Unemployment Pushed Spanish Retail Sector Down

Spain’s retail sales in November 2008 recorded an 8% decline in the wake of declining consumption, resulting from the rising unemployment and global economic recession.

As per Spain’s National Statistics Institute (INE), retail sales in Spain suffered a calendar-adjusted decline of 8% in November 2008 on a YOY basis, as reported by forbes.

Retail sales in the country slumped in November 2008, following an 8% YOY decline in October 2008 and 7.2% decline in September 2008. The GDP growth of the country contracted at a quarterly rate of 0.2% in Q3 2008, registering its first ever decline since 1993.

The key reason that induced this decline in Spanish retail sales is the declining consumption in 2008 due to increasing unemployment with the end of construction boom that prevailed for over a decade. Tough financial environment also rocked the Spanish consumption.

However, the promotions of “Black Friday” lured shoppers to come out, but only at the cost of heavy discounts. Also, as compared to November 2007, the shoppers got five days less to shop during the Thanksgiving holidays in 2008. Moreover, consumers have become highly price-conscious while shopping and thus, they are purchasing less expensive goods.

Retail sales in November witnessed a tough time in the background of global crisis, which is still posing a severe threat to the country’s economy. November sales, recording one of the worst declines in past few decades, increased the probability for poor results in December also.

Most of the stores held late Thanksgiving responsible for the feeble sales in November 2008. Delayed Thanksgiving implies that the reporting period of the month excluded a full week of post-holiday shopping in 2008 as compared to 2007.

“With falling household consumption due to increasing unemployment and grim economical conditions, Spanish retail sales suffered constant decline in November 2008. However, it will be too early to predict about the rebounding of consumer spending, but this downturn appears to be the worst. Meanwhile, the only good news is that the shoppers are no longer cutting their expenditure”, said a Research Analyst at RNCOS.

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