It sounded like hyperbole but the minister was making a simple statement of fact. Isidoro Álvarez, the man they were mourning on a hot September day two years ago, had spent a quarter of a century as chairman of El Corte Inglés. He had presided over Spain’s great retail empire, the largest department store chain in Europe by sales and the fourth-largest in the world.

The group’s department stores have for decades occupied the heart of every major Spanish city. But they are also lodged deeply in the nation’s collective consciousness.

For generations of Spaniards, El Corte Inglés (“The English Cut”) offered a route to middle-class respectability, the place where young men bought their first suit and aspiring families ordered their first dishwasher.

Founded in 1940, the group’s real expansion began in the 1960s, a decade of high economic growth. It built store after store and swallowed one competitor after the other, branching out into every corner of the retail market.

Today, aside from its 89 department stores, it operates hypermarkets, opticians, convenience stores, travel agents and DIY centres. Close to 2m enter its premises every day.

The group sells insurance and provides consumer credit. It owns property worth an estimated €16bn, and employs more than 90,000 workers. Only the Spanish state has more people on its payroll.

Trouble behind the tributes

Yet, for all the wealth and power, and despite the effusive tributes, it was obvious that Mr Álvarez was leaving behind a troubled legacy. Sales and earnings had plummeted in the final years on his watch, and the group was engaged in a frantic effort to cut its debt.
Spain’s brutal economic crisis had exposed serious flaws in the way El Corte Inglés was set up and managed — from a board dominated by septuagenarians to an ageing customer base and the group’s near-exclusive reliance on its domestic market.

“El Corte Inglés was hit harder by the crisis than anyone,” says a senior Madrid banker. “This was a company without any escape. Santander and BBVA and other large Spanish groups had their operations in Latin America and other places to compensate for the downturn here. El Corte Inglés was the only top 10 company in Spain that was still essentially 100 per cent Spanish.”
Since Mr Álvarez’s death, discussion about the group’s future has only gained in urgency. Last year, despite the economic recovery and rebound in consumer spending, El Corte Inglés posted a profit margin of less than 1 per cent across all of its divisions. Earnings at its Hipercor chain of hypermarkets have fallen 97 per cent since the crisis. The group’s supermarkets have been lossmaking every year since 2006. As a whole, the group has lost market share to a panoply of nimbler, cheaper, better-financed and more focused rivals.

The troubles of El Corte Inglés in many ways reflect those of the country at large. The group has long been seen as the ultimate bellwether of the Spanish economy, flying high during times of boom and expansion, but suffering more than almost any other company when recession bites.
In the first quarter, the Spanish economy grew by more than 3 per cent year on year, prompting speculation that El Corte Inglés, too, will report healthier numbers when it releases results in August. Indeed, the company predicts that even its super and hypermarkets will return to profit.

Yet the deeper challenges, for country and company alike, remain. They range from the financial legacy of a decade-long debt-fuelled spending spree to the question of whether the old growth model still works in the face of a radically changed competitive landscape.

According to Euromonitor, El Corte Inglés has seen its overall market share sales fall by 8 per cent over the past five years, while supermarket chain Mercadona, the market leader, saw its share increase 17 per cent. In online sales, El Corte Inglés is growing its revenues but at a much slower pace than rivals such as Amazon and Inditex, the owner of clothes retailer Zara.

Despite its national profile, the privately held group largely remains a mystery to outsiders. It publishes results only once a year, on the last weekend in August at the height of the summer holiday season.

The information it releases to the public is sparse and includes little more than the sales and profits at its main divisions. Its executives never give interviews, and have guarded the privacy of the company with rare intensity.

According to analysts and people close to the group, that approach is in part the product of its ownership structure. The majority of shares are held by the descendants of the founder, Ramón Areces, and by the foundation that bears his name. Mr Álvarez was the founder’s nephew, and he was in turn replaced by a nephew of his, Dimas Gimeno. Outside pressure to become more transparent is minimal.

It is places like Getafe that offer a glimpse of the struggle that lies ahead for the group. A working class suburb south of Madrid, it is home to an El Corte Inglés department store and attached Hipercor, the group’s hypermarket chain. On a recent afternoon, the three floors of the store were almost deserted, with staff outnumbering customers in all but a handful of departments. In the Hipercor checkout area, only four of 52 lines were open (and even they were not overly busy). Shoppers and staff alike said it was a fairly typical day.

Reckless expansion

The Getafe centre was opened a decade ago, just before Spain entered into its worst economic crisis in modern history. It was part of what — with hindsight — was a reckless expansion that took El Corte Inglés into out-of-town areas and suburbs a million miles from the natural habitat of an upmarket department store. Remarkably, that campaign went on even as Spain slipped deeper into recession.

In 2012, the nadir of the crisis and the year Madrid had to ask for a €100bn EU bailout for its collapsing banking system, El Corte Inglés proudly announced the opening of stores in Zaragoza, Córdoba and Badajoz. The last two were sited in regions with unemployment rates above 30 per cent.

That expansion drive has saddled El Corte Inglés with billions of euros worth of debt, which it has been battling to reduce. Over the past three years, it has issued bonds, sold a majority stake in its consumer finance business and is now trying to raise €1bn by selling part of its family silver — the group’s property portfolio. Last year, it invited a Qatari investor to buy a 10 per cent stake in the group, raising €1bn in the process.

Perhaps more problematic in the long run, though, is the string of underperforming or lossmaking El Corte Inglés stores that dot the Spanish landscape.
“There are two El Corte Ingleses right now,” says José Luis Nueno, a professor at IESE business school. “They have a small group of stores — maybe 15 or so — that are tremendously profitable and valuable. But there are also many that should never have been built.”

Like many retail experts, Prof Nueno argues that department stores can and do function well as long as they are located in major world cities, draw a large number of tourists and sell lots of high-margin luxury goods. Beyond that, however, the competition from cheaper and more specialist stores such as Ikea, Zara, H&M and Carrefour, plus online retailers, may prove too strong.

The group’s fundamental problem is compounded by its overreliance on Spain, a midsized European economy with a history of boom-and-bust cycles.
A different kind of group would have started culling its store network years ago, or would have at least tried to offload chronically underperforming divisions. But, says Prof Nueno, “there is a lot of internal resistance to closing them down. It is not company policy.”

Even at group level, El Corte Inglés is barely profitable. For 2014 it posted net profits of €118m on sales of €14.59bn. Sales showed a slight uptick last year for the first time since the crisis hit, but earnings still drifted lower.
One of the key reasons El Corte Inglés remained profitable in the first place was tax. The group has not paid a single euro in tax over the past four years. On the contrary: in 2015 it received a tax refund of €103m, and the year before of €126m. Without those contributions from the taxman, profits would have melted into the low double digits. El Corte Inglés said in a statement that the tax benefits were due to legal changes and the losses at Supercor and Hipercor.

Another warning sign — at least to outsiders — was the deal struck by the group last year with Sheikh Hamad bin Jassim bin Jabr al-Thani, a former Qatari prime minister and one-time head of the Qatar Investment Authority. The sheikh agreed to provide €1bn in fresh financing to the group, in exchange for a convertible loan that will eventually hand him 10 per cent of El Corte Inglés, or more if certain targets are not met.

The transaction prompted fierce opposition from a minority shareholder, who attacked it as a symbol of the group’s “opaque” ways. The response from the rest of the family was swift: the opposing shareholder was kicked off the board for “repeated violations” of its legal obligations.
In Madrid the fact that El Corte Inglés preferred to cut a quiet deal with the Qataris rather than raise money through more conventional means, such as a sale-and-leaseback agreement, raised eyebrows. “The only reason why you would accept that kind of funding is because ordinary sources of financing have dried up,” says a Madrid-based investment banker.

The company said at the time that the investor would not just provide capital but would also help with the group’s “strategic development”.

‘A lonely fight’

The man who now steers the group is Mr Gimeno, who joined the board in 2010 and was appointed chief executive by his uncle a year before his death. His relatively young age marks him out — he turned 40 in December — but he is steeped in the company tradition.

Outside the group, many regard the affable Mr Gimeno as the group’s best chance of modernisation. He is said to understand its challenges, though some observers caution that he is surrounded by men almost twice his age, and reluctant to embrace change. As one Spanish business leader remarks, “Dimas is fighting a very lonely fight.”

There are signs of change. The sheer number of measures it has taken recently to reduce debt makes clear that El Corte Inglés has woken up to the urgency of the problem. Retail analysts have also noticed an effort to adapt store offerings to the economic reality that surrounds them.

In Getafe, for instance, there are relatively few branded luxury goods on sale, though it still offers €300 bottles of wine and bespoke tailoring on the ground floor. El Corte Inglés says that it will continue to “improve the position of our own-label goods, adjust the portfolio of our divisions and department stores … and optimise operating expenses”.

It retains formidable strengths, from its dominant position in Spain’s leading cities to its long association with some of the world’s most popular brands. Selling down its property portfolio, meanwhile, will allow El Corte Inglés to cover operational weakness for years to come.

“The easy answer is that the business model is probably dead. But the truth is also: Spain still loves to shop at El Corte Inglés,” says the Madrid banker. “The mere fact that they are still here after the crisis is testament to its strength.”

On that hot September day in 2014, Mr Álvarez was laid to rest in San Ginés, the same church where his uncle lies buried, right in the centre of Madrid’s shopping district. Both tombs are located a stone’s throw from the El Corte Inglés department store in Calle Preciados, the very street on which Ramon Areces made his first foray into retailing.

Their decision to be buried at this emblematic site might be read as a posthumous reminder to the current leadership not to stray too far from the group’s traditions and roots.

But it may be wise to draw a different conclusion from the peculiar proximity: that business models, like the leaders who embody them, cannot live forever.

Article written by Tobias Buck and published by The Financial Times Limited 2016.

Such are the findings of a report written by IESE’s José Luis Nueno, with Silvia Rodríguez and ABN Metrics. Commissioned by Barcelona Bridal Fashion Week, the report focuses on Millennial-specific trends in the global wedding industry. It also homes in on the successes of the Spanish bridal industry, which has a turnover of close to 1.3 billion euros and employs 6,000 people in wedding dresses alone.

So, what makes marketing to Millennials different? For one thing, they are the most digitally accessible — and digitally dependent — of all demographic groups. With 2.7 devices per person, the study states that Millennials shift between them (smartphone to PC, to tablet, to console, etc.) up to 27 times a day. Even if today’s bride plans to buy a wedding dress offline, you can be sure she checked online for store locations, brand reputations, Instagram photos and more.

The Marrying Kind
First, it’s important to note that not all Millennials are getting married. The marriage rate in the world’s most developed countries is falling, with a few exceptions — the United States, Germany, the United Kingdom and Canada show a slight uptick. Millennials’ marriages are also happening later, as brides get their careers on track and struggle to overcome the setbacks of the global financial crisis.

Yet more wedding bells are ringing in the world’s developing countries. This is partly due to demographic shifts, which are expected to continue going forward.

While advanced economies have an aging population and fewer Millennials overall, in developing countries there are eight people of marriageable age (18-34) for each one in developed regions — a ratio that is expected to move to nine to one by 2030.

While the volume of weddings moves to the world’s developing markets, spending seems to be moving there, too. Before the global financial crisis hit, between 2005 and 2007, many mature markets reached a spending peak, with recovery only seen in the last few years (see chart).

The lesson for those in Europe and North America’s bridal industries is to look beyond the home market. “The wedding markets of the future will be ‘elsewhere,’” the report concludes. Internationalization is essential.

Capturing Millennial Attention
In the year 2020, the median age of the Millennial Generation will be 30 — a ripe time for saying “I do.”

The bridal industry needs to be ready to market to these digital natives effectively. Looking beyond demographic changes, the following factors present challenges and opportunities:
- Creative, user-friendly e-commerce. Millennials account for 46 percent of online clothing purchases (vs. just 32 percent of the online-and-offline total). While most wedding outfit sales continue to take place in brick-and-mortar shops, it’s only a matter of time before that changes.
- “The Age of Cheap.” Millennials grew up with discounts, fast fashion, outlets and low-cost options. There is no such model within the bridal industry… yet. Meanwhile, an absence of price competition (almost 85 percent of dresses sell for 1,000 euros or more) could mean rich rewards for a lower cost operator.
- Mobility is physical, not just digital. Millennials are quick to take advantage of low-cost flights to travel. They are also quick to move big events, such as weddings, to appealing destinations. Companies need to figure out the best way to attract these moving targets.
- The rewards of postponement. By delaying their nuptials until they are in their 30s, Millennials often have their careers well underway, and have more disposable income to spend on a bespoke wedding experience.
- The dress. Spending may have fallen on weddings as a result of the crisis, but the wedding dress segment of the industry was less hit than others. “Brides are giving up on mass weddings, but not their image,” the report insists. And while that dress is still most-often purchased in-store after various fittings, Instagram, Pinterest and other webs and apps are key to defining the bride’s interests.

At the End of the Aisle: What’s Next?

The report conclude with a list of nine consumer trends in weddings, many of which suggest means to maximizing profits for companies in the bridal industry:
- Dress the guests: evening gowns are a growth area, as guests will always outnumber brides. Women on their second marriage are also more likely to choose eveningwear.
- Double-dipping: Intercultural marriages are on the rise, and with them, the opportunity for brides to wear not one, but two outfits. These might represent the different cultures represented in her union, or it might be a simpler day-night divide.
- The wedding planner: As luxury weddings become standard and brides are busier with their own professions, the role of the wedding planner has grown considerably to deal with the complexities of flowers, invitations, venues and other tasks.
- The wedding celebrities: In the media, celebrities continue to publicize to the idea of the aspirational wedding. Increasingly, bloggers and reality shows also reinforce the importance of a traditional wedding with multiple stages.
- Plus-size: There are many opportunities in the plus-size wedding garment industry.
- Jet-away: Destination weddings present new opportunities, as couples aim to provide guests with a different experience.
- Omni-channel: With Millennials connected to so many devices, brands must embrace coherent and consistent communication across them — from Instagram accounts to e-commerce sites — even if brides ultimately buy their 1,000-plus-euro dress in the shop.
- The budget market: Not everyone signs off on luxury without checking the price. There are multiple opportunities in new markets for low-cost, second-hand or rented wedding dresses.
- Social media: It’s the best day of your life, so of course you want to share it online. From inspiration for gowns, to finding specialist wedding planners, social media offer huge rewards for savvy companies.

The Millennials may be slow to marry, but when they do, they will know exactly what, where and how they want their big day to be. The bridal industry is well poised to give it to them — if they can speak the language of the digital generation.

This article has been published by the “IESE INSIGHT Magazine” and “Financial Express” on May 16, 2016

They want to get to know the fellow who one day imagined the pinnacles on the Sagrada Familia cathedral, who decided to create that wave effect on the front of Casa Milà, and who thought that an enormous multi-coloured dragon –why the devil not?– should decorate the entrance to Parc Güell. And all this more than a hundred years ago.
The thing is that Antoni Gaudí isn’t easy to get to know. The architect, yes: seven of the eight Gaudí works that have been declared Unesco World Heritage Sites –Parc Güell, Casa Milà, Casa Vicens, Casa Batlló, Palacio Güell, the crypt of the Sagrada Familia cathedral, and the Nativity Façade of the same cathedral– are easily accessible by Metro, while the eighth, the crypt at Colonia Güell, can be reached by train. What did Gaudí believe in? Why was nature so important to him? Was he accepted by the bourgeoisie of his period? How did he work? What were his roots? Was he really a revolutionary?

Until now it was complicated to find a single space in which to dig deep into the work and personality of the genius from Reus. But a few months ago, next to the Cathedral in Barcelona’s Gothic quarter, the Gaudí Exhibition Center was opened, a place conceived to answer –in an amusing way and with the help of technology and research– the million-dollar question: Don Antoni, just who were you? Located inside the Casa de la Pia Almoina, the headquarters for the Barcelona Diocese Museum, the Gaudí Exhibition Center goes out of its way to define the master. The exhibit Walking With Gaudí uses 22 audio-visual aids, several multimedia spaces, 20 scale models, reproductions, set designs and working tools. In total, more than 150 metres of exhibition cabinets on three different floors. This is Gaudi’s world as it has never been seen, heard or felt before. The exhibit, which is divided by thematic blocks into seven different rooms, relies in part on the work of the Gaudí Research Institute and in part on the latest multimedia technology. It ranges from a 180-degree video prologue and several holograms to tactile screens and a virtual reality stroll through the crypt at Colonia Güell.

This digital world is all very well, but the exhibition cases of the Gaudí Exhibition Center also contain real things like wood, iron, paper and glass. There are magazines of his period to understand context, work tables, models that reflect his ideas in three dimensions, along with original bills as well as the legacy he left for designers who continue to create trends. All this and more can be found in this new space dedicated to the most celebrated yet least known of Spanish architects.

Published in LING Magazine (Vueling) by Daniel Martorell, April 2016.

Interview: Alex Cruz: Ready to take-off
Interview: Alex Cruz: Seeing the Big Picture
Interview: Alex Cruz: Handling Disruptive Tech & Smooth Mergers

“People think I’m crazy to work in the airline industry because of the low margins and the high costs, which are outside of management control. But that’s precisely what makes it so fascinating.” says Alex Cruz (CEO of Vueling)

Alex Cruz discusses how IP-based tech is shaking up numerous industries, from airlines to retailers to hotels. And he reveals the keys behind a successful merger. In both cases, spending time understanding what makes people tick is key.
There are a lot of lessons that can be drawn from working in the airline industry and applied to business. And vice versa, pilots can benefit from a grounding in general management topics ranging from economics to social media. No matter your job, understanding the bigger picture of what you do will help you become more effective.

These interviews were published by IESE; IESE Insight, March 2016.

The term mileurista has come to define the plight of the best-educated generation in Spain’s history. A decade ago, when Alguacil wrote her letter, the Spanish economy was already slowing down, and hundreds of thousands of university graduates like her were discovering that there weren’t enough jobs to go round. The euro had sent prices soaring, wages were falling, and the property bubble was about to burst. Even at the height of the economic boom, people’s purchasing power was falling rapidly. Today, the ongoing recession has killed off 3.7 million jobs, unleashing the worst crisis since the Civil War.

The mileurista generation has grown up. A decade on, Carolina has married, lost one job, found another, sometimes earning more than €1,000, sometimes, less, and is now about to have a baby: Nora.

In 2008 she moved from Barcelona to Córdoba, where her partner, an engineer, had found work in the renewable energy sector. She initially continued working from home. But in 2012, the company he worked for ran into trouble, he wasn’t paid for a year, and was finally made redundant. Then her company ran into trouble, and she had to look for work, eventually finding it at a digital content company in Madrid, where the couple moved in March 2013. He then found work again.

We meet on a chilly spring day along the newly created park by Madrid’s Manzanares river. Carolina brings her dog along: she found him in the street in Córdoba.

So, is she still a mileurista? “We both earn more than €1,000, fortunately, but his contract runs out in September, so we don’t know what’s going to happen.”

Does she live well? “We have lived off my salary for a while, and that has an impact. We don’t spend much, we save as much we can because we know what can happen. When we first moved here we found an apartment to rent for €650. We live okay, we still go out, we eat out with friends at the weekend every now and then, but there are no luxuries. I think this is pretty widespread. Because now people are more aware of the need to spend less.”

The recession may have officially ended, but in a country where around 5.4 million people are out of a job, a quarter of the workforce, people are fearful about the future. “The fear hasn’t gone, those who have lost their jobs in this crisis will go on fearing they will lose other jobs, even if things seem to be getting better,” says Luis Garrido, a sociologist at the UNED distance learning university. The feeling of insecurity, uncertainty, that something bad is going to happen, will linger for many years in the minds of Spaniards, he says.

Fedea, an economic think thank, says men’s wages have on average fallen by around 17 percent, and women’s by 14 percent over the last five years. Most new jobs are part time, and turnover of fixed contracts has risen by 23 percent since 2011. It’s easier and cheaper than ever to fire people thanks to labor reforms.

The income from a single job is often not enough to live on for many Spaniards. Montserrat Jiménez, a 40-year-old teacher, has two. “Ten years ago, my pre-doctoral grant was €1,500 a month, and when abroad, it went up to €1,800. My situation has worsened.” Now armed with a doctorate, and a specialist in Latin, she is an associate Castilian Spanish teacher at the Complutense University in Madrid. Three hours of teaching and another three supervising students a week brings her in €270 net. At the same time, she teaches Italian at the state-run Official School of Languages, which brings her in another €800. But she has no income in summer. She lives in a shared apartment that costs her €500 a month with all bills included.

“I’m a mileurista, and I almost feel privileged. But I have two jobs. I’m an associate teacher because I couldn’t find another position,” she says. Montserrat is also aware of the difficulties her students at the Complutense face. In response, many, along with teaching staff, have staged demonstrations, including taking classes out into squares and parks as a protest.

Fernando Ángel Moreno, a lecturer in philology and literary theory, is among them. None of his brightest students will be staying in Spain, he says. “Young people today are required to meet extremely high standards, and are then offered very little in return. The good ones, the really good ones, leave. And with the cuts in education, things will get worse.”

The job security once enjoyed by the parents and elders of people like Carolina Alguacil can no longer be counted on. “If I look around me at my friends, many have started families, but with a different mindset to their parents: they know that they have to live from day to day, without the security that we understood before.”

As a result, Spaniards are starting families later and later. The average age for women to have their first child is 30. The crisis has driven Spain’s birth rate down, and it is now among the lowest in the world, says Teresa Castro, a demographer at the CSIC Spanish National Research Council. In 2008, Spaniards had an average of 1.46 children; by 2013, that figure had fallen to 1.27. “As a country, we are not going to grow, but rather shrink,” she says.

In his highly influential 2011 book A Precariat Charter: From Denizens to Citizens, British academic Guy Standing says insecurity is the defining characteristic that sets today’s workers apart from their forebears. “Three of my female friends with small children work, but their jobs are temporary, or they are freelancers. They are solid enough jobs in the sense that they will continue, but not as secure as would have been the case 15 years ago,” says Carolina. “Buy an apartment? No way, unless you have a lot of money saved up, so it’s not an option, you can’t commit to it.”

“When the concept first appeared, mileuristas aspired to stop being so, but now people have become fatalistic,” says José Luis Nueno of the IESE Business School, adding that Spain has increasingly become a low-cost economy. “There is nothing wrong with low-cost per se: offering somebody something crappy because they are in a transitory situation is fine, but it is something else to do so to families who believe they are now in this situation permanently.”

Carolina Alguacil was born and grew up in Colmenar Viejo, a town in the Guadarrama mountains around 50 kilometers north of Madrid. She has five siblings, but her father’s wage as a quantity surveyor was enough to put them all through university. “We inherited the attitude of our parents, which was ‘get a good education so that you can find a good job,’ but things did not turn out that way,” she says.

How does she think her generation differs from today’s twentysomethings? “We had no idea what was coming, but young people today know that things are going to get worse, and so they work harder, they are much more focused. They go out there to kill.”

“My name is Juan Alberto Guirao García. I am 24 years of age, and I have had to drop my studies in the middle of the academic year because I can’t pay my tuition fees after ending up without a grant, and am now working in McDonald’s. […] For the first five months, I was able to live off the little savings I had and with help from my parents while I waited to see if I would get a grant to study. But it never happened. On Christmas Eve, December 24, I was in the library preparing for my exams in January, and received the email telling me I had been turned down. I opened it, read it, and picked up my books. That was the last time I looked at my master’s degree notes.”

The open letter was addressed to Spanish Education Minister José Ignacio Wert. Juan Alberto says he doesn’t want to give the impression he feels sorry for himself, but talking to him, it’s clear he is bitter. “We’re not mileuristas. We are just poor. I wish I could earn €1,000, but my generation is earning between €700 and €800 a month,” he says, adding that he personally takes home around €450 a month for a 20-hour week, and describes himself as underemployed.

Like Carolina Alguacil, he grew up in a family supported by his father’s income. He was given a grant, gained a degree in social work from the University of Murcia, and last October, started a master’s degree at the Complutense costing €8,000. “There are people who believe that there shouldn’t be grants for master’s programs, but this is about equal opportunity. If my family had the money, I would still be studying,” he says.

In Spain, families with huge differences in income have still seen themselves as middle class, but Juan says that dream is over. He is overqualified, but doomed to a low-income for the rest of his life.

José García Montalvo, a professor of sociology at the Universidad Pompeu Fabra, says that in 2008, around 42 percent of young people said they believed they were overqualified; by 2011 that figure had fallen to 28 percent because huge numbers of low-qualification jobs have disappeared, while at the same time, there has been a huge increase in the numbers of young people who aren’t worried about where they work, as long as they have a job: from 12 percent in 2005, to 48 percent in 2011. “Three years on, they don’t feel overqualified, that means they have lowered their expectations: that’s dramatic. Our economy is based on tourism and services, while the people who run our businesses are less well educated than the rest of society, which means that education is less and less important,” he adds.

Does this mean that young people will rise up and protest? “How are they going to do that: mileuristas no longer measure themselves against somebody earning €1,500 or €2,000, they compare themselves with the unemployed, with those who have nothing,” says Luis Garrido.

Take somebody like Rubén del Campo, for example, who feels he is relatively well off. He studied biology, then took a master’s in biodiversity, and now, aged 25, is immersed in a doctoral thesis on river ecology, while receiving a grant of around €1,000 a month. “I am extremely lucky. Very few people are working in something related to their studies, while others are looking for unpaid work experience,” he says, adding that he hopes to find a job in the medium term.

Of the 3.7 million jobs lost in Spain over the last five years, 2.5 million were posts occupied by people aged under 30. But as Josep Oliver, professor of economics at Barcelona’s Autònoma University, points out, the roots of the mileurista phenomenon date back to before the crisis, and things are not going to change much even if the economy picks up. “There are structural factors, such as the fact that the global labor force has tripled in the last three decades. That drives wages down, as happened between 2001 and 2005, but with the crisis the trend has increased; and as technology improves, more jobs will be destroyed,” he says.

In 2001, US aviation company the Lear Corporation closed its plant in Cervera, in Catalonia, which employed 1,280 people. It was making money, but the company decided to move to Poland to save costs further. During this time a great many factories closed in Spain, relocating to eastern Europe in the hope of making greater savings and increasing their profits, but the property boom and the availability of cheap money masked the impact of what was going on. But when the housing crash came, and the dust settled, the factories had all gone.

“There is a huge paradox within globalization: we are transferring production to other countries to make things more cheaply so that our unemployed can afford to buy them,” says Nueno.

Mireia Bauxauli is aged 17, but will turn 18 in time to vote in this year’s general election. She says it’s difficult to know whom to vote for: “Those who led us into the crisis, others who are up to their eyes in corruption, or the latest supposed saviors of the country, who are shouting from the rooftops what they intend to do, although they themselves have no idea if they can do any of the things they are promising. I just hope that mine isn’t yet another lost generation.”

She has grown up in a time when the concept of the mileuristaalready existed, and the first prime minister she remembers is José Luis Rodríguez Zapatero, the Socialist Party leader in office between 2004 and 2011. She has no memory of the boom years, but remembers the first signs of the crisis: “I was in school, I must have been around 10, and some of my friends’ parents lost their jobs and a lot of kids left the school because they couldn’t pay the fees.”

What does she talk about in class now? “When the crisis started there were people who said ‘Why should I study if I’m not going to find a job?’ But now most people say they will have to study harder than ever because there are so few jobs, or they will have to go abroad. The teachers say it’s not enough to get good grades, that we’ll have to get the highest possible ones if we want to find a job.”

Mireia says she would like to study journalism, but isn’t sure she’ll find work, and so is thinking instead about business studies. Similarly, she hasn’t decided whom she’ll vote for.

Paradoxically, Mireia lives in a low-cost world thanks to the internet, which offers everything from free telephone calls to car sharing, but she is also aware that her life is going to be much harder than that of her parents.

Josep Oliver says that unequal wealth distribution needs to be addressed, and can be tackled: “Wealth is concentrated in high salaries, but aggressive tax policies and a greater focus on value addition could help put a brake on inequality.”

Spain’s income gap is among the widest in the EU. Mireia, whose father is an agricultural engineer and whose mother is a teacher, says she is worried about being condemned to a low-wage life. “I am not accustomed to being short of money. I don’t get any pocket money, but if I need something I ask for it. I don’t really know if I could live on €800.”

A decade on, young people continue to write letters to EL PAÍS about their concerns. Mireia is just hoping that by the time she finishes her studies, “the crisis will be over for good.”

By Amanda Mars published in EL PAIS IN ENGLISH, May 15, 2015 

http://elpais.com/elpais/2015/05/14/inenglish/1431604981_253944.html

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José Luis Nueno, a professor at IESE Business School in Barcelona, said the financial crisis in Spain created “a trigger to do the restructuring that should have happened years ago.”

But banks need to keep trimming, he said. Spain remains, Mr. Nueno said, “overbranched.”

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Continue reading

By Jeannette Neumann  published in Wall Street Journal, January 28, 2015

Interview published in IESE Insight December 17 th 2014

A few weeks from now, young women all over the world will decide that what they really want to wear this summer is a long, flowing trenchcoat with a buckle belt and soft shoulders. They don’t know it yet. But Manuel Ruyman Santos knows, and Inditex knows, and €17bn in sales says they will be right once again. 

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For Inditex, the biggest fashion retailer in the world, the success or failure of one trenchcoat is of marginal importance. It is just one of 18,000 individual designs made every year for its chain of Zara shops alone. Add in the group’s seven other brands – from upmarket Massimo Dutti to casual Pull & Bear – and the number rises to more than 30,000. The new coat is nothing but a tiny thread in a much bigger story – but one that illustrates how a small family-owned clothes manufacturer on the edge of Spain turned into one of the most striking corporate success stories of recent years.

The rise of Inditex holds valuable lessons for business leaders, highlighting how important it is to challenge industry conventions and turn entrenched practices upside down. “Our business model is the opposite of the traditional model,” says Pablo Isla, the group’s chairman and chief executive. “Instead of designing a collection long before the season, and then working out whether clients like it or not, we try to understand what our customers like, and then we design it and produce it.”

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The expansion so far has been relentless. For more than a decade, the group has opened at least one new store every day. In 2010, it overtook Gap to become the world’s largest fashion retailer by sales. A year later, it usurped Banco Santander as the biggest company in Spain. Inditex shares have risen sevenfold since the group went public in 2001, turning its reclusive founder into the third-richest man on the planet. Today, it is the undisputed industry leader, a company studied in business schools and management books, hailed at home and abroad as a rare European success story in a continent scarred by stagnation and unemployment.

Speed is of vital importance to Inditex. Industry analysts say no other company reacts to fashion trends as quickly as the Spanish group, and none is faster when it comes to turning sketches into products ready for shipment. “The essence of the Inditex model is to push the moment of production as close as possible to the moment of sale,” says José Luis Nueno, a professor of marketing at Iese business school. Many of the items you see in Zara stores today will have been designed back in Arteixo as little as two weeks before.

This rapid response time has prompted analysts to describe Inditex as the leading exponent of “fast fashion”. But top managers at the Spanish group wince when they hear the term. “I don’t identify with the concept of fast fashion,” Mr Isla says. “We are not about selling a million striped T-shirts as fast as possible.” He insists that Inditex’s success is based not on speed but on accuracy, on understanding exactly what customers want, week by week, and store by store.

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Another short walk away is the vast on-site manufacturing plant, where textiles are cut, stitched and ironed. From there, another elevator takes you to the packaging floor, where conveyor belts race along at dizzying speed to drop the right T-shirt into the right cardboard box ready for dispatch to Shanghai or Seattle. Every Inditex store receives fresh deliveries twice a week – a feat of logistics that helps encourage customers to return to the store as often as possible.

According to Prof Nueno, Zara customers typically visit the shop four or five times more often than clients of a more traditional fashion store. “They sell in small batches and they are producing what they already know will sell,” he adds. This means, crucially, that Inditex has much lower inventories than its rivals, and less need to discount unsold goods. According to research by Société Générale, the investment bank, only 15-20 per cent of Inditex stock is marked down, as opposed to 45 per cent for a competitor like H&M.

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In the early years, says José María Castellano, who served as Inditex’s chief executive until 2005, the company’s location made it hard to attract talented managers and designers. In fact, the decision to open a store in New York as early as 1989 was partly motivated by the need to make Inditex more attractive for new employees by adding a dash of glamour, he recalls.

Attracting designers is no longer a problem (Zara alone employs 350 in Arteixo). The challenge facing management today is how long Inditex can keep on growing, and at what pace. Fears that the group’s expansion would run out of steam have been around for a long time. When the group listed on the stock exchange in 2001, one analyst warned bluntly that “highly complex supply and distribution models tend not to be scaleable”.

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Store openings have indeed slowed down markedly in recent years. But Ms Critchlow argues that this reflects a shift in company policy towards fewer but bigger outlets, as well as the new focus on selling Inditex products over the internet. Far from dying, she sees the Inditex model as the one that will set the standard for the whole industry: “Inditex is already where the rest of the industry will eventually end up.”

The argument is certain to rage for years to come. For Mr Isla, talk that Inditex is running out of room to grow is premature. The group has never come up with a fixed number of stores they believe can be sustained by shoppers around the world. “Our company is perfectly used to growing at a gradual and sustainable pace,” he says. “It is very difficult to see where the limit is.”

Article published by Tobias Buck in The Financial Times. June 18, 2014

To read the full article, please click on the following link: http://www.ft.com/cms/s/0/a7008958-f2f3-11e3-a3f8-00144feabdc0.html#ixzz3559h0Psl

In 1898, his father Baldomero sold church headscarves known as mantillas españolas. After they went out of style, Andrés Sardà launched an underwear company in 1962. The aim was to produce garments that were beautiful, not just functional. By 2007, his company was selling €13m of high-end lingerie and swimwear a year; it was recently named Designer of the Year at the Salon International de la Lingerie in Paris – the second time it has won the coveted award.

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When twins Aitor and Iñaki Muñoz arrived in Barcelona to study fine arts in 1990, they found a city reinventing itself for the 1992 Olympic Games.

The brothers soon shifted to clothing design, and the brand they founded, Ailanto, has won fans for its use of geometric forms and avant garde art references. Last year, they sold about 5,000 garments (a typical dress retails for €240), and designed the new uniform for the staff of the Guggenheim Museum in their home town of Bilbao.

“When we go to the shows in Paris and they ask you where your brand is from and you say Barcelona, it’s a plus,” says Aitor, 46.

Though the area’s fame is new, fashion has a long history in Barcelona. A century ago, its working class suburbs were home to a huge textile industry.

“It was the Bangladesh of Europe, with low cost production of everything textile,” says José Luis Nueno, a professor at Barcelona’s Iese Business School who studies fashion.

Later, the city became the country’s centre for Moda Pronta, a predecessor of Fast Fashion in which designers went to Paris to copy designs and turned out replicas in Spain.

Today, a handful of international giants dominate Barcelona’s fashion industry. After a turnround in which it cut prices and turned to casual clothing, locally based Mango, founded in 1984, had 2012 revenues of €1.7bn. Desigual, the Barcelona maker of colourful fashion whose slogan is “Life is cool”, had 2013 sales of €828m.

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The Catalan government has helped local fashion businesses to become more international. In the past three years, it has taken more than 30 companies and designers on trade missions to countries such as Russia, Colombia and India. In Colombia, for example, seven local designers staged a version of the 080 Barcelona Fashion show.

“The clearest difference is between those who had a majority of their sales in Spain versus those who sold outside,” says Mr Rodríguez. “Those who are recovering most are those who had begun to internationalise.”

If Barcelona gets its next steps right, says Custo Dalmau, co-owner of a local fashion group known for its colourful shirts, the city “could rival Milan”.

Article published by Ian Mount in The Financial Times. March 30, 2014.

To read the full article, please click on the following link: http://www.ft.com/cms/s/0/30fb04fa-b021-11e3-b0d0-00144feab7de.html#ixzz355VP6iZO