Consumption Businesses, on the ropes: 52% expect a drop in sales in 2024

Every day in Spain, an average of 34 self-employed workers dedicated to commerce disappear

Consumption Businesses, on the ropes: 52% expect a drop in sales in 2024

Every day in Spain, an average of 34 self-employed workers dedicated to commerce disappear. A loss of productive fabric that has been happening for two years, mainly due to the blow of inflation in this period.

The rise in prices and the slowdown in demand has been the main problem in the sector, which also suffers from competition from large companies - especially digital distribution platforms, since only 28% of companies in the sector have online sales channel or ecommerce -, customer non-payment and financing problems, derived from the increase in the cost of credit due to the rise in interest rates and the difficulties in accessing new funds.

These circumstances lead 52% of companies in the sector to foresee a drop in their sales in 2024, according to the latest edition of the Business Competitiveness Observatory prepared by the Spanish Chamber of Commerce based on 400 surveys, to which EL has had access. WORLD. Pessimism is greater among smaller companies - from 0 to 9 employees - since in this segment 58% predict a less favorable situation in this year that has just begun.

Despite the difficulties, businesses have generally maintained employment: 73.8% have continued with the same number of workers, while 16.5% have made new hires, making a total of 9 out of 10 companies They have increased or maintained the workforce, according to the document. This perception is consistent with Social Security affiliation data, which show that 34,558 employees have joined the sector throughout the year.

This good dynamism is cushioned by the drain among the self-employed, who in many cases have been forced to close. "We witness impassively the extinction of retail commerce," lamented a few months ago one of the largest self-employed associations in the country, UPTA. "The most affected sector throughout the year continues to be commerce. The high number of businesses that have been lost stands out, undoubtedly due to the economic crisis, the shortage and the high prices of raw materials, fuel and electricity "More than ever, it is necessary to activate a rescue plan for traditional commerce," asked Eduardo Abad, its president.

There are several demands that this sector has. According to the Observatory, 82% of companies in the sector ask that the tax pressure be relaxed, that is, that tax burdens be lowered in order to have more disposable income; while 35.5% see it as necessary to improve information on subsidies that they can access; 14.3% ask for more uniform regulation; and 9% ask for commercial revitalization programs.

Despite the difficulties, the fact that practically half of the productive fabric (48%) foresees an improvement in its sales in 2024 can be considered a positive fact, given the context of uncertainty and economic slowdown that the country is experiencing, with a Gross Domestic Product ( GDP) that is slowing down little by little.

In the last year, the Gross Added Value (GVA, equivalent to production) of commerce, transport and hospitality has been progressively slowing down. It rose 2.4% in the first quarter, 1.1% in the second and contracted 0.1% in the third, according to quarterly National Accounts data adjusted for seasonality and calendar.

This decline during the year would have been more pronounced if it had not been for the fact that household consumption spending has remained in positive territory, although it has also been deflating until registering a timid advance of 0.2% in the third.

"Spanish families have faced the current cycle of interest rate increases much better than in other episodes due to the strength of the labor market and the improvement in nominal gross income, and this despite the rise in inflation (... ) The best indicator that families are resisting better than in other cycles can be seen in the evolution of mortgage delinquencies, which remain contained at low levels (12.4 billion euros, 2.5%), and with a slight increase 442 million in the second quarter of 2023," BBVA Research noted at the end of December, which estimates that "the transmission of the rate increase to households' financial burdens has not yet been completed."