Portugal: A Blend of History and Modernity With Diverse Landscapes and Warm People
Portugal, with 10.4 million inhabitants, is a captivating country known for its stunning coastlines, historic cities, and diverse landscapes, ranging from the lush vineyards of Douro Valley to the golden beaches of the Algarve. It is situated at the end of the west Iberian Peninsula, bordering Spain, including the mainland and the beautiful islands of Madeira and Azores. 40% of its population inhabits the two main metropolitan areas, Lisbon, the capital with close to 3 million people, and Oporto in the north with a metropolitan area of close to two million people.
Its rich cultural heritage is evident in its traditional Fado music, a music genre recognized by UNESCO as cultural heritage, its vibrant festivals, and distinctive azulejo tiles visible in buildings across the country.
Historically, Portugal was a leader in the age of discovery, with explorers like Vasco da Gama and Fernando Magalhães, instrumental in mapping unchartered territories and establishing maritime routes to Africa, Asia, and the Americas, establishing a vast colonial empire.
Some fun facts about Portugal include the Portuguese people’s love for soccer, producing world-class players like Cristiano Ronaldo. It is also the leading producer of cork, supplying over half of the world’s demand.
Portuguese is the sixth most spoken language globally, uniting a vast Lusophone community across Europe, South America, Africa, and Asia.
Economy and Employment
Portuguese population is aging doubly, due to its increasing population over 65 (24% of the total population) and the decreasing number of people under 18, representing 18% of the total. Nonetheless, the population has been growing thanks to immigration, offsetting the natural negative growth. On the other hand, almost 30% of young people born in Portugal live outside the country, escaping Portugal’s low salaries compared to those of stronger economies like France or Germany.
Its GDP is estimated to be 256 billion Euros, growing 1.5% in the first quarter of 2024, after recovering the pre-pandemic levels in 2022. The inflation rate is stable at 2.21% and the unemployment rate at 6.8% as of the first quarter of 2024. Portugal’s GDP ranks 15th in the EU. Its economy is dominated by the services sector representing over 70% of its GDP, with tourism growing every year, accounting for 15% of Portugal’s GDP.
With the country’s economy growing and the low unemployment rate, the direct selling industry faces a challenge in attracting entrepreneurs. The opportunity very much lies in the younger people who increasingly want to have their businesses as a gateway to stay in the country without having to equate emigration and at the same have the freedom and flexibility they value so much.
Doing Business in Portugal
Portugal’s transportation and communication infrastructure is well-developed, facilitating efficient movement of people and goods and robust connectivity for communication and information services.
The regulatory environment governing direct selling in Portugal is comprehensive, focusing on consumer protection, fair competition, and ethical practices. There are clear regulations and procedures for establishing and operating a business in the country with possible incentives for foreign companies to open up their businesses in Portugal.
Despite the efforts and progress to reduce bureaucracy, there are still significant challenges. Portugal ranks 31st as far as ease of doing business is concerned (according to the World Bank 2020 ranking). Nonetheless, Portugal is ahead of countries like Netherlands, Belgium, and Spain.
Direct Selling in Portugal
The direct selling industry has been present in the country for several decades with Avon being established in the mid-eighties, along with Tupperware followed by many others like Mary Kay, Herbalife, Oriflame, Vorwerk, Yves Rocher, and LR Health & Beauty.
Direct sales in Portugal generated in 2022, a volume of 195 million Euros in retail, with more than 240,000 direct sellers. These micro-entrepreneurs are mostly women, around 71% are between 35 and 55 years of age, selling products ranging from cosmetics to personal care, health and wellness, and household goods.
The country’s perception of the channel is twofold depending on individuals and communities. On one hand, it is perceived positively as it provides an entrepreneurship opportunity and direct access from consumers to products. On the other hand, some individuals might look at it with skepticism and mistrust as they may sometimes encounter sales agents with pushy sales techniques and misleading earning claims. Strict adherence to ethical standards by complying with the code of conduct of the Portuguese Direct Selling Association (IPVD) is crucial in shaping a positive perception of direct selling.
A Look Towards the Future – Threats and Opportunities
While increased regulations or stricter rules can always cause a threat or at least mean complexity, disruption, and costs to both the companies and its direct sellers, the biggest threats direct selling companies need to address is in the consumer behavior change towards convenience shopping through e-commerce and social selling. Companies must adapt fast to these new trends to remain competitive and relevant in this new ecosystem.
Nonetheless, despite e-commerce channel’s growth, Portuguese consumers continue to value personal interaction and personalized service, both of which are at the very core of what direct selling is. At the same time, there’s a growing trend among the population to start small businesses or engage in freelance work, with an emphasis on work-life balance. All of these make direct selling the perfect match for these consumer and entrepreneurship needs of the country.
The opportunity for growth is there provided that the direct selling companies support their direct sellers in adjusting themselves to e-commerce and social selling without loosing their personal touch with consumers and shoppers. No doubt this will be the biggest differentiator.
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Written by Sandra Machado da Silva, President of the Portuguese Direct Selling Association (IPVD). Sandra has been the General Manager of Mary Kay Portugal since 2009, leading the company turnaround in Portugal and playing a pivotal role in the renewal of its business strategy and company growth since then. She earned her Master’s Degree in Advanced Management from Nova School of Business and Economics (Nova SBE) and her Bachelor’s Degree in Economics from Coimbra University in Portugal. Sandra writes regularly on strategy, leadership, and culture and is a speaker at events.
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