"It would be amazing were these green taxes to come before parliament again and be ratified. The government says that they will be debated once more in September with an intention to introduce them at the end of the tourism season. But what would have changed to make business more inclined to stomach them? The next election would in fact be that much closer; this is about all that might have changed."
I wrote the above in early June this year. The Balearic Government had announced then that taxes on car hire, on food and drink packaging and on large retail centres - the green taxes - were not going to be introduced as the government had intended. President Bauzá has now said that, despite a promise to bring the taxes back for debate in parliament, there will be no taxes. Not for one moment did I ever imagine that there would have been such a debate or that the taxes would have been introduced.
Bauzá has avoided taking the issue before parliament at all. His announcement came at a briefing for business leaders. There may have been little point in having a parliamentary discussion, but he might at least have afforded the parliament a touch of courtesy and made the announcement to it rather than to a private gathering.
But of course the people he was addressing would have included just those people who objected to the taxes - business leaders. It was they who put the kibosh on the taxes. When the mighty retailers gathered and threatened legal action against the taxes, the government's game was up. A president who knows which side his bread is buttered doesn't bother with announcements to parliament but to those who are the real powers in the land, of which he isn't one.
The spin behind the announcement, though, tells a rather different story. The taxes are not being reconsidered because the economy is improving; hence there is no need for new sources of tax revenue. The deficit requirement placed on the regional government by Madrid has given the Balearics a bit of wriggle room as well and given the government a further reason not to bring in the taxes.
Maybe we should just consider, however, what this economic improvement entails. Growth of 0.3% in the second quarter, excellent hotel occupancy rates and increased tourist spend. I think I have dealt with the latter two of these in a previous article. As for second-quarter growth, it is positive, but let us wait until the winter quarters and see if there is genuine and consistent growth and not just that brought about by seasonal factors.
We should also consider the original motives for the green taxes. One was to raise revenue, the other was to act as "an incentive for greater environmental responsibility". The finance minister and vice-president at the time, Josep Aguiló, conceded that these taxes went counter to the "ideology of the Partido Popular" (a point which has now been reiterated by the party's spokesperson Mabel Cabrer), but one has to ask, therefore, why they were ever conceived. The government's sudden discovery of a previously absent greenness was fiscal imperative wrapped in environmental foliage.
It might be recalled that there was one other green tax. It is the one that has been introduced. It has resulted, in some instances, in householders' water bills doubling. If this ran counter to PP philosophy, then will it now be scrapped? One very much doubts it.
The green taxes were announced right at the end of last year's tourism season. So, despite the revenues from tourism (being repeated this year), the government still felt compelled to invent some new taxes. Oddly though, at the start of this year the government was able to announce that its tax revenues for 2012 had risen unexpectedly. Regardless of this, and running counter to the party's ideology, the green taxes were still to be introduced.
The fact is that they would have been had it not been for pressure from big business, the typical supporters of the PP. They would have been up for introduction now were it not for the same pressure, while there is one other good reason why the government does not intend to consider the taxes again. The government doesn't want to be fighting on too many fronts. It has a fight with the teachers, one it will believe it can handle and depict as leftist, Catalanist agitation. It doesn't want one with an opponent it cannot handle. That which helps put it into government. Big business.
Any comments to andrew@thealcudiaguide.com please.
Showing posts with label Retailers. Show all posts
Showing posts with label Retailers. Show all posts
Thursday, September 19, 2013
Friday, January 27, 2012
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.
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.
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