After years of price wars and continued deflation in the sector, 82% of Spanish companies in the fashion business in Spain they contemplate raising their prices during the current fiscal year. An unprecedented quota in the recent history of the sector. Not only will the product be more expensive: most companies have already started or are planning to start charge for online shipmentsa channel that continues to be the most important in the medium term for almost 40% of those surveyed.
These are some of the conclusions that emerge from the twelfth edition of the Veepee-Modaes Barometer of Fashion Companies in Spain, a study sponsored by Veepee and prepared by Modaes based on the testimonies of a sample of 300 Spanish fashion companies. The report is presented as a reference for companies in the sector and is intended to be a tool for entrepreneurs and managers in this business to know the evolution of the fashion sector in Spain, as well as to make informed decisions regarding your business strategy.
There is a great consensus among companies that the inflation it will be generalized in the sector: an overwhelming majority, 95%, believes that prices will increase in 2022, while only 5% of companies anticipate a contraction.
The movement is part of a context of generalized inflation, which could have long-term effects for the sector. This is what 65% of the panelists of the Barometer of Fashion Companies in Spain believe, while 34% consider that the effect on the fashion business it will only be temporary.
The answers regarding the international geopolitical situation are similar: 55% contemplate a lasting impact on fashion, compared to 44% who estimate that this impact it will only be ephemeral. The rises in interest rates will also have an impact on the sector, although not more intensely than in other economic activities. This is what 68% of those surveyed believe, compared to 29% of companies that foresee that the impact on fashion will be more pronounced.
Performance in 2021 and forecasts
The Veepee and Modaes report also collects data on the performance of companies in the sector in 2021, the last year closed, and their forecasts for 2022. After the pandemic hit, the trend in 2021 it was a strong recovery and nearly nine out of ten companies increased sales. 57% of the panelists even recovered their sales volumes from 2019, before the outbreak of Covid-19.
By 2022, marked by the outbreak of war in Ukraine, optimism moderates slightly: 75% of companies foresee a positive evolution of their business, while 19% anticipate that it will remain stable and 6% that it will decline. These forecasts are also transferred to job creation: almost two out of three groups in the sector plan to increase their workforce this year.
This growth will occur despite the fact that the environment is not so good, according to the perceptions of the companies themselves. Only 35% of those surveyed define the situation of the fashion market in Spain as good or very good and 57% see it as regular. Looking ahead to 2023, environment could get worse: the ratio of companies that believe that the market situation for fashion in Spain will be bad next year rises to 13%.
The online grows, but with new rules
The main fashion companies in Spain continue to bet on the online channel as the most important in the medium and long term, although the consensus that places it as such falls to 37%. The multibrandmeanwhile, remains at 30% and own stores are recovering ground: 22% of companies identify them as the key channel for their development.
The data is supported by the good performance of ecommerce during 2022. With the physical trade already free of restrictions, 51% of those surveyed indicate that their online sales will grow in the current year, compared to 42% who believe they will remain stable.
However, the rules that have governed this channel are changing. 65% of the companies in the sector already charge for online shipments in some cases and another 9% always do so. Less popular is the option of charging for returns: 49% of companies do so, although 27% contemplate it.
Anja Brehmgeneral director of Veepee in Spain, points out that “It seems that we are in a paradigm shift in which the new pricing strategies will allow us to apply appropriate policies to the online boom and consolidation in which we find ourselves” and he adds. “They will also shield the margin and thus generate stronger businesses. In addition, it will be a good awareness campaign for consumers.”
