Spain

Spain takes to the thrift shop

March 26, 2014: 12:24 PM ET

Secondhand stores are among the very few businesses that have grown during Spain's long economic crisis.

By Ian Mount

Customers browsing at a Cash Converters store in Spain

Customers browsing at a Cash Converters store in Spain

FORTUNE -- The display window at the Cash Converters branch on Barcelona's toniest shopping street, the Passeig de Gràcia, features everything from a child's guitar to bolt cutters, and on a recent Monday afternoon, the secondhand store was filled with browsers.

Jaime Antonijuan was looking at a bike, but he often shopped at the store for goods he could resell online. An elegant older couple named Teresa and José Bestué weren't yet ready to buy used -- "We look, we look, but for now, no," Teresa says -- but they had plenty of friends who had. And regular patrons Joao Queirolo of Brazil and Fabio Soana of Italy were checking to see what was new.

Buying and selling secondhand goods, long commonplace in the U.S and countries like the U.K. and Germany, is making major inroads in Spain, where the idea was anathema to local culture until a decade ago. According to a 2012 study that market research firm Simple Lógica conducted for Cash Converters, 22 million Spaniards, or 50.7% of the adult population, now buy or sell used goods. That's a 10% increase in used-good shoppers in two years.

MORE: Despite setbacks, tech industry presses on immigration reform

Companies that are part of this industry have been among the few that have grown during Spain's long economic crisis.

Cash Converters, an Australian chain that came to Spain in 1995, has opened more than 60 local stores since 2002 (it now has 82) and it sells over 100,000 cell phones and 500,000 videogames a year. Sporting goods chain Decathlon now runs biannual secondhand goods fairs. Used goods website Segundamano.es has quadrupled its ad count and doubled its unique users in the last five years, to 2.5 million and 10 million, respectively. Pikeando, a site dedicated to used IKEA furniture, is tripling its traffic and ads annually and now gets 150,000 visits a month. And Wallapop, a locally designed geo-location app that connects buyers with nearby sellers, has been downloaded 1 million times since October and lists 250 million euros in inventory; 80% of its business is in Spain.

The big question is why the sales of used stuff is rising so much in Spain when it is not in places like the United Kingdom, where a recent IBISWorld report found that sales at secondhand goods stores only grew 1.6% annually over the last five years and are expected to shrink 1.2% a year between 2014 and 2019.

The easy answer is that Spaniards are reacting to their country's crisis by buying used instead of new. "The boom is tied to the crisis. It's low cost," says Pikeando co-founder Ricardo Ruiz, 40.

That squares with the experience of shoppers like Jaime Antonijuan, who has been buying used goods for five years. "It all came from when things hit bottom. People are without work. The government doesn't help," says Antonijuan, 41. "If you can save five or 10 euros, great."

But Spain's embrace of secondhand shopping is more complicated than that. Until a decade ago, selling used goods was considered taboo, says Simple Lógica research director Raquel García. "It was seen as cheap to try to profit by selling something used. So, before selling a used good, it was preferable to give it away," she says.

Amid rising prosperity after the end of the Franco dictatorship, Spanish consumers didn't want to buy secondhand, anyway. "At the end of the 1980s, people started to have more money and that's when you saw this desire for the newest model," says Cash Converters marketing director Alex de Reguero.

In recent years, explanatory ad campaigns by Cash Converters, which offers one-year guarantees, have made the practice feel more normal. And old prejudices are less prevalent among Spain's younger generations, which put more emphasis on consuming intelligently and ridding themselves of unused possessions.

"You have a generation that's much more used to the Internet and wants to follow international trends," says Frode Nordseth, CEO of SCM Spain, the local affiliate of Oslo-based Schibsted Media Group, which bought Segundamano and is in the midst of buying a competing site, MilAnuncios, for 50 million euros and a 10% equity stake in SCM Media. "It's about being smart. And I think the 'green' wave has helped us."

MORE: Fed: Taxpayer subsidy for 'Too Big To Fail' banks? $8.5 billion

Nordseth argues that, instead of increasing sales, the economic crisis should have hurt secondhand sales because fewer people trade up their old goods in bad times; there also should have been fewer buyers with cash. "If it's a booming economy and you feel good, you might look at your almost new sofa and replace it and sell the old one," he says. "In a crisis time, you might wait until the sofa is knackered and then throw it away."

He may be right. While Internet secondhand sites are booming, the more established Cash Converters has recently taken a hit. After more than 10 years of growth, annual revenue at the chain dropped last year, says Alex de Reguero.

"When there's more consumption, we buy and sell more. When there's a big crisis, people aren't thinking of buying things," he says. "A person who would buy a used snowboard for 90 euros to try it out now simply isn't going to ski."

Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.