Retail hit by fall in demand and lack of tourists

In February, the growth in sales in the Balearics was 5.3%, almost identical to a national figure of 5.5%. From the middle of March there was the state of alarm. Sales dropped 14.7% nationally and 16% in the Balearics. From March to August, the monthly decreases in the Balearics were greater than the national average. The most alarming difference was in June, when the national figure was minus 3.3% but was -21.2% in the Balearics. With tourism returning, the figures for July and August were less extreme, but the decreases in the Balearics remained much greater: -14.5% versus -3.7% nationally in July, and -15.3% compared with -4.6% in August.

Over the first eight months of the year, retail sales fell 17% in the Balearics compared with January to August 2019. The data from the INE do not distinguish between type of retail outlet, so they include everything from small shops to department stores and supermarkets. The associations which represent smaller retailers, Afedeco and Pimeco, estimate that the decreases in their sector have been as great as 50%.

The absence of tourism is one reason why the Balearics have the worst sales performance of all regions. The Canaries have the second worst. In addition, domestic consumption has fallen significantly, a reflection of, for example, the number of employees who were placed on ERTE terms. The view from the retailers' associations is that residents of the Balearics have only been buying what they need. The lack of events, such as fiestas, has also had an impact. People haven't been out and about like they normally would be.

In Palma specifically, the associations were critical of town hall commercial and mobility policies before the crisis hit. These have led to the city centre being emptied of people.

The problems for retailers are of course compounded by the competition from online selling, the INE noting that in 2019 more than half of the Balearic population purchased a product online. The state of alarm and the new normal have only served to grow this trend.