Portugal Market Insight

Welcome to an unbelievable new world. The Perfect Storm is here with the risk of a nuclear war along with fuel, gas, energy and food inflation not to mention the crisis in raw materials production and transportation. Consumers have a declining purchasing power and are more concerned about ensuring they have money to pay bills and buy essential goods even more since interest rates are expected to rise. After a landslide election success meaning the current government will see a other four year term, the Portuguese economy forecast remained positive with a 4.9% growth for 2022 but below the 5.8% announced in December due to the conflict in Ukraine. War unpredictability means the economic forecasts of all European countries are now less credible and may change at any time of course. Words such as uncertainty, anxiety, worry and fear define the feelings that boardsport brands and retailers are experiencing right now because of the war in Europe. The increasingly serious problems in raw material shortages and rising prices, transport and running out of stock that affect the world economy also have an impact in Portugal obviously. Due to all this unpredictability, business managing is done more on a daily and monthly basis due to the difficulty of making medium and long-term plans. There are delays in Spring/Summer collection deliveries due to logistical issues. If until 2019 stores usually received this collection in mid-February now it’s happening in April which means a shorter sales season for this collection having the risk of hurt sales. After the hardgoods boom over the last two years there are stores that now have skateboard full stock and are delaying the new order delivery. On the other hand, some stores are having problems restocking wetsuits. There are several segments of skateboarding and surfing products that have increased their retail price. Grua Surf Co is a core surf shop specializing in

PORTUGAL surf, bodyboard and skate technical gear with a personalized customer service. They have a FRANCE premium location close to Matosinhos beach in UK the north of Portugal attended by ocean lovGERMANY ers throughout the year. The store is visited by ITALY customers from all over the country and also SWISS from Northern Europe and Germany. Although SPAIN they have products for beginners the main business positioning targets the customer a need for quality products for performance and with environmental impact in mind. They are a key surf account. “The beginning of 2022 was way more positive business-wise compared to the two previous years in which we were closed due to the lockdown because of the pandemic”, explained the CEO, Diogo Lamares. “We had to adapt to the new reality with our online store at www.gruasurf.com which was the main tool for us to survive. Because of that today it already accounts for a significant amount of our business volume”. To deal with the current problem of restock they chose to anticipate their moves ordering in advance at the end of 2021 to ensure they always have product available. But the rise in prices is something unavoidable. The question is how much. “Due to the increase in freight transport costs, prices had to rise. However, some brands are bearing part of that cost so that retail selling price don’t make such a heavy impact on customers,” he said. The war in Ukraine also has a negative effect. “We started the year with rising sales compared to 2021. But since the end of February, we felt a demand contraction. Still, we think positive and when this conflict is solved, we know sales will rise and everything will come back to normal,” he predicts. Grua Surf Co aims on selling more focused in quality than quantity bringing more value for the customer choosing anti-fast fashion collections that have more longevity and products made with sustainable materials. Well, I’m not sure what’s going to happen in the next months in Ukraine and all over the world but I’m certain that what everybody wants is one thing: peace.

NUNO PRINCIPE