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Cross-Category Trends

Growth of e-commerce

Online shopping has been growing at a rate of more than 20 percent a year, as consumers look beyond flights and hotels, which have previously dominated online spending, and grow more comfortable shopping for household goods, clothes, electronics and even groceries online. Kantar Worldpanel data shows e-commerce already accounts for 1.1 percent of spending on fastmoving consumer goods (FMCG) and is used by nearly 4 million Spanish households. The take-up of online shopping will be helped by improvements to broadband services that make browsing a more streamlined experience. In January 2017, the number of fixed broadband lines in Spain rose by more than 72,000 in just that month, taking the total to nearly 14 million. This is 29.7 lines per 100 people, up from 28.5 just one year earlier. Similarly, the number of smartphones is still on the way up, bringing more people within clicking distance of online retailers, both local and international. Each month, nearly 200,000 new smartphones get connected in Spain; 94 percent of internet users have a smartphone. Spanish brands with global aspirations should look at e-commerce as a low-risk expansion route; the value of online transactions in Spain of goods sent to foreign locations is more than 2.5 billion Euros a year and growing at nearly 28 percent, mainly to other European Union markets but also to the US and Asia.

Rising expectations of convenience

The growth of e-commerce and the influence of internet pure-play retailers such as Amazon are raising consumer expectations of the shopping experience and, in particular, delivery windows. If Amazon can deliver within a few hours, then consumers are starting to wonder why anyone else needs a week. Older consumers and those in remote areas increasingly demand the same speedy service from their local stores as is offered by this international giant. Click-andcollect services are increasingly the norm, as is the option to order outof- stock items on an in-store iPad when browsing in a physical store. National retailers are upgrading their web sites and making them mobilecompatible. At the same time, there’s a push for physical retail stores in closer proximity to people’s homes. When it comes to fresh goods, there’s declining tolerance for anything seen as sub-par; no longer will consumers accept food that’s past its prime as a trade-off for having it available close to home. They want the freshest, the best prices, and they want it now.

Changing spheres of influence

Television remains a powerful tool for mainstream brands to reach a national audience efficiently, but digital media is becoming increasingly powerful as a source of both reach and influence when it comes to consumer perceptions of products and brands. Kantar TNS research shows that 40 percent of under- 24s say they rely more on what people say about brands online – bloggers, YouTubers and online reviewers – to inform their purchase decisions than what they see as more “official” sources, such as newspapers, TV commercials and brands’ own websites. Brand-savvy YouTubers include elrubiusOMG, a 20-something man whose video game tactics and comedy has won him more than 22 million subscribers and more than 4 billion views, not just in Spain but across the Spanish-speaking world. What marks out many of the most popular YouTube channels is they’re either informative – with how-to videos – or they’re just good fun. And there’s lots of scope for brand involvement: the YouTube channel iTownGamePlay describes itself as a hub of “terror and fun”, and features video games, memes, music – and the snack brand Doritos. It’s not just the young who are online, though. While the main web of influence for older consumers tends to be friends and family, the speed of social media adoption across age groups means they are increasingly seeking inspiration and advice online.

The new youth of today

The gap in attitudes and priorities between the generations always feels vast, but in Spain, these gaps are opening up, as young people face a very different start to adult life to their parents and grandparents. Their situation is so different that there’s a vast swathe of a generation that is nicknamed “ninis”, a term derived from the Spanish phrase ni estudia ni trabaja, used to describe those who are neither working nor studying or in training. This applies to 25 percent of Spanish people aged 15 to 29, compared to a global average of 15 percent. In some parts of Spain, it’s over 40 percent. It’s not just their lack of spending power that marks out these young people, but a lifestyle and attitude. Other young Spaniards stand out in a different way. They left Spain when the crisis hit; many went to other EU markets, especially Britain, in search of work. What they have discovered is not just employment but a different outlook on life, so when they return to Spain, as they have begun doing as the economy turns a corner, they have a more global outlook – although retain a fondness for their favorite brands from home. What this means is that there are few brands that can appeal to the entire spectrum of Spanish consumers with the same flavor of communication. The media mix may be similar, but the content needs to be adapted to suit different demographics.

Evolving habits, new opportunities

Economic upheaval and high levels of employment in recent years have led householders to completely reassess what they buy, and where and how they shop. As purchasing power has diminished – some estimates say 55 percent of households struggle to get to the end of the month – private label goods have seen a huge surge in popularity. Some supermarkets even carry several private label ranges in a single category, and the lines between private label and brands have become somewhat blurred. Loyalties to brands and retailers are being tested, and there’s a willingness to consider new brands. Lidl has become the fastest-growing supermarket chain in Spain, with nearly 57 percent of Spanish households having shopped there. While it’s still a small player, its market share has grown from 3.5 to 4 percent, as it improves its fresh food offering and adds beauty products to make it more of a one-stop shop, like the larger national chains. To stay competitive, other retailers, like market leader Mercadona, have been upgrading stores and focusing on quality, particularly of fresh food, to prove they provide value. DIA has reinvented itself with a new beauty offering and a marketplace feel in the fresh section. And as basket size has shrunk, regional stores with more accessible locations have gained ground over out-oftown hypermarkets. Lower prices at supermarkets have led many consumers to switch from small, individual stores to the modern retail trade. Smaller players will have to work hard to win back that trade. As the economy recovers, there are opportunities, though, to entice consumers back from private label to branded goods.

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