El Corte Inglés bets on luxury while losing its younger customers

El Corte Inglés changes its skin between luxury and customers walking away

Sixty cans of Albo tuna thanks to a 3-for-2 deal. A trolley filling up in the food hall of a store in Pozuelo. That is the picture of the shopper who, according to the debate participants, keeps El Corte Inglés (Spain's largest department store chain) afloat today: a high or upper-middle income customer. And facing it, a question the company itself has yet to settle: is this a new trend or the last gasp of a dinosaur?

From seventies green to the Club del Gourmet

The starting thesis is on the table: El Corte Inglés has closed loss-making stores and redirected its strategy towards luxury flagships and neighbourhood outlets. The example doing the rounds is El Guanol, with a premium supermarket, Club del Gourmet and a clothing section from its own budget brand, UNIT. The brand, people say, has left behind that seventies bottle green and the musty smell to embrace a warm, welcoming aesthetic.

Not everyone buys the story. Next question, replies the textbook sceptic. The recurring irony: if this is a trend, it is a trend among 88-year-olds. Others call it Neopaco life, that nostalgic attempt to keep the popcorn ceiling, the hundred-square-metre home and two cars in the present day. El Corte Inglés would never become fashionable: it simply endures the way its customers do.

Why don't the under-40s set foot in El Corte Inglés?

Here the analysis gets uncomfortable, especially coming from the inside. Someone who works in a store tells it straight: the image change is noticeable, but it arrives twenty years too late. Outside the Christmas campaign, when the stampedes give way to calm, the under-40s are a minority and the under-25s, unless accompanying family, practically don't exist. They prefer the out-of-town shopping malls or simply shop online.

The reason has little to do with culture and a lot to do with pay packets. The purchasing power of that age group bears no resemblance to 1996, the year in which, the argument goes, much of the management seems to have remained stuck. Against that, the company has peine its segmentation: the same products are no longer in every store, but assortments adapted to the purchasing power of each area —Vitoria or Talavera is not the same as Madrid or Bilbao—, with an active stock-clearance policy and an online channel that has gone from an afterthought to functional.

The perfect showroom and the shop assistant who never shows up

One diagnosis keeps coming up: El Corte Inglés is the best place to see, touch and try on a product before buying it cheaper online. The problem is that this advantage now works against it if it cannot be monetised. According to one participant, 50% or more of El Corte Inglés would already be spaces rented out to brands, which use the shop window and official prices as a cachet argument: for example, trainers that can be found online for half what they cost there.

The underlying complaint, however, is another: the service. Long-standing customers remember shop assistants who pounced on you at the slightest glance, and today they face queues just to ask about a product, appliance sections with nobody there at certain hours and answers like "that's not my department". The harshest reading points to staff cuts, veterans replaced by young staff and outsourcing that does not make up for the lost commissions. The effect is lethal for the classic business: the lady with a good pension who went to feel advised finds herself alone in front of the shelf.

Will El Corte Inglés survive the next crisis?

The question runs through the whole conversation. The most cited forecast: a dozen flagship stores in the big capitals will hold on, specialising in luxury brands, and the rest will sink without remedy. The strongholds would remain Goya, Nuevos Ministerios or Pozuelo, where the tills, it is claimed, are still ringing non-stop and the locations are unbeatable for the moneyed customer. The Club del Gourmet stores, in certain cities, could work as a profitable island.

The rest is a fight many consider lost from the start. The dog-friendliness —allowing dogs in the shops— has driven away customers who will not return. And the same old doubt hovers: what happens to El Corte Inglés when the next recession arrives.

Someone summed it up with a phrase worth more than a report: if El Corte Inglés went under, we should really start worrying. It is the canary in the coal mine. And for now, the canary is singing softly.