Apple Opens First Latin American Store in Brazil

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The first Apple store in Brazil had its grand opening on Saturday. As one of the world’s largest smart phone markets, Brazil is said to have welcomed the store with open arms. After losing market shares to competitors like Samsung Electronics Co., the business move was made in relatively good timing as Brazil is set to host the World Cup this coming summer, and the Summer Olympics in 2016. The store, located in Brazil’s Rio de Janeiro, drew more than 17,000 people for its opening day which is not surprising as Apple is said to be popular in the country and it is the first store to open in Latin America.

Consumers might notice that the cost of Apple products in Brazil are higher than in the US, this is due to Brazilian’s high import taxes. To combat this, Apple is working with Foxconn and manufacturing some of its products in the country. The company has also been said to be lowering the prices of their iPhones but as it turns out, they are still the highest priced in the world at a $1,174 for the 16-gigabyte 5s. The same phone sells for $649 in the US and $872 in China. It is not just the iPhone, the 16-gigabyte iPad 2 with wireless will sell for $566 compared to the US price of $399.

The market in the US is saturated so it is believed that Apple wishes to take advantage of Brazil’s less saturated economy. The opening of the store follows the launch of Apple’s Brazilian iTunes. Director of global wireless practice, Neil Mawston believes the move to Latin America is exciting for Apple, but he states that the novelty has slightly worn in the brand. He says “the hype and shine around the Apple brand is not quite as strong as it was two or three years ago, so I wouldn’t expect as strong a buzz.” Chief economist at Brazil’s National Confederation for Commercial Goods, Carlos Thadeu de Freitas claims that the move may be a little late but he also states that it is still coming at a favourable moment. He adds that Apple is known for quality, which is in demand in the Brazilian smart phone market right now. Although Brazil has the world’s seventh largest GDP and retail sales are a primary source of economic growth, they are showing signs of moderating. According to the national statistics institute, sales in Brazil for 2012 rose 8.4 percent but in 2013, they rose only 4.3 percent. This is some cause for concern as a lot of pressure is placed on the performance of Apple’s first Latin American store.

If the move to open the first store in Brazil is found to be successful, it could mean openings in other Latin American countries such as Argentina and Peru. The need for overseas expansion is evident when looking at Apple’s US revenues compared to that of China, Europe and Japan. Revenue fell in the US while it grew overseas, also only 162 of Apple’s 400 stores are currently in the US. Many believe this move indicates Apple’s belief that future growth is not in the US and may be a prediction of more overseas store openings in the near future.

By Lian Morrison

Sources:

Bloomberg Technology 
Financial Post
Los Angeles Times
24/7 Wall St.

 

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