Spreading Spending: Too Many Shops?

The calle Major in Alcudia runs from the Plaça Constitució to the Porta Mallorca (Sebastian) gate of the reconstructed city walls. The most notable building along this pedestrianised street is the town hall. Otherwise it is a street with buildings that are superbly preserved in line with protection requirements for the old centre. These are homes, a few bars and some shops - not big shops but small ones that typically sell clothes, accessories and craft-style jewellery.

A few years ago there was a shop close to the gate which was somewhat innovative in what it had for sale. It was the only shop along this part of the street. The owner was always a little concerned by his being the only shop. He felt isolated and a potential target for robbery, especially in the evenings. He no longer needs to have the same concern. There are other shops and his now sells what most of the others do. Innovation didn't bring long-term success.

I mention the street as it is an example of rejuvenation and of how local retailing can develop. The shops are very pleasant. They add to the outstanding atmosphere of Alcudia that has been created through a prolonged period of transformation. But they are also a potential indication of undifferentiated proliferation. How many shops are actually needed which sell - in broad terms - the same sort of thing?

The associations for small to medium-sized retailers, Afedeco and Pimeco, are regular occupants of the press column inches. They come as a pair, usually agreeing with each other. The agreement tends to always be negative. The latest is that despite increased tourist numbers the spending is down. This isn't a new theme. It has been echoed down the years. And if it's not summertime selling, then it is the winter. The associations point to factors such as the liberalisation of the sales period in explaining decreases in members' turnover.

Local and traditional retailers are the ones defended by these associations. Advancing the cause of local traders is very much a government policy. It is also of interest to town halls: Alcudia, for example, has recently conducted a survey of local shopping habits. Yet where is it leading? There was a recent report which revealed that the number of businesses in Mallorca - ones active this summer - was back to a level similar to that of pre-crisis. The growth in businesses was overwhelmingly of the small business variety. Shops accounted for a good deal of the growth.

There are more tourists than ever before, certainly more than in the years immediately prior to the economic crisis. But was the situation with the smaller retailer markedly different? I would suggest that it wasn't. Coming back to Alcudia, I well recall a letter from the late Graham Philips that appeared in the Bulletin. There was little that Graham didn't know about business in the town; he had been involved right from the beginnings of the sale of properties in the City of Lakes at the turn of the 1970s. The point he made in that letter had to do with the proliferation of units that could be used as shops, bars or some other business, such as an estate agency. There were simply too many of them, and when they were occupied the businesses generally struggled.

Afedeco and Pimeco point, as everyone else does, to the increased number of tourists staying in holiday rentals. Logic suggests that this type of tourism is a boost to local business. It is, but it can depend on what type of business. In Palma the federation of residents associations is even less reticent in getting its name into the press. When it comes to rentals, about which the federation has had a great deal to say, it points out that the "gentrification" of the city - brought about by rentals - has led to the loss of the traditional, local business. It is being replaced by souvenir shops, ice-cream parlours and franchises, and these franchises are also identified by traditional cafés for their being squeezed.

Rentals tourism does benefit the so-called complementary (non-hotel) sector. The greatest beneficiary is arguably the supermarket retail sector. The Spanish association of supermarkets issued a report the other day in which it stated that supermarket sales in Mallorca this summer have trebled. It also made the point that in certain tourist areas a third of all shops are supermarkets, be these the national or multinational retailers, the Spars or others. We haven't heard as yet from the large retailers' association, but one suspects that the likes of El Corte Inglés will offer a different perspective to that offered by Afedeco and Pimeco.

Local is good, local is to be encouraged, but when one hears of lower spending, might the number of businesses be a contributory factor? What spending there is can be spread very widely and perhaps too thinly.

Guilt By Too Many Associations

It was one of those news stories which comes along with depressing frequency. Whenever the official sales periods are about to start, have come to an end or are even weeks past, up pop retailers' associations to complain about the market liberalisation which has allowed sales and promotions at times other than during the official sales periods. (There are two such periods: in winter and in summer.)

We therefore had not one, not two but three associations (or federations or whatever) saying roughly the same thing prior to the current sales campaign. The only novelty was that one of the associations suggested that other associations - those for larger retailers - are beginning to think like they do; they being representatives of smaller retailers.

And which were these smaller-representing associations? They were Afedeco, Pimeco and the Balearic trade (retail) confederation. Their presidents were quoted in agreeing with each other, some statistics were dragged out (based on one of the association's "barometers" of sales activity), the Rajoy government was berated, and it was said - once more - that consumers are confused by the fact that there can be sales at times other than the official sales periods. Are consumers confused? I suppose one has to take the associations' words for it, given that the words are similar.

Reading this story, I asked myself why there are these different associations. In this instance, as has been the case in the past, a normal curiosity and willingness to research what and who they represent was set aside. When it comes to retailers' associations, I've lost the will to live, and if I have, then I suspect others reading the same story will be of like mind. There is an abundance of associations making the same points. It smacks of overkill. Why don't they just form one association and have done with it?

Which isn't to deny the rightful place that associations have, whether in business or for other purposes. No, associations are absolutely crucial in defending and promoting the interests of those they represent. The fact of associationism isn't at issue; its extent is what is.

Allied to this is the repetitious nature of the message. Of course, if it is made often enough, it may have an impact in influencing public or political attitudes and so bringing about desired change. Associations are, in many cases, lobby groups. Their announcements in the media are intended only so much for the public's consumption. There are politicians being targeted as well. But the repetitiousness can also have an adverse effect. Say things so often and the intended audience is turned off. It ceases to listen because it's been heard so many times.

In the specific case of retailing, it's not as though I don't have sympathy with the smaller retailers. Moreover, the current regional government is sympathetic to them, placing much store (sic) on "local" business, namely the smaller retailer as opposed to the larger ones and multiple chains. A left-wing regime in the Balearics is thus, once more, butting heads with a right-wing national administration, whose business allies are the grander retailers.

The cause is therefore not wrong, the campaigning is therefore not unjustified, although it doesn't follow that holding sales outside the official periods is solely the preserve of the larger retailers; this is manifestly not the case. The bottom line with the argument in favour of a reversal of market liberalisation and the re-establishment of official sales periods alone is that everyone is a winner - all retailers and all consumers. Discuss.

But when they talk of consumers - be they consumers of news or of goods and services - being confused by the liberalisation, are they not guilty of creating confusion by their very associational proliferation? Why are there all these associations, and does anyone care?

Toni Abrines, president of the Aviba travel agencies' association, has spoken about why people should care. He makes the case for the absolute need for associations. He notes, though, that an association doesn't always do things for the best in terms of the interests it is supposed to be defending or of wider society/economy. There is also the issue of all pulling in the same direction, which can be difficult enough within one association, but when there are several with different messages, then which one will be listened to? Any?

At least the associations for the retailers generally seem to have similar messages, but these do differ when one includes the associations for the larger retailers. Hence, there are conflicting views, and it becomes a case of who shouts loudest and most often. Residents' associations in Palma are another example. They seem to be in competition to see who can get the town hall to listen. In the end, because of the number, the rival messages and a fair degree of pomposity, there's the danger that no one is listened to.

Retailer, Hotelier: Good guy, bad guy

It was the queue of the hopeful. How many of them were there? Hundreds. They went in their droves, enticed by the search for "dynamic, committed, enthusiastic" people of a certain (young) age. Such is the recruitment lingo. When did employers ever wish to take on apathetic, uncommitted, unenthusiastic staff? Once upon a time they probably did. A time when no one much cared for anything other than the pay packet regardless of whatever drudgery was performed or expected.

They were queuing in Madrid last October. Hundreds. They weren't after jobs. They were there to buy. In the capital city's Gran Via, Primark had come to town, and Primark shopping fever had taken over. But jobs with Primark were what mattered last week to those who had waited patiently to hand in their pen drives with all relevant information at the offices of the Balearic Confederation of Business Associations.

Primark will open in September and not towards the end June as had been initially said. FAN Mallorca Shopping, the curious name of the new commercial centre, will not be ready until then. For those queuing it might as well rain until September. Then the sun will shine. Assuming they are the lucky ones. And when the doors of the shopping centre finally open, there will be a tidal wave of shoppers. The roads will have been gridlocked. There's more to FAN, much more to FAN than Primark alone, but it will be the Irish retailer attracting the greatest fan base, if the Madrid experience is anything to go by.

The jobs though, what about the jobs? How much might the lucky ones earn? In Madrid the labour agreement was for a "competitive salary package" for the dynamic ones. The typical sales assistant maximum is just over 15,000 a year - twelve months plus three extras. Over half of the staff, however, are not on full-time contracts. One worker, quoted in a report by the "El Confidencial" website, said she was on 700 euros for a 30-hour week, though this seemed to be for a temporary contract.

Retail jobs are like many in the tourism industry. They are not highly paid. The Primark base salary for full-time employees - 15,247 euros per annum (quoted in connection with the Madrid store) - is virtually identical to the agreement Lidl came to earlier this year. It has a guaranteed fixed hourly minimum of 8.50 euros per hour: 15,257 euros for an annual maximum of 1,795 hours, five days a week. Lidl has also agreed to have a 75% minimum of its staff on full-time contracts.

This doesn't match Mercadona, though. It has 98% full-time contracts. Its base salary is 15,160 euros but it adds two extra months to this depending on performance. It also rewards loyalty. Length of service and corresponding increases in salary mean that it has 90% of staff earning 1,430 euros after tax plus the potential two additional months. Mercadona is looked upon as one of the best employers in the retail sector.

The regional government, the Council of Mallorca and the town halls have an at-times awkward relationship with retailing. The current moratorium on new developments is an example of this and is aimed principally at larger retailers. Yet they will all know that these larger retailers create employment and, as can be seen with Mercadona in particular, this is pretty stable employment. It may not be highly paid, but that is how retailing tends to be. Mallorca's no different to anywhere else in this regard.

Where the public authorities really run into a problem is with seeking to safeguard the smaller retailer and defend it against the voracious appetites of the large multiples. A case in point has been the to-ing and fro-ing over declaring (or not) zones of high touristic influx. Say yes, and there is far greater liberalism for large store opening hours. Say no, and there is not.

But generally, and here is where the government and others let slip their begrudging acceptance of the large retailers, there is no antagonism implied when it comes to terms and conditions of employment. Yes, the government keeps banging the drum for greater "quality" of employment and higher earnings, but the retailers fall into the category of the "good" employer. Mercadona is a prime example.

Contrast this with the general antagonism towards the hoteliers, with Podemos the most ferocious of critics. True, there are issues with maids and some other categories of employee, but the attacks are certainly not always justified. The government is toying with the star ratings being modified to reflect this so-called employment quality. But would such an attempt at labour engineering work? Can the hotels really be blamed for offering contracts that are not in the Mercadona league when it comes to being full-time? It's the seasonality, stupid.

Law Of Confusion: Opening hours

In 2012 the national government introduced a round of measures designed to liberalise the retail sector and opening hours. An experiment in fourteen cities across Spain, including parts of Palma, that allowed shops to adopt all but unlimited opening hours all year round (to include Sundays and holidays) tested the impact of opening-hours liberalisation in cities with a large tourist presence. According to statistics compiled by the Universidad Nacional de Educación a Distancia (open university), liberalisation would add 0.78% to national GDP, which translated as 8,263 million euros and 16,272 jobs.

The system was thus to be extended to what were already known by the acronym ZGAT (zonas de gran afluencia turística - areas with large tourist influx). ZGAT municipalities across Spain (some towns or cities can have more than one such area) were to be able to decide whether or not they wanted to liberalise opening hours by declaring themselves all-year-round ZGATs. This measure was adopted in the Balearics under the region's Commercial Law approved in October 2014. Under this law, opening hours are normally restricted to a maximum of ninety hours a week for all working days (including Saturdays) and a maximum of sixteen days a year of Sunday and holiday opening, but ZGATs, which already had liberalised Sunday/holiday opening hours in the summer, were to be allowed to apply these to the whole year.

In Mallorca there are a number of towns which are not ZGATs, meaning that the potential for all-year liberalisation does not apply to them. In eleven municipalities, Palma being one of them, ZGAT is applicable to only certain parts of the municipality. In nineteen others, ZGAT applies to the whole town, one of these being Alcúdia. It, as with other ZGAT areas, operates opening hours according to two seasons, the summer season starting on 15 March and finishing at the end of October. As a ZGAT, shops in Alcúdia have been able to open much when they like during the summer, a situation which will continue. But only certain types of shop will now be permitted to open on Sundays and holidays during the winter, because Alcúdia town hall has rejected the notion of making the town all-year-round ZGAT.

An immediate impact of the town hall's decision has been, or appears to have been, that the two Eroski supermarkets that had been opening on a Sunday are now closed and will be until March. Notices direct customers to the store in neighbouring Sa Pobla, a town which, rather bafflingly, is a ZGAT and, because its town hall has declared it to be, an all-year-round ZGAT, to boot. Alcúdia's rejection came after small businesses lobbied against liberalisation. With one eye on the next election perhaps, the town hall sided with the small businesses, mayor Coloma Terrasa noting (and tellingly so, one feels) that now was not the time for liberalisation.

Small business associations across the island have been up in arms over ZGAT extension, claiming that it is designed to help only the larger retailers, those with shopfloors of more than 300 square metres. This size limit is a further aspect that has to be considered. There are general exceptions when it comes to Sunday opening restriction, such as with newsagents and, subject to certain provisions, shops under 300 square metres.

The Eroski supermarkets in Alcúdia are an interesting case. One presumes that it is the town hall's rejection of all-year ZGAT that has led to their closure, but then how was it that they used to be open on Sundays in winter? I don't have an answer to that, but the small business association in a different town, Manacor, has claimed that there has been an abuse of ZGAT.

It needs stressing that objections to ZGAT extension are based on competition and not on a notion of keeping Sunday special. Whether larger supermarkets being open on Sundays in winter would make a great deal of competitive difference is a moot point. Whether it is necessary for them to be open at all on Sundays is another. Areas of large tourist influx? In winter? Alcúdia isn't, but it is more likely to have what tourists are around than a town like Sa Pobla. With the best will in the world, it attracts comparatively few tourists in summer, begging a question as to why it has ever been a ZGAT. If Sa Pobla might be an anomaly, then Vilafranca most definitely is. How does it qualify as a ZGAT and an all-year one, its town hall having adopted the measure? If it can be a ZGAT, then why not, for example, Artà?

The law is confusing in application and consequence. One rule for one town, one rule for the next. If it was improved competitiveness that the government was hoping for, then this is no way to achieve it.

* The decision by Alcúdia town hall has now been reversed, so Alcúdia is an all-year ZGAT and the large supermarkets are able to open on Sundays and holidays all-year round.

From COP To Primark

I'm trying to think of the year. Was it 1964 or 1965? When the Sainsbury in my by-then home town of Camberley ceased to be a sort of High Street deli with porcelain walls that were reminiscent of a public lavatory and became a supermarket. Its modernised upgrading was due entirely to the development of the new town centre. Sainsbury was the first proper supermarket. Tesco followed, as did Presto (for those of you who can remember Presto before it was Safeway-ed).

Supermarkets in Britain were an invention of the 1950s, largely thanks to Jack Cohen, a one-time tailor from the East End, reinventing his pre-war Tesco stores. They were representative of the new consumerist society in much the same way as mass tourism was. And in a similar way to tourism, they operated according to a mass production model adapted for the service sector. And when the mass became so great, urban planning allowed for their relocation to the out-of-town retail park, signalling crisis on the high street. No sooner had Brent Cross Shopping Centre opened than the road to Wembley was abandoned by shopping supporters switching their allegiance to the retail stadia of the North Circular Road.

The story of Mallorca's retail development is not dissimilar. It differs mainly in the development having occurred much later. Recent relaxations of planning regulations have facilitated a further increase in the number of commercial centres, predominantly out-of-town. Primark's arrival in Carrefour's new centre in 2016 will be one further example of this and an example also of an internationalisation of Mallorca's retail sector which had long given the impression of being antagonistic towards foreign investment.

The commercial centres have not all been greeted with open arms. When Media Markt, the German electrical goods giant, opened its Palma store, there was a campaign against it and in favour of small shops in towns out in the sticks. It was a campaign with more than just a slight hint of xenophobia, but it was, nonetheless, an understandable one. Communities, like those which existed along Britain's high streets, were and are threatened by a concentration of commercial centres in the greater Palma conurbation; this threat exacerbated by Mallorca's small size and so ease of transport.

But Mallorca's commercial centres are, again like Britain, an extension of how retail competition evolves and can leave smaller retailers trailing behind, struggling to adapt or out of business. When Sainsbury opened in the new town centre in Camberley, competitors along the high street which didn't adapt were affected. Mac Fisheries, Cullen found the going tough. And the story of competition from larger stores, i.e. supermarkets, in Mallorca is largely the story of one man - Francisco Lavao.

He wasn't from Mallorca originally but from Tetuán, a district in Madrid. He came to Mallorca at the age of ten in 1952. He was to go on to form a chain of supermarkets. Their name was COP. Lavao was the first true supermarket entrepreneur, and his story is a remarkable one. In 1977, the supermarkets having suffered in the wake of the oil crisis, he upped and left Mallorca. He fled to Argentina with a suitcase stuffed full with fourteen million pesetas. Three years later, he was extradited to Spain in order to stand trial on a charge of unlawful bankruptcy that had brought about the collapse of the COP stores. The most astonishing aspect of this story is that Lavao, who seemed genuinely remorseful, picked himself up and started all over again. His new supermarket venture took its name from the words "servicio" "y" "precio". SYP.

If Francisco Lavao was arguably the man who created Mallorca's supermarket sector, it was a businessman from Asturias whose company was to give Mallorca its best-known retailing name, that of the department store El Corte Inglés.

There is a connection between El Corte Inglés and Tesco insofar as the Madrid store was originally a tailor's shop, established in 1895. The Asturian Ramón Areces Rodríguez bought the shop in 1935. It was the start of the creation of a retail empire. Yet, despite the fact that El Corte Inglés is so well-known in Mallorca and that its reputation might suggest that it has been long-established here, the Avenidas' store isn't even twenty years old. It wasn't opened until 20 September, 1995. In the same year, the company bought fifteen commercial centres from Galerias Preciados, one of them having been the Jaume III store. It had taken eleven years for the building and then opening of the Avenidas' store to become a reality. The administrative process to permit it had started in 1984.

Such administrative processes don't now take as long. Permissions for commercial centres are generally easier to obtain. And Primark will be a beneficiary. The latest chapter in the story of the changing face of Mallorca's retailing.

MALLORCA TODAY - Media Markt set to open in Palma

Anticipated for some months, the German electrical-goods retailer Media Markt has officially announced its intention to open a large store in the Ocimax centre in Palma at some point this year. The company expects to create 60 new jobs as a consequence.