The lack of target audience and specialized commercial areas slows down the arrival of luxury brands in Andorra
Iago Andreu identifies commercial and customs conditions to develop this sector and highlights the Andorra Selected program
The director of the Andorran Business Confederation (CEA), Iago Andreu, believes the luxury sector has potential in Andorra but faces several constraints on its development.
Speaking to La Veu Lliure, he points to a limited customer base, customs barriers and a lack of clearly defined shopping districts.
Andreu stresses that he is not a specialist in this segment and that industry operators should assess the prospects for developing a dedicated luxury retail area. However, he outlines the difficulties the business confederation has identified in recent years.
A limited customer base
One of the main obstacles he identifies is the lack of a sufficiently large target market to support certain luxury businesses. He emphasises that each company and brand must conduct its own market research to assess whether establishing a presence in the country would be viable.
Changes within the sector itself add to this constraint. According to Andreu, luxury brands have increasingly favoured single-brand stores in recent decades, a trend that compounds the challenges of operating in a market with a limited pool of potential customers.
Luxury brands want other luxury brands nearby
The CEA director also highlights the lack of clearly defined shopping districts in Andorra as another factor affecting the segment.
“Luxury brands want to be surrounded by other luxury brands”, he says. The surrounding retail environment is therefore one of the factors he highlights when assessing the country’s ability to attract these businesses.
Customs and tax constraints
On a more structural level, Andreu points to the existence of customs borders and the relationship between Andorra’s general indirect tax (IGI) and the European Union’s VAT territory.
In his view, Andorra’s IGI rate is not high enough for the country to form part of that tax territory. However, he stresses that this issue currently commands no consensus either within the CEA or across the country. His remarks do not amount to a call from the confederation to raise the tax.
Despite these constraints, Andreu highlights ongoing efforts to establish a stronger premium offering, which he distinguishes from luxury in the strict sense.
In this regard, the CEA director considers the Andorra Selected programme a positive initiative. His assessment points to opportunities in the premium segment despite the limitations he describes for the development of the luxury market.