Catalonia: The impact of the referendum on the fashion industry

The Spanish fashion industry also suffers the negative consequences of the Catalonia referendum to achieve independence. The persistent political instability faced by the region - and much of the Iberian Peninsula – has led to a significant slowdown in tourism and consumption, as well as the imminent escapism of several Catalan entities due to fiscal pressure.

Although it is still early to give exact figures on economic losses in the fashion industry, according to several financial analysts, Catalonia is entering a latent crisis of no return and Spain is preparing for an economic slowdown as the autonomous community represents 16 percent of its GDP.

Pronovias and Dogi make for Madrid, while Mango remains

Last June, the owner and son of the founder of Spanish Bridal company Pronovias, Alberto Palatchi, decided to flee from the fiscal mess in the autonomous community and the fight for independence led by Carles Puigdemont. Palatchi decided to minimize the risks for his company by transferring its fiscal headquarters to Madrid when independence becomes official.

Dogi is another Catalan textile company that announced to the National Securities Market Commission (CNMV), on October 6, that it is going to move its headquarters to the Spanish capital. The Catalan company was founded in 1954 and its main factory is located in the town of El Masnou, Barcelona, where it has 163 employees, according to its corporate website.

Despite having kept silent about the political instability in the region until now, fashion brand Mango has decided to remain in Catalonia, where it is based in Palau and Plegamans, Barcelona. Company sources have assured that the possibility of leaving Catalonia has not even been on the table. On the other hand, the Ok Diario newspaper states that, at the end of 2015, Mango left the Spanish Chamber of Commerce, due to the impossibility of its managers to attend the different meetings and commitments of the Chamber, as they were focused on the obligations of day-to-day business.

To date, more than a thousand companies have left Catalonia and 19 would have reached this autonomous community, according to the latest data from the Commercial Registry.

Tourism down 30 percent affecting fashion consumption

In the last quarter of the year, the tourism industry already registered a decline of 20 percent in its reserves. Should it maintain the current trend, it would suffer a decrease in turnover of 1.197 million euros on average. If this unstable trend persists, Spanish tourism will grow only 3.1 percent this year, which is one point less than expected.

Income from tourism has dropped significantly this summer due to the attacks in Barcelona and Cambrils, whereas Spain’s rival destinations like Egypt, Greece or Turkey have increased 45 percent, according to Spanish newspaper La Vanguardia.

After the hotel and real estate industries, fashion is the third sector affected by the 30 percent drop in tourism that Catalonia has registered since the referendum took place on 1 October.

Tourists choose "safer" destinations

Last Friday, in the centre of Barcelona, the shops were practically empty. Staff at the French retail brand Sandro told FashionUnited that sales have dropped about 30 percent compared to the same period a year earlier. "The decline in sales began to take place this summer after the attacks, but it has also been more obvious since the referendum," explains retail manager Filippo Zunini. He adds that this fall retail sales have been affected in Barcelona and also in Valencia and the Balearic Islands. "Tourism has registered a decline all along the Mediterranean coast. During the golden week in China (the holiday period during the first week of October) the number of Asian customers in our stores was far lower than it was in previous years. Japanese and Koreans are still coming but very few Chinese. They're going somewhere else."

The manager of the Maje store in Paseo de Gracia says that there has been a 45 percent drop in business in her store. "I have been told that embassies in some countries such as the United States and China warn tourists that Barcelona is a dangerous destination and that demonstrations may break out at any moment. Some cruises to the Mediterranean have also been cancelled," she said.

Liu-jo is another brand that confirms the previous statements. "There are very few people coming," said a shop-assistant at the Italian firm. "When people come in and they hear ambulances or police cars in the street, they get scared and look through the window to see if they are in danger. Of course, there is a lot of insecurity and this has an impact on our turnover, which has fallen by about 30 percent, compared to last year. "

Other big multinationals like Burberry, Loewe or Desigual, with shops located in the city centre, prefer to remain silent. "Our policy is to say nothing," says the manager of one of these establishments. If we say something, we risk losing clientele one way or another."

Photo: Nicolas Carvalho Ochoa / DPA / via AFP