Despite an amazing promotion from Ford — a 25 percent discount — few Spaniards are buying, he said. On a recent morning, salesmen sat at their desks, surrounded by shiny new hatchbacks staring into space as only two customers, a father and son, came into Cantero’s showroom during a three-hour period. In the end, they decided not to buy anything. Two mannequins, a man and a woman dressed in the summery hue of orange, were strategically placed at either corner of the store to make the place feel more lively.
“People are afraid,” Cantero said. “They don’t know what’s going to happen this month or next month, so they don’t want to buy something they may not be able to afford in the future.”
The day after Ford offered its dismal view of the situation in Europe, Starbucks said its fiscal third-quarter profit was 43 cents a share, nearly three cents less than analysts expected, and blamed poor performance in Europe. Chief executive Howard Schultz said that he had dispatched two top executives to the region to address the problem and that the company planned to close several of its European outlets.
Juan Soto Serrand, president of the American Business Council in Madrid, said such reductions in stores and staff have become normal for many U.S. corporations in Spain.
“Consumer companies are experimenting with advertisements, heavy discount policies, but there’s no question that multinational businesses are having a difficult time,” he said.
Biting into Apple’s sales
The real earnings shocker has been Apple. The company had phenomenal growth late last year and early this year. But for the quarter ending June 30, Apple had surprisingly poor iPhone sales and blamed it on falling demand in Europe. As a result, Apple said it missed its revenue targets.
Spain has been especially challenging for Apple. Analysts say the company entered the Spanish market relatively late and has been trying to make inroads into Android’s dominant market share at an extremely difficult time. About 5.7 million Spaniards, or 24.6 percent of the working age population, are unemployed, the highest rate in the industrialized world. Retail sales have fallen for the past 24 months.
Apple has begun experimenting with a radical new strategy in Spain by giving devices away.
Through deals with banks (if you sign up for direct deposit for your salary, you can qualify for a free iPad) and telephone companies (for an 18-month contract, you can get a free iPhone), Apple has tried to target middle-class consumers with stable incomes.
The question is whether Apple will be able to retain these customers’ loyalty.
This week, Prisilla Bejarano, 23, who works as a clerk in an accessory store, was checking out the company’s newest products at Madrid’s Gran Plaza 2 mall. Nearly every retailer in the mall except for the Apple store had “Rebajas” or “Sale” signs plastered on their windows advertising merchandise up to 70 percent off.
Bejarano said she received her iPhone for free a few months ago when she signed up for a phone contract, but she broke it and was waiting to see whether it could be fixed. She said that although she adores her iPhone, she’s planning to buy “a different, cheaper brand” if the phone can’t be repaired. She has a stable job, at least for the time being, but is saving all her money in case the worst happens. “I can’t allow myself any splurges right now,” she said.
A few tables away, Tomas Ortiz, a 42-year-old telecommunication engineer, was standing across one of the tables from his young daughter as they simultaneously swiped their hands across the screen of identical black iPads. He said he loves the technology and thought he could afford the device. But he had been mulling the purchase for three days and kept coming to the same conclusion: “I think it’s too much.”
Corral, who got a free iPhone two months ago, also left the store empty-handed. A runner, he was eyeing the iPod Nanos and Shuffles, but he concluded that one would be an unnecessary expense.
“For now,” he shrugged, “until the economy improves, I will run with my big smartphone.”