How did the pandemic affect Portugal’s retail market and what adjustments have companies made in response?

Portugal’s retail market, more mature compared to Spain, primarily centers around shopping complexes, with a scarcity of high-street shops. Over the last decade, robust growth was seen, fueled by tourism and Golden Visas, attracting numerous foreign investors and residents to Lisbon, Porto, and the Algarve. This surge in population and tourism significantly boosted consumption and consequently, retail.

However, when the pandemic struck, foot traffic and sales plummeted, remaining at 5% to 10% below 2019 levels. While recent times have shown a slight sales uptick, shoppers tend to spend less time shopping, seeking efficiency and exercising caution due to virus exposure concerns. Government mandates for mandatory rent discounts, and in some cases, total rent cutoffs, imposed additional strains on companies. Such legislative interventions disrupted the balance between landlords and tenants, necessitating managerial efforts to navigate the ensuing tensions.

How dynamic is the market presently, and what growth opportunities do you foresee in this industry?

The retail sector in Portugal doesn’t present many opportunities for new shopping malls due to market equilibrium. Spain might accommodate some new projects, but the focus is primarily on expanding and refurbishing existing shopping centers, many of which are two to three decades old. The retail landscape in the Iberian Peninsula leans toward upgrading existing infrastructure to modern standards rather than constructing new developments.

Refurbishments seem to dominate residential and office spaces. Are there notable renovation projects in the retail sector as well?

Major fashion industry players constantly seek prime locations to showcase their collections, often closing shops in secondary cities to move into more densely populated areas. Meanwhile, food retailers, particularly supermarkets, are expanding and reconfiguring their layouts. The F&B sector’s significant growth has led to an increase in new market entrants, especially in malls, where they replace underperforming retailers.