Puerto Rico prepares for luxury shopping amid recession
SAN JUAN, Puerto Rico (AP) – A pair of nearly five-inch black satin heels with a large gold alligator that serves as the front strap retails for almost $1 600 at the first Saks Fifth Avenue store to open in Puerto Rico, more than what the average person here earns in a month and where nearly half the population lives in poverty.
While a nearly decade-long recession has forced many Puerto Ricans to seek a more affordable life on the US mainland, some of the world’s priciest retailers have stores at The Mall of San Juan, a $475 million shopping centre opening Thursday alongside one of the island’s most crime-ridden public housing projects.
“We know that Puerto Rico has its challenges, but we’re not basing our decision on the economy’s ups and downs,” said Manuel Vazquez, the mall’s general manager. “The sales of shoes, clothes and accessories in Puerto Rico have always been strong.”
Puerto Ricans do seem to have been busy shopping while the government struggles with $73 billion in public debt and US investors worry some of island’s public agencies could go bankrupt. Retail sales grew 0.5 per cent over the past year to $37.6 billion, with a 17 per cent increase in sales at women’s clothing stores, according to government statistics.
Shopping on credit is popular on this island, where the population of 3.65 million holds more than $22 billion in consumer debt, compared with the $3.3 trillion held by consumers on the US mainland. Laura Ortiz, a sociology professor at the University of Puerto Rico, said consumers she interviewed for her book Shopping in Puerto Rico told her they didn’t worry about debt. The view was, “I’ll handle it,” she said.
That shop-until-you-drop mind-set is on full display at the Plaza Las Americas, the largest shopping centre in the Caribbean. It generates roughly twice the sales-per-square-foot of the average US mall and draws up to 70 000 visitors daily.
Angel Diaz, who was shopping there with his girlfriend one recent afternoon, said they can’t wait to explore the new Mall of San Juan. “They say the economy is bad, but the stores are always full,” the teenager said.
Developers are betting the trend will continue at the new two-storey, 650 000-square-foot mall. It has more than 70 stores, many new here, including Lululemon and Jimmy Choo. Two high-end department stores anchor the shopping centre: Puerto Rico’s first Nordstrom, where shoppers can choose from 7 000 different lipstick colours (“We heard that people in Puerto Rico love their cosmetics,” spokeswoman Amy Jones said), and Saks Fifth Avenue, which has mother-of-pearl walls and polished white Italian marble floors.
Developers expect to attract strong sales from a mix of tourists and locals because of its proximity to the main international airport and Old San Juan, where cruise ships dock.
But some Puerto Ricans wonder why the mall was built next to the Ernesto Ramos Antonini housing complex, among the island’s most violent. It also borders on a working class area.
“You would think a mall of this kind would be located in a high-end neighbourhood,” said David Caleb Acevedo, a translator. “I don’t know how good this will be for an island whose economy is in such a bad state.”
Other malls that tried to attract a high-end clientele have failed, and stores including Macy’s have had to lower prices and modify products for consumers, said economist Jose Villamil, CEO of the Puerto Rican consulting firm Estudios Tecnicos.
He said it’s remarkable that retail sales remain robust amid a shrinking economy, but maintained there’s not a huge demand for luxury items. “People erroneously assume that Puerto Rico’s high-end market is bigger than it is,” he said.
Still, some who live nearby hope to benefit from the new mall. In October, police officer Angel Aviles bought a small sports bar within walking distance, hoping to attract workers who cannot afford to eat there.
“If that mall weren’t there, I would have never done this,” he said.