U.S. exporters find new paths to profits in Spain

Business America, August 23, 1993 by Amy Wei

Large distribution channels, consisting of department stores, hypermarkets, and supermarkets, account for 16 percent of the total retail market. Spanish department stores offer consumer goods similar to their American counterparts. Just two department stores, El Corte Ingles and Galerias Preciados, are established nationwide. These two chains account for over half of the department store outlets.

El Corte Ingles is the largest department store in the country, with approximately 22 establishments already in operation, and five or six to be opened in the near future. El Corte Ingles is the largest privately-owned company in Spain and the third largest Spanish company after Telefonica, the partially privatized telephone company, and Repsol, a state-owned petroleum company. In addition, El Corte Ingles has the largest advertising expenditure. U.S. exporters distributing their products through this reputable chain could benefit from the broad exposure their goods would receive from the store's nationwide advertising campaigns. El Corte Ingles publishes a catalog seasonally to advertise Spanish, as well as U.S.-made, products. In fact, El Corte Ingles is already one of the best customers for U.S. consumer goods exports, especially for sports equipment and housewares.

Galerias Preciados is somewhat smaller, with 18 to 20 establishments nationwide. Although Galerias has experienced several changes of ownership and some financial difficulties in the past, the store chain, which is presently owned by a group of investors headed by Justo Lopez Tello of the Mantequerias Leonesas grocery chain, is on the road to recovery. Last year, Galerias publicized an "American Month" that promoted several U.S. apparel designers in Spain, such as Calvin Klein and Ralph Lauren. The display was developed by the U.S. department store Macy's. In addition to carrying these labels, Galerias now employs several U.S. designers who are creating American styles for the store.

Marks and Spencer, a leading British department store chain, has successfully penetrated the Spanish retail market, establishing outlets in Madrid and Seville. The openness of Spaniards to new and foreign products and brands allowed the chain's own top quality articles to become widely accepted. As a result, Marks and Spencer's products are in great demand, and the chain may eventually join the ranks of Galerias Preciados and El Corte Ingles as a leading department store operation in Spain.

Similar to the growth in department stores, hypermarkets have also become very popular among Spaniards. These giant supermarket chains offer a range of products including ready-to-wear clothing, housewares, electrical appliances, and do-it-yourself departments (with furniture, tool, and bathroom sections) at competitive prices. Hypermarkets are usually found in the outskirts of large cities, and they target suburban families. Their popularity has grown rapidly since customers can do their grocery and clothes shopping simultaneously.