Retailers in the Balearic Islands are facing a positive tourist season, though one marked by a slowdown in visitor spending. This situation calls for special support for local businesses. There has been no substantial drop in retail spending, though there is a clear slowdown in sales growth, particularly since the period immediately following the end of the pandemic, with the recovery of tourism activity.
“An increase in tourist arrivals does not automatically mean higher sales for local businesses,” said the president of the Balearic Islands Business Federation (AFEDECO) during the presentation of a report on trends in spending and commercial activity between March and June of this year. “Our main competitive advantage remains our personal touch, the quality of our service, and our ability to bring life to our towns and cities. Local commerce not only creates wealth and jobs, but also serves as the backbone of the region and contributes to social cohesion,” Manresa argued.
The current situation continues the trend of moderated spending that began two seasons ago. Rising costs for flights and accommodations have reduced tourists’ spending power, cutting into the portion of their budget allocated to ancillary services. Local businesses, along with restaurants and leisure activities, have been among those hardest hit.
In addition, inflation and the rising cost of living in the Islands are also affecting residents’ shopping habits. “We are seeing customers who are increasingly price-sensitive, who compare prices more, look for sales, and plan their purchases more carefully. This is a logical response in a context where fixed household expenses have risen significantly.” As a result, retailers are observing that both visitors and residents are exhibiting “more thoughtful and selective” spending patterns.
Nevertheless, Afedeco is sending a message of reassurance to the sector, as they conclude that what is currently being experienced is not a contraction of activity per se, “but rather a phase of normalization following several years of strong growth driven by the economic and tourism recovery.” Looking ahead to this year, Manresa emphasizes that the challenge will be adapting to this new, more demanding type of customer “and to a high-cost environment” without, however, causing the sector to lose its competitiveness.
