The enconomy

The Q1 20 GDP figure for Spain shows a more pronounced impact than expected, recording the largest quarter-on-quarter decline in the historical series (-5.2%).

All forecasts are subject to extreme uncertainty and the economic consequences depend on factors that are difficult to predict, such as the course of the pandemic, the impact of drastically tougher conditions in the financial markets, the volatility of raw material prices, changes in spending patterns and the effects on consumer confidence.

Despite this, both the Banco de España and other entities agree that the magnitude of the impact of the pandemic in Spain will be very pronounced in the short term, but, even with the considerable uncertainties, it should be a transitory disruption.

By sector, the most affected have been the hotel and catering industry (181,000 fewer employees) followed by construction, administrative activities and commerce.

In spite of this, the inertia of the first months has benefited the CCI in the first quarter which is up 3.4% in comparison with the previous quarter, although it is down 16.8% in comparison with 2019, and as a consequence of the fall of -19.2% in the current situation and another -14.8% in expectations.

Conclusions

The health and economic crisis triggered by the COVID-19 has raised important questions about the future of retail.

The partial closure of shops had a serious impact on business. Shopping centres are reacting adaptating their concepts to the trends that are going to prevail in the market and implementing the maximum protocols, technologies and services that guarantee a safe environment.

Solidarity, sustainability and slow living lifestyle are the most important consumer values that are going to influence brand strategies.

Some retailers took advantage of the rise of e-commerce during the quarantine to invest in important areas of improvement that have been defected.

Delayed rent payments and the threat of a possible resurgence of COVID-19, have led to a near standstill in retail deals. Investment in the traditional segment (excluding high street) is expected to reach €2 billion by 2020. This figure exceeds that of 2019 due to the sale of Intu Asturias and Intu Puerto Venecia in the first months of the year, as well as the number of supermarket portfolios currently on the market.

As far as the high street market is concerned, activity was almost totally paralysed during the lock-down and activity is anticipated to be resumed during the second half of the year.