Sun, Apr 20, 2014 page14

• Malls empty in Venezuela as economic woes bite

  Businesses are grappling with stiff government controls on foreign currency acquisition, merchants’ profit margins and commercial rent

  • By Sofia Miselem / AFP, CARACAS
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  Venezuelans, already struggling to find basics like milk and toilet paper at the supermarket, are now confronted with empty appliance store windows and clothes racks at shopping centers.

  Malls have become deserted in the oil-rich country, with stores straining under government-imposed limits on profits, rents and access to hard currency.

  Venezuelans have always loved to shop, even under a socialist-inspired government that frequently lambasts capitalism and consumerism.

  

  A clothing store in a mall in Caracas on Wednesday shows mostly empty shelves.

  Photo: AFP

  However, in many shopping centers, stores are closing and the shelves are nearly empty in those that remain open.

  “Shopping centers are like a window onto the country, and whoever comes to Venezuela will realize that from 2013 to how we are today, the sector has deteriorated. It is chaos,” said Claudia Itriago, director of the Venezuelan Chamber of Shopping Centers, or Cavececo.

  Itriago warns that the collapse of the sector — which provides work for about 586,000 people — would deliver a hard blow to an economy that is posting listless growth and saddled with 57 percent inflation.

  In recent weeks, representatives of malls and the footwear and textile sectors have met with Venezuelan President Nicolas Maduro and other officials in a bid to find ways to keep the shopping centers afloat.

  Shortages of some foodstuffs and basic goods are nothing new in Venezuela. However, shopping centers had remained bustling, with customers browsing and buying in stores full of merchandise, including well-known international brands and luxury goods. The big change started in November, after Maduro moved to regulate imports and ordered price cuts of as much as 70 percent on everything from appliances to hardware to shoes.

  As part of an “economic war,” a so-called “fair price law” was promulgated, which limited merchants’ profit margins to 30 percent.

  “With the discounts, we have ended up with nothing. We already displayed the last merchandise we had and we do not know when new garments will be shipped in,” said the manager of a Zara clothing shop, part of the popular Spanish-based chain.

  The store used to see women of all ages lining up with their arms full of clothes. Now, it has a few items over in one corner while employees — whose pay has dropped because their sales-based bonuses have taken a huge hit — kill time fiddling with their cellphones.

  Restocking merchandise is no easy task in Venezuela, which imports most of its consumer goods amid tight hard currency controls that makes US dollars hard to come by. Complicating things is a system with three official exchange rates, which range from 6.3 to nearly 50 bolivars to the US dollar. Then there is the illegal black market, where the greenback was going for more than 60 bolivars.

  “In order to import, we ask for dollars. But they do not always authorize the amount we need,” said the manager of another store, who asked not to be identified. “Before, we would make up for this with dollars from the black market. But with the price controls, we cannot go on like this.”

  The “fair price law” is confusing to merchants, especially those who import goods and merchandise, says Profranquicias, which represents 500 companies and 12,800 outlets.

  “It is impossible to argue that someone who sells hamburgers is just as useful as a company that sells screws or clothes or shoes. The usefulness of a company has to do with many things, especially with inflation running so high,” Profranquicias president Jose de Martin said.

  “Out of order. Imported pieces needed,” says a sign on the escalator of a posh shopping center in Caracas. Half of its restrooms are also closed for lack of materials to keep them clean.

  In another front of the “economic war,” Maduro issued a decree establishing that rent paid for commercial space not exceed the equivalent of US$4 a month per square meter, based on the black market exchange rate. Sharp cuts were also ordered in what merchants could charge maintenance companies for upkeep of malls.

  “All of these measures have had a big impact on how we operate malls, and if this does not change, our sector will no longer be viable,” said Itriago, adding she was encouraged by talks with the Maduro government.

  The decline of malls has a drastic effect on everyday life in a country with rampant violent crime and the world’s second highest homicide rate, De Martin said.

  “Shopping centers are a refuge, a safe place where families get together, do their shopping, dine, or go to the movies. We are enduring a decline in living standards as a result of a faulty approach,” he said.
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