Spain: shopping tourism and the textile industry economic drivers

30-05-24

The textile sector, although often underestimated, is a considerable force in Spain's economy. Contributing €19.8 billion to GDP, equivalent to 1.62% of the total, this industry encompasses such influential brands as Inditex, owner of Zara, Mango and the Tendam Group.

In 2022, the textile industry contributed significantly to the added value of fashion, accounting for 60% of the total. These data are part of the report “The contribution of textile retail to the Spanish economy” prepared by the financial consultancy AFI and presented by the Association Retail Textile Spain (ARTE) in the Congress of Deputies.

If we break down the economic impact, the sector generated 8.8 billion euros in gross value added directly, 5.7 billion indirectly and 5.3 billion indirectly. In addition, it contributed more than 6.3 billion euros to State revenues, representing 2.5% of total national revenue. Public revenues derived from Social Security contributions make up almost half of the sector's contribution: 27% corresponds to Personal Income Tax, 19% to VAT and 6% to Corporate Income Tax.

Textile trade not only contributes directly, but also stimulates other economic sectors. For every euro generated in gross value added by the textile trade, an additional 1.3 euros are created indirectly and induced. Moreover, for every direct job, another indirect job is generated, which is evidence of its capacity to boost the economy.

In terms of employment, the fashion trade in Spain generated more than 343,000 jobs in 2022. Of these, 163,000 were direct and 178,000 indirect and induced, representing almost 2% of the average affiliation in Spain during that year. Diego Vizcaíno, managing partner of AFI's Economics area, highlighted that “the fashion trade in Spain registered more than 343,000 jobs in 2022, of which, 163,000 are direct and 178,000 indirect and induced”.

Ana López-Casero, president of ARTE, underlines the importance of the textile trade, which represents 8% of the companies dedicated to trade, 5% of their turnover and 6% of the GDP generated by their activity. This figure underlines the essential role played by the sector in the country's commercial and economic sphere.

Shopping Tourism

Another aspect where the fashion trade has a positive impact is shopping tourism. Spain is an outstanding reference in Europe in this area. In 2023, the country received 8.5 million “shoppers” tourists (those who spend three times more on shopping than the average tourist), which generated a shopping expenditure of 10,600 euros. Enrique Ruiz de Lera, deputy assistant general manager of Tourism Marketing in Turespaña, highlighted that “this is a strategic segment for Spain, since this tourist spends much more than the average, travels out of season and with motivations other than sun and beach, thus contributing to the strategic objectives of Turespaña: increasing profitability and temporal, geographical and motivational diversification of the international tourism that visits us”.

Shopping tourism contributed to the Spanish GDP an increase in travel spending of 2210 million euros and 55,800 jobs. This type of tourism contributes not only to the direct economy of the trade, but also to the diversification and sustainability of the tourism sector in Spain.

The rapid evolution and transformation of the textile sector, especially in recent years, has posed new challenges in terms of talent and specialization. Teresa Sádaba, dean of ISEM Fashion Business School, commented that “in a sector as dynamic as fashion, it is key to anticipate trends and adapt tools or emerging trends to the retail market in particular”. He added that “Spain is today a reference and cradle of talent for attracting and exporting profiles to Europe”.

Francisco Aranda, president of the employers' organization UNO, the Spanish Logistics and Transport Business Organization, underlined the importance of the logistics and transport sector, which represents 8% of GDP and employs more than one million people in Spain. “It has always been an indispensable part of the fashion distribution chain, although in recent years, it has gone from being a commodity to becoming a competitive advantage,” he said. This transformation is largely due to the irruption of e-commerce, where the textile sector accounts for 9.2% of online sales.

Major Spanish brands, such as Inditex, Mango and the Tendam Group, have shown remarkable growth. In 2023, Inditex, the flagship of the Spanish textile trade, had a turnover of €3.1 billion, 15% more than in 2022, and doubled its net result from €81 million to €172 million. Inditex covers not only manufacturing, but also the sale of garments, consolidating its position as one of the most important companies in the sector.

Mango also recorded an excellent performance in 2023, with sales of approximately 3.1 billion euros, an increase of 15% over the previous year. This figure reflects the success of its 375 stores throughout Spain and the robustness of its business model.

Grupo Tendam, the Spanish fashion multinational and parent company of chains such as Cortefiel, Women'secret and Springfield, reported positive financial indicators for its 2023/2024 fiscal year. The Group's total sales reached 278.2 million euros in the last quarter, an increase of 5.7% compared to the same period of the previous year. In the first nine months of the financial year, turnover reached EUR 884.3 million. Recurring earnings before interest and taxes (Ebitda) grew by 12.6% to 210.7 million euros in the first nine months of the year, 9.4% more than in the same period of the previous year.

Tendam is also preparing to go public before July 12, a transaction that could value the company at 2.5 billion euros. U.S. regulations limit fund intervention more than 135 days after the close of its fiscal year, adding pressure for a timely IPO.

Despite the textile sector's remarkable growth and contribution to the Spanish economy, it faces significant challenges. Global competition, the need for sustainability and adaptation to new technologies are some of the challenges that must be addressed to remain competitive.

Sustainability is an increasingly crucial aspect. The textile industry is known for its significant environmental impact, from the use of natural resources to waste generation. Companies are increasingly focusing on sustainable practices, adopting eco-friendly materials, efficient production processes and recycling programs. This approach is not only essential for the environment, but also responds to growing consumer demand for sustainable products.

Digitalization and technological innovation are also key areas. The adoption of advanced technologies, such as artificial intelligence and automation, can improve efficiency and customization in production and customer service. Companies that invest in these technologies are better positioned to adapt to changing market demands and remain competitive.

The textile sector, often overlooked, is a fundamental pillar of the Spanish economy. It contributes significantly to GDP, generates employment and boosts other economic sectors. Leading brands such as Inditex, Mango and the Tendam Group not only drive the economy, but also set standards in innovation and sustainability.