The Spanish Market

It often surprises people to know that Spain is a major export market for UK publishers. For publishers with weekly titles, it’s highly likely that Spain will be one of their top five markets, alongside Australia and Canada. With over 52 million tourists every year, the import titles represent an important sector to retailers in tourist areas.

There are two very distinct categories of UK titles in the Spanish market: seasonal titles, generally weeklies like Now, OK and Heat and non-seasonal titles, like Uncut, Mojo, Vanity Fair and Wallpaper*. In the last year it has been a demanding market for UK publishers, and indeed domestic publishers, due to two major factors: the market has suffered due to shifting tourism behaviour and a significant law change banning the sale of tobacco in newsstands.

On the 1st January 2006 the Spanish government introduced a law banning the sale of tobacco products in newsstands, the only exception to this being newsstands in public places which are allowed to have cigarette vending machines. However, since many newsstands in public places are already over-crowded with other products, many have no space for the machines.

It is widely agreed that the decline in magazine sales in the Spanish market is directly related to this law change. Varying sources say the decline in magazine sales, both domestic and import, is as much as 6%. Turning to the impact on retail outlets, in 1996 there were an estimated 32,000 outlets selling magazines; in 2006 there are an estimated 27,000. Whilst this rapid decline cannot all be attributed to the new tobacco law, it could explain the closure of as many as 3,000 outlets. Many newsagents simply cannot sustain a profitable business without the sale of tobacco.

Distribution Facts & Figures

Spain has a very competitive and complicated distribution market. In many European territories, distribution for both local and international press is limited to two or three viable distribution options. However, in the Spanish market there are eight national magazine distributors. Five of these distribute both national and international press, two distribute Spanish press only and one focuses solely on international press.

The competition in the market is demonstrated further when you look at how the copies are distributed. Firstly, distribution is through a wholesale network. In total there are 100 local wholesalers (independent and distributor owned branches) operating in 55 regions. In certain areas of Spain there are four wholesalers competing to service a single area. A national distributor would use around 60 wholesalers for local titles and between 20 and 30 for international titles, depending on the size of the title and its relevance in each particular region.

These distributors and wholesalers are servicing over 6,000 domestic titles and an estimated 5,000 international titles. The larger circulation international titles are English or German language weeklies.

Retail Landscape

There are 27,000 press retailers in Spain. The widest reaching international title would typically be distributed to 3,000 retailers in high season, halving to 1,500 retailers in low season. An international title would typically be distributed to kiosks, newsagents, hotels, supermarkets, shopping centres, petrol stations and airport stores.

The Spanish market does not have major retail multiple groups. Many of the chains that are operating in Spain are fragmented, with stores operating as franchises and / or being managed on a local level. The exceptions to this for international press are the VIPS chain, which has stores in the cities and major towns, and the RELAY chain which has a strong presence in the airports with 30 outlets across Spain.

Perhaps because of this lack of retail multiples, the retail landscape for each region has a unique mix. For example, in Alicante, supermarkets account for 14% of the retail universe sale for international titles, yet in Gran Canaria supermarkets are a much more important channel with a 50-60% share of the universe.

Trade marketing spend has to be planned at a local level, considering which areas are strong sales regions for a title and the retail dynamic in those areas.

UK Tourism in Spain

It is not hard to see why the Spanish market is important to UK publishers when you take a look at the tourism figures. In 2005, 52 million tourists visited Spain; 16.1 million of these were UK visitors, representing a 31% share of all tourists.

You can get access to tourism figures on a monthly basis. The latest report, for August, shows that UK tourism is up year to date by 2% (Jan-Aug) and up 0.8% Aug 06 vs Aug 05. Tourism from all countries was up 4.7% (Jan-Aug).

However, when you delve deeper into these figures, a different picture emerges. Although there are, in total, 4.7% more tourists in 2006 vs 2005, the level of spending is not increasing in line with this figure. In the same period, spending has increased by 2.9%. This is due to two factors, the average length of stay decreasing and the average level of spending decreasing. With tourists staying for less time, their exposure to new issues is increasingly limited, and with the average level of spend decreasing they are more cost conscious to the relatively high cover prices of magazines.

This shift can be explained when you take a look at the number of entries by the low cost airlines. The number of tourists arriving from the UK on-board a low cost airline increased by 5.8% and now represents 38% of all entries by air from the UK.

When you look at tourism figures in some detail, you can begin to understand where the shifts in tourism are occurring. In August, traditional areas such as the Balearics and Andalucia showed declines year-on-year, whereas Valencia and Alicante saw strong growth. Sales patterns follow these shifts and distribution has to reflect this.

Key Considerations

When creating your strategy for the Spanish market, it is important to consider the following:

1. Do appoint a distributor that understands where international press will sell. The UK press is divided between three key players, SGEL, Comercial Atheneum and Iberpress. The choice of distributor in Spain is incredibly important due to the general lack of retail multiples. Almost without exception, the top 100 outlets for international press will be independents in tourist areas.

2. Don’t be greedy with pricing; it is an important factor in Spain if publishers want to drive volume. The market is price sensitive, so price competitively.

3. Do think about the freight arrangements as they will have a major impact on sales volume, particularly for weeklies. Generally, all monthlies will travel by road and arrive in Spain a week to ten days after the UK on-sale date. For major weeklies, publishers strive to be on-sale in Spain the same week as the UK. This will usually involve air-freighting copies over to the major distribution centres. Catching an on-sale date prior to the weekend can uplift sales by as much as 25% for a weekly time-sensitive title.

4. Do include cover mounted gifts if budgets allow. Both seasonal and non-seasonal titles with added value will perform very well.

5. Do understand your target market and ensure that if your title is seasonal you adjust the supply to reflect demand in the summer months.

6. Do understand the ex-pat community; many reside in Spain all year long and want to buy their favourite UK magazines. Access to the ex-pat community can be reached through local newspapers, associations and radio stations.

Major Opportunities

Despite the market pressures described earlier, there are still lots of opportunities to increase sales in Spain.

* RELAY, the major retail chain in airports, offers retail promotions in all major Spanish airports. These provide excellent availability and exposure during the summer months.
* Focus activity on seasonal titles in the major areas: Canaries, Balearics, Costa Del Sol and Costa Blanca. Focus activity on non-seasonal titles in Barcelona and Madrid.
* Widening distribution is an effective way of gaining additional display space. Due to the lack of retail multiples, it is easier to access new outlets but be prepared to make copies available and be flexible with sales efficiencies.
* Pricing is a very effective tool during the summer months to stimulate sales, so consider price promotions.
* Save your UK cover-mount overs for use in Spain during the summer months; you can use very small quantities and target specific areas.
* Point of Sale can be difficult to place, so if POS is part of the marketing strategy, channel it to the top selling outlets where it can be placed by merchandisers.
* Display space in retail outlets in the tourist locations is incredibly cramped. If you want to make a big impact, consider producing racking that retailers can place outdoors.
* Take the opportunity to try and meet some of the local wholesalers; they are incredibly knowledgeable about their local market. They will happily give you advice on what activity will work in their area.

Spain will almost certainly continue to be a major market for UK exports in the women’s weekly and lifestyle categories, thanks to the fondness the British have for Spain. But it is no longer a market that publishers can just simply pump copy into. Success in this market requires a clear strategy with meticulous attention to freight arrangements, choice of distributor, pricing and promotion.