Crisis in Spain forces distributors to engage Third World tactics

22 consecutive months of sales decrease

According to the Spanish
Statistical Institute, the 9.8% drop was just the latest in a series
of 22 consecutive months in which the Spanish retail sector shrank.
Unemployment is higher than ever (more than one in four adults
currently has no job), so many Spaniards struggle to pay their
interests – which in turn weakens the Spanish banks.

This forces the Spanish
government to borrow money to support the financial sector, raising
the national debts and increasing the need to cut spendings… which
only adds to the lack of consumer confidence. According to Nielsen’s survey, Spanish confidence – though being one of the lowest in the world – was still higher than six other European countries in the first three months of 2012; but a heavy crash can be expected for the second quarter.

Third World tactics

Lower consumption and
growing poverty force international retailers to engage in strategiesthey adopted for emerging markets, as the Wall Street Journal
reports. Unilever is trying to produce alternative versions of its
brands for these countries, which are almost half as expensive as the
normal ones.

“With around one in five
people now officially living beneath the poverty line in countries
like Spain and Greece, it’s critical that we find new solutions to
ensure that people across the region continue to enjoy our brands,
while keeping in control of their household budget,” says Matt
Close, Unilever’s head of European marketing.

Swiss Nestlé is also
struggling to stay in the favour of southern consumers. Using cheaper
versions and smaller packages , the brand hopes to be able to fight
off the cheaper private labels, which are growing ever more popular.