Country Focus: Spain

A bullish market, isn’t it?

We’ve covered Belgian, Polish, Australian and Nordic markets, and this time we’re venturing into Mediterranean territory. More specifically speaking, Spain, the country that gave the world tapas, sangria and two of the most revered football clubs to ever exist (our office in Barcelona says there is only ONE!).

But that´s just the touristic side of the country. Spain is also the second largest country in Western Europe and more complex as a market than many outsiders might believe, with two archipelagos (Canaries and Baleares) as well as African enclaves as part of the territory. Some more interesting facts about Spain:

The Economy

Spain has a population of 47 million and a GDP per capita of around EUR 27,000, which makes it the fifth largest economy in Europe, behind Germany, the UK, France and Italy. After a Covid-related recession in 2020, prognoses are currently predicting an economic growth of 6.6% and 4.2% in 2021 and 2022, respectively, with the return of domestic and export demand. [ source ]

Some economic strengths that support an optimistic outlook are Spain’s solid banking system (including global institutions Santander and BBVA) as well as a plurality of companies with international recognition in fields like pharmaceuticals and biotechnology, automotive, mining, renewable energy (Iberdrola being the world’s largest operator), infrastructure, clothing and technology.

Moreover, Spain’s tourism industry is the second-largest in the world, while the harbour in Valencia is the busiest seaport in the Mediterranean basin. Given that Spain is among the EU countries with the fastest vaccination rate, an economic rebound is a calculated projection. [source]

The Ecosystem

With 107 stores and 17 recently acquired Worten stores on the Spanish mainland, Barcelona-headquartered MediaMarkt is the biggest eletronic retailer in the nation. Worten, based in Madrid generates 75% of its EUR 1bn turnover from 15 stores on the Canary Islands, while the other 25% can be attributed to online business and a single store in the capital.

FNAC, also headquartered in Madrid, has 72 stores in Iberia and according to Statista generated a turnover of EUR 378m in 2019.

With 89 stores across the nation, El Corte Ingles employs 88k people throughout the organisation and makes USD 15.3 billion in annual turnover (2019). Customer traffic amounts to a total of 700m, of which 11.5m are ECI card holders. It’s the only remaining department store chain in Spain, the biggest one in all of Europe and the 3rd biggest in the world. Carrefour boasts an impressive 180 stores across Spain and ranks as the #1 in TV sales.

The user penetration of the online business in Spain is estimated at 27,6% with an average revenue per user in the CE market of US$319.95. [source] . According to the bank JP Morgan the average annual online spend, is lower than the European average.

Younger Spaniards are the nation’s most enthusiastic online shoppers, yet the number of items they buy is still low, as they make an average of 3.7 purchases per year. The 31 to 45-year-old age group is next, at three purchases a year. It appears small basket sizes apply across all demographics; 46 to 65-year-olds make two purchases online each year on average.

Apart from Amazon, Ali Express and PcComponentes, there are no significant purely e-tail dealers. Online business in Spain grew by 24% in 2020, rising to USD 21bn. The compound annual growth rate (CAGR 20-24) for the next four years is estimated at 8%.

Very relevant in terms of CE online business are again, omnichannel players such as MediaMarkt, El Corte Ingles, FNAC and Carrefour, some of which even employ their own marketplace structure. The most relevant players are:

Influencers

In terms of influential media platforms, Spain has some noteworthy names. OnOff  is the number 1 image & sound hifi magazine, and tuenti blog is a trusted knowledge database for tech-savvy readers (the company started out as a social networking service known as the “Spanish Facebook”).

At Clipset, a digital lifestyle channel with 2.38m followers on YouTube, you’ll find unboxing videos, analyses and comparisons of the best gadgets and latest technology/Internet news presented in a fun and relatable manner. Eduardo Arcos and Rosa María García are two important tech personalities with 150k and 14k Twitter followers, respectively.

Notable Instagram & Twitter influencers with tech focus (also active on Twitch):

Notable YouTube influencers with tech focus:

Significant influencers overall:

Consumer electronics

The brand mix in different Spanish CE sectors looks as follows:

Home Appliances

It’s pretty much a European average of brands butwith lower price points. Beko and Haier are strong in Spain, as well as Korean brands LG and Samsung. In spring and summer, the air conditioning business disrupts the market as white goods sellers (especially buying groups) focus massively on this category, which makes the impact on other departments huge.

“Independent” smaller retailers (often members of various buying groups) with a strong focus on AC and fans are devoted to this category in Q2 & Q3, there’s often a liquidity problem to also be able to focus on other brands. Interestingly, carbonators aren’t a lucrative business in Spain due to the poor tap water quality – not even Sodastream plays a relevant role.

Smartphones

Except for some premium models by Apple and Samsung, the Spanish smartphone/smartphone accessory market is clearly in a different price range than Central Europe. The biggest players are Samsung (lower end models), XIAOMI (extremely relevant), Apple and Huawei. Accessories are mostly OEM or obtained very cheaply through Ali Express or similar platforms.

TV, PCs & Notebooks

Samsung, LG, Sony and Philipps are the standard brands here, but some entry-level players like Hisense, XIAOMI and Thomson are also gaining ground. About 60% of Spaniards currently have some pay-TV service in use, Netflix and Movistar being the most relevant ones. About 95% of all soundbar sales can be allocated to LG, Samsung and Sharp. In terms of computers, the most notworthy brands include HP, Lenovo, Acer and Apple.

Action Gear & Office Communication

GoPro is the dominating supplier of all things action gear, followed by some minor B-brands. Logitech pretty much commands the webcam market, and Trust is a relevant player with bestsellers in the < 50 EUR range.

Audio

The top 5 value headphones brands are Apple (25% marketshare), Sony, JBL, Vieta (extremely strong local player) and XIAOMI (MI TWS). The top 5 headphone brands in terms of volume are Apple (9% marketshare), Sony, XIAOMI (MI), Vieta and JBL. In recent years, there was a total category growth of 30% in volume and 37% in value driven by the emergence of True Wireless headphones, which experienced a 90% volume and a 63% value growth.

JBL dominates the portable speaker industry both in terms of volume and value with 26% and 21% marketshare, respectively. Other players include Vieta, Sony, Bose and Logitech. Overall, a total category decline of 6.4% in volume and 4% in value was recorded.

While not really relevant as a category yet in Spain, the smart home/voice command sector is controlled by Google and AMZ. DAB+ radio is practically non-existent.

The listing process

In Spain, margin discussions and bargainings are a standard part of any listing process. Business handlings can be rather emotional, and with that being said personal relationships are overly important. Forming those personal connections with customers takes time but is key to establishing and maintaining a good business relationship.

Spaniards tend to show loyalty to local players “made in Spain”. The average price points in Spain are a lot lower than the European median, which makes the average purchase ticket value in CE relatively low. However, in business dealings, comparisons with other countries aren’t very welcome.

An area on the Spanish retail landscape that could do with more initiative, for one, is an earlier adaptation to technological trends (right now 2-3 years behind) as well as a faster decision making process.

Aqipa Insights

Through Aqipa Iberia Management, we have strong business relations and contacts through all channels. There are 4 sales staff members, 4 in customer service, 6 in logistics, 2 in the RMA department and 1 Brand Operations Manager.

The Spanish brand portfolio encompasses the Harman Group (JBL/Harman), Zound Industries (Marshall/Adidas/Urbanears), Thule Group (Thule/Case Logic), Pioneer, Onkyo, Teac, Esoteric, Integra, Pure, Braun Audio, Hombli, Nextbase, Blueair, eMeet, Baseus and JLab.

If you have any questions, feel free to reach out to our Spanish gear guru Rafael Yuste.