The positive performance of indicators such as GDP and the employment rate boosted domestic household disposable income, and this trend drove sales growth in department stores in particular in 2016. In addition, department stores also benefited from the positive performance of tourism in 2016. Meanwhile in variety stores demand remained relatively stable. Intense competition from other channels negatively impacted the growth potential of variety stores. On the other hand, mass merchandisers and warehouse clubs are non-existent in Portugal.
With a wide offer spread over two outlets and 89,000 sq m of selling space, El Corte Inglés - Grandes Armazéns led mixed retailers in 2016. With strong competition from other channels, the company attempts to differentiate itself through higher service levels and a wide offer ranging from lower-cost to luxury banners. In a strategy to expand the offer of Portuguese brands, El Corte Inglés added the Bonamôr and Portoluso brands to its homewares portfolio in 2016. In the same year and through the opening of selling spaces in El Corte Inglés, the American apparel and footwear giant, GAP, entered the domestic market.
Mixed retailers is set to record growth value growth at constant 2016 prices over the forecast period, given the expected improvement in domestic consumer purchasing power. Access to credit is likely to improve as unemployment rates decline and the economic instability drops. Price is likely to remain an important factor in purchasing decisions, although losing significance as the forecast period develops to factors such as design, convenience or quality. This trend is likely to fuel sales in both El Corte Inglés and variety stores over the forecast period. Focused on price, Chinese stores will probably lose share over the period, while new variety stores with elegant and clean décor offering products at affordable prices may emerge and attract consumers.
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