.com partly explains why it would. Primark would be a different matter. It has already been successful in moving into mainland Spain and as it is also in Gran Canaria, then why not Mallorca? And it's not just the expats who would be thankful for a Primark. There is a Facebook page called "Queremos un Primark en Palma!" ("queremos" being we want) that has over 4,000 likes.

Analysts have identified over 140 cities in 12 countries that could be ripe for a Primark store. If there were more in Spain, and at least one in Mallorca, then Inditex may just have to watch out.


Any comments to andrew@thealcudiaguide.com please.