Blog: Retailers' price cuts highlight Spain's weak economy
Dean Best | 11 June 2012
Spain is the country in Europe that has dominated business headlines in recent weeks. Over the weekend, ministers for the countries in the eurozone agreed to a EUR100bn bailout package for Spain's banks. The move will provide some relief for the markets but, for FMCG manufacturers, it needs to be remembered Spain is in its second recession in three years. The unemployment rate in Spain reached 24.4% in the first three months of 2012.
As data from the latest just-food international basket shows, Spain is one of the most price-sensitive markets in Europe, reflecting the pressure consumers are under. The gap between the prices of brands and own label is growing as retailers fight to attract shoppers. Spanish retailer El Corte Ingles has announced price cuts on thousands of food products in a bid to stay competitive. Its announcement followed annual financial results from Spanish co-operative retailer Eroski that showed a fall in annual sales as it invested in price. Food manufacturers operating in Spain will be aware just how challenging operating in Europe's fifth-largest economy has become.
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