Spain at the crossroads

For many years, Spain was the model country in Europe. The economy of this southern European country was buzzing, unemployment was falling and the purchasing power of Spaniards grew year on year. The recession marks a decisive and far-reaching break with this situation: it is hitting Spain harder than most other European nations. Many sectors of the economy, above all the particularly significant building industry, have suffered a drop in sales of up to 50 per cent this year compared with last year. The growth in Spain's economy has come to an abrupt halt, while inflation is increasing fast, and financial experts speak of stagflation.
The pet supplies business has not been quite as badly affected by the slump in the Spanish economy as many other sectors. Hopes currently exist for a modest growth in sales compared with the previous year. Declining purchasing power is damping the appetite of many Spaniards for consumer shopping, however, and this restraint will have a negative influence in the next few months on the pet supplies sector. As well as this, many banks in Spain are increasingly restrictive when it comes to granting credit. Since the Spanish pet supplies sector is composed primarily of small family-run businesses, no capacity for clairvoyance is required to predict that some of these firms will face considerable financial difficulty in the months and years to come.
Experts anticipate that the economic crisis will trigger a drastic restructuring process in the pet sector. In the wholesale trade in particular, where the level of fragmentation is especially high, many sector experts believe that concentration will be the result. In some product groups, one or more wholesalers currently exist for virtually every province. Foreign firms above all complain that it is scarcely possible to be represented uniformly throughout the country, because an immense number of distribution partners is required to achieve this. As a result, some companies have resorted to bypassing the wholesalers and supplying speciality retailers directly.
Changes are to be expected in the retail trade too. The market is presently made up chiefly of many small pet shops. Some of these will probably vanish from the market, as the experience of other countries indicates. Pet product chains and branches might, on the other hand, gain greater influence in the next few years, according to the predictions of market expert
Yours
Ralf Majer-Abele
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