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Portuguese Market Insight: Winter Sales Impacted by Stock Issues & Extended Summer

The last quarter of 2021 saw another bump on the Covid-19 rollercoaster. Despite hitting 85% vaccination rate in October and the economy fully opening… everything indicated that the war was about to be won. But the Omicron variant ignited fear with our government as they saw the scenario seen in other European countries struggling with exponential growth of infections, so they made the vaccine booster and testing a priority. By Nuno Principe

With the Winter and Christmas season coming, the government called for precautions to be taken with family reunions and made four free tests a month available to each person. Fortunately, the 40,000 daily cases of infections had no serious impact on the number of hospitalizations and deaths. To fight the spread of Omicron the authorities set two weeks of restrictions after Christmas with measures such as mandatory work from home, bars and nightclubs closed, banning sales and store limit number of customers.

Despite all the concern, the Portuguese economy shows positivity with the forecast pointing to 5.8% growth in 2022 and the unemployment rate falling to 6.3% in November (the lowest since 2001).

Surf and skate shops continue to struggle with stock problems due to the worldwide production and logistics crisis. Summer weather in October and November harmed Fall collection sales and the limit of one person per 5m2 instore has returned.

Waterbound is a surfshop founded in 2019 located in a premium spot in Ericeira. His business includes apparel, surf lessons and rentals. They work with brands such as Roark, Ocean&Earth, Salty Crew, Sisstrevolution and Jaase, among others. They also have their own clothing brand which is made from organic cotton. For a store that was only about six months old and was still recovering from the investment it was hard to deal with the shock caused by the pandemic. It was survival mode. Looking back almost two years there were several months they were closed or working with lots of restrictions. For a store that had its doors open daily from 9am, to start working from 10am to 7pm with a limited number of customers and being closed on the weekend was a disaster. Before the pandemic they had 30 customers in store at the same time but because of government restrictions they only had authorization for two at a time. The result was a 90% drop in the store’s capacity. Store owner André Caré admits that his business wasn’t prepared for such a disruptive reality. “Our website wasn’t ready to have online sales,” he said. “Still, we got down to work and opened the online store. But after some sales we had to deal with another setback: lack of stock. This forced us to give up on the idea and remain only with the physical store.” Furlough support from the government was key to facing the storm. But that didn’t prevent the store from having to reduce staff. Christmas sales didn´t go as well as in 2020. That’s because there was free circulation of people between cities and a drop in sales was noted. Another reason is customers became more used to shopping online due to the pandemic. The fact that the summer weather lasted until November didn’t help to sell the Fall collection either.

Stock and logistics issues that have come to harm the action sports industry also had an effect on the store. “Due to production and transport failures worldwide re-orders sometimes don’t arrive when they are supposed to. There’s lack of product and a delay in their arrival. Several sizes of clothing are missing. This ended up having an impact on sales”, he admits.

But there’s always a positive side to things. Waterbound optimized their business thanks to the pandemic. They chose to have only two brands for men and two for women allowing for a more inviting product displays for customers instore. Looking for the present and future, the outlook is colourful. “We feel that the worst is over. We also ended up with new local customers. Special thanks to our staff team, our suppliers and customers for their spirit of resilience. Their unconditional support allowed us to survive and keep the store open and make good sales.”