As Spain enters the sixth year of an economic slump that has sent unemployment levels soar to over 26 percent, and with GDP on track to shrink for a second year, consumer confidence is at an all-time low: Spaniards have slashed spending, hitting manufacturers and shops hard.
In response, the country's retailers are increasingly shifting their marketing strategies to try to take a bigger slice of the one sector of the economy still showing signs of life: tourism.
"It's called retail tourism," says Mar Sardá de Abreu, director of Madrid Shopping Tours, which she set up in 1999 while working for a duty free shop. "The travel agencies are about making sure that visitors know which museums and restaurants to go to; but they think that shopping is something people do in their free time, while our business model is about making sure people have enough time to go shopping. The key questions are: What do you want to buy? How much do you want to spend? And what are you looking for, exclusivity or a well-known brand?" she says, adding: "Everybody wants somebody to tell them that they look nice in that dress, or that that jacket suits you."
Sardá de Abreu initially focused on business conferences delegates, as well as offering her services to the super rich. But she has since branched out to include the less well-heeled, some of whom are prepared to pay up to 75 euros for a guided tour of the capital's top shops.
First Steps in Madrid, set up this year, aims to offer a more complete service, and can include the advice of a stylist.
"A basic shopping tour of around four hours can cost up to 30 euros per person, but it varies," says the company's Anabelle Fernández.
People are prepared to pay 75 euros for a guided tour of the capital's top shops
According to the website of Value Retail, which specializes in luxury goods, shopping is now a key factor for many visitors when deciding on their holiday destination: "In Madrid, more than 50 percent of visitors see shopping as a positive activity, and see it as a way of having fun."
Belén Pardo, the head of Your Personal Shopper Madrid, says that cities offering a wide range of shops are more attractive to visitors.
Piedad de Diego, who runs a fur and leather fashion shop in Madrid's upmarket Salamanca district, says summer is her busiest time. "It might seem crazy to be buying a fur coat when it's 32 degrees in the shade, but we have visitors who have come especially for that reason," she says. Her cheapest items retail at around 2,000 euros. The elegant, 19th-century streets of the Salamanca district are among the capital's prize assets when it comes to attracting wealthy overseas shoppers.
The area's main artery, Serrano street, has recently undergone a remodeling to allow Madrid City Hall to turn it into the capital's golden mile and is home to world-class shops, along with traditional establishments that give it a uniquely Spanish feel. Running off it are José Ortega y Gasset and Jorge Juan streets, which in turn are criss-crossed by a network of narrower thoroughfares, filled with smaller outlets.
Spanish brands such as porcelain manufacturer Lladró say they are benefiting from the growth of shopping tourism: "A decade ago, 70 percent of our sales were to Spaniards and 30 percent to overseas visitors; it's now the inverse," says María Llanos Brull, the manager of one of Lladró's Madrid outlets.
Madrid is now the joint-second city in Europe for shopping alongside Barcelona
A recently published survey by BBVA bank on the impact of tourism on retailing shows that spending on shopping by foreign visitors in the Salamanca district alone last year rose by 15 percent on 2011 to 38 million euros, making up a quarter of all sales in the capital.
Chinese visitors lead the way, buying 80 percent of their goods on Serrano street, with the Japanese and the Russians bringing up second and third place. On average, each Chinese visitor spends around 900 euros during their stay in the Spanish capital, according to BBVA's survey; the Japanese spend an average 528 euros per head, and the Russians 444. "Madrid is much cheaper than London or Paris. In some shops, the price difference is as much as 20 percent," says Mar Sardá de Abreu.
The Global Shopper Index ranks London as the world's favorite city for shopping. But among 33 European cities, Madrid is now joint second alongside Barcelona. Paris comes third, and Rome fourth. The guide highlights the Spanish capital's variety of shops and hotels, as well as its transport system, climate and culture.
"It's clear that Asia is the key target market for the luxury brands," says Gabriel Suárez, the commercial director of jeweler Suárez. "China is the top market, but Indonesia, Singapore and Thailand are also growing fast." The Chinese dedicate 82 percent of their holiday budget to shopping, spending just 4.2 percent on accommodation and 0.1 percent on food, according to BBVA.
Russia is the fastest-growing origin market for shopping tourism in Europe, according to Madrid's regional government. Russians also stay longer when visiting abroad, spending an average of 9.2 days away. They are also big spenders: from 1,150 euros in 2011, to 1,266 euros last year, an almost 10-percent increase.
The Chinese dedicate 82 percent of their holiday budget to shopping
Mar Sardá de Abreu says the first shop one Australian tourist she was escorting round the city wanted to go was an ironmongers. "He said that there were only three types of key in his country, and the thieves had copied them all." She ended up taking him around the historic center of Madrid: the Puerta del Sol, the Plaza Mayor, and the pedestrianized Preciados street, which runs from Sol up to Gran Vía, and is lined with shops and bars. "The hostelry trade has also does well out of visitors to the capital," she says.
The BBVA says in its report that the policy of banning cars from more and more streets in the center of the city has helped tourism: "The Puerta del Sol has also undergone a recent remodeling that has helped improve access to public transport for visitors."
The Plaza Mayor attracts stamp and coin collectors, and since 1860 has hosted a huge open-air market at Christmas time.
Over the last decade the Gran Vía has lost many of the cinemas, cafés and bars that once lined it, with large-scale fashion retail outlets, many of them belonging to the vast Inditex empire, taking over. "Shopping tourism has huge potential, thanks to the diversity of Madrid," says Annabelle Fernández of First Steps in Madrid. The regional government says 98 percent of visitors who come back to the capital include its shopping attractions as one of the main reasons.
"Tourism is filling the gap left by the decline in spending by Spaniards," says Fernández. In 2012, around 9.8 million tourists visited Madrid, 56 percent of them from other Spanish regions, and the remainder from abroad. Italy is the biggest source of visitors (619,000), followed by France (562,000), the United Kingdom (360,000), Germany (301,000), Portugal (300,000), and the United States (287,000).
98 percent of visitors who return cite shopping as one of the main reasons
Despite the appeal of its stores, Madrid still lags behind other regions in terms of attracting visitors, most of whom still associate Spain with beach holidays: Catalonia is the number one destination, following by the Balearic Islands, Andalusia, the Canary Islands, and Valencia. According to the BBVA, foreign visitors spent a total of 166.9 million euros in Madrid last year, up 13.7 percent on 2011. In the area around the Puerta del Sol, they spent almost 45 million euros, up 19 percent on the previous year.
The BBVA report also says that Madrid's retail sector has benefited from the renovation of once run-down areas, such as Chueca, and the warren of streets that make up the Triball and Fuencarral neighborhoods, off Gran Vía: "These areas have virtually reinvented themselves and successfully established a brand that is now known internationally."
Visitors to Madrid are not just tempted by its fashion outlets, says the BBVA: traditional shops benefit too, with tourists looking to buy silverware and jewelry, along with Spain's prized charcuterie.
"We have everything you could want here in Madrid: from the Gran Vía to flea markets such as the Rastro," says Mar de Sardá. "There is something for everybody: especially if you love shopping."