Luxury brands soar over struggling Spain

MADRID -- Spanish luxury brands are up 25 percent, while the rest of the economy is down.
Written by Jennifer Riggins, Contributor

MADRID--Despite the fall of Spanish consumer confidence, many are still buying bags that cost more than the average salary. In fact, the local luxury brands actually grew 25 percent last year. The huge influx of Chinese, Japanese and Russian tourists looking to buy designer fashion and home accessories has offset the general downturn in Spanish consumerism.

In total, 4.5 billion euros were spent on Spanish luxury items last year, particularly in the foreign tourist havens of Barcelona, Marbella and Madrid.

In the summer of 2011, the Spanish luxury brands--led by Loewe, Numanthia, Lladró, Carrera y Carrera, Natura Bissé, Pagos Marqués de Griñón, Village Olive payments, La Amarilla de Ronda and Sotogrande--got together and formed an organization to self-promote abroad. Called "Circulo Español del Lujo Fortuny," or the Spanish Circle of Luxury and Fortune, this corporate union joined the European organization the European Cultural and Creative Industries Alliance, as well as it forged alliances with the UK, French and Italian orgs. It was welcomed to join these heavyweights because the luxury brands of Europe--which hold 80-percent market share--have been going strong through the economic crisis.

The European luxury sector employed more than 800,000 people in 2011. While the vast majority of European-branded consumer goods has been outsourced to countries with cheaper labor, the manufacture and design of luxury goods remains in Europe.

The new Rajoy government has openly spoken about its support of the Spanish luxury brands, as it thinks they will continue to rise in 2012. This governmental support will be focused on helping to promote these brands abroad, for both consumer exports and tourism imports. Both the government and the Circulo Lujo believe this is one of the right-now-rare concrete steps for Spanish companies to increase their sales, thus creating more jobs, which should then be reinvested in the economy.

Citizens from outside the EU don't pay the 18-percent value-added tax, and export/import tariffs crossing the EU borders are reaching the point of astronomical. Besides the mild weather, gilded gastronomy, Mediterranean beaches, and Picasso and Gaudí, Goya and Vasquez, these substantial shopping discounts are excellent tourist draws. A Loewe purse can cost around 17,000 euros, so the cost of a round-trip flight would be nothing in comparison to the savings.

While there are many Spanish luxury brands, no other is bigger than the accessory and clothing company Loewe, which began over a century ago as the official supplier to "La Corona," the Spanish royalty.  SmartPlanet popped by the Loewe accessories store on Calle Serrano and talked to their Japanese employee Noemi. "We have thousands of foreigners. Chinese, Asian," she said. Loewe "is a Spanish brand unique to the world."

The seller did say they have seen the purchasing power of Spanish clients to be "down quite a lot." She said, in general, she has also seen a huge increase in Russian custumers, along with a significant increase in Latin American customers. She said that, in the last year, they've also seen a small boost again in customers from the US and from the UK, though not from the rest of the European Union.

Calle Serrano is Madrid's version of Fifth Avenue, with windows filled with 20,000 euro Cartier watches and 500 euro bras from La Perla. One block has two Prada stores capped with two Loewes on the corners. While many Spanish businesses are putting up for-sale signs and shutting there doors, you simply do not see this or even sales or clearance signs on Serrano.

The luxury and tourism markets are the silver (or gold or platinum) lining in an otherwise bleak country with 24 percent unemployment. SmartPlanet has already talked about how Spanish tourism is up a 10 percent since 2010, opening its borders to 56.9 million foreign tourists last year.

One of the newest tourism trends is shopping tours, including the Made in Spain luxury tours. Shopping not til you drop, but casually with private showings and personal assistants are a big draw for the ex-pat elite. Even on the Spanish tourism homepage, which doesn't typically have anything except the occasional English or French translation, is fully translated into Russian, Chinese and Japanese as well.

While luxury brands are up, we will wait another month if any other Spanish consumer area start to climb back up in the first quarter of 2012.

Photo: UCityGuides

This post was originally published on Smartplanet.com

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