Second in a three-part series on Development During Economic Crisis
SAN SALVADOR, El Salvador – While the global economic crisis is hitting everyone hard these days, it hasn’t kept Central Americans from going to the shopping malls.
In fact, according to Grupo Roble, the region’s largest developer and operator of commercial centers in Central America, more people are going to the malls than ever before.
“Curiously, our traffic in commercial centers has increased,” the company’s general manager, Alberto Poma, told The Nica Times during a recent interview in El Salvador.
Grupo Roble owns 18 of the largest commercial centers in Central America, including the Metrocentro malls in Guatemala, Nicaragua and El Salvador; the Multiplaza shopping centers in Honduras, El Salvador, Costa Rica and Panama, the new Metromall commercial complex being built in Panama City, and several smaller shopping plazas and office complexes.
In Central America’s gloomier capital cities, Grupo Roble’s malls are more than just shopping centers, they’re reference points, meeting places and clean air-conditioned buildings that people can pop into to escape the afternoon heat, rain or otherwise maddening street bustle.
In the case of Managua, Metrocentro has already reached institutional status as the de facto downtown center of the urban sprawl that passes for Nicaragua’s capital. In a city that’s devoid of any agreeable public areas suitable for meeting up with friends or strolling leisurely, Metrocentro has become a sort of a bizzaro, jetsonian central park.
On any given day there, most people at the mall are decidedly not there for commercial purposes. Instead, people can be seen sitting around the food court slurping jumbo-sized drinks and staring at other passersby, standing around the lobby talking to friends, cutting through the mall as a climate-controlled shortcut to the bus stop on the other side of the parking lot, wandering mindlessly while looking at their reflections in store windows, or leaning lethargically on the second-story railing and watching people step timidly onto the escalator.
Though people go to the malls for a variety of reasons other than shopping (Poma, in fact, admits that sales have “gone down slightly” despite the increase in foot traffic), Grupo Roble is confident that the overall increase in visitors will translate into an uptick in sales once the economy coughs back to life.
Plus, Poma says confidently, those who are shopping these days still go to the brandname malls to do so.
“In each country where Grupo Roble operates, our shopping plazas are considered the leaders in the market, so that is a great benefit to us and to our business partners,” Poma said. “In the moment when people think ‘I have to go buy something,’ they go to our commercial centers.”
Poma said that some of the stores in their malls have actually increased their sales volumes during the economic crisis, while others have dipped in retail sales. But overall, he said, the balance has been positive.
“We haven’t felt the economic crisis as strong as in the United States,” Poma said. That may seem like a curious phenomenon in a part of the world that is so intimately linked to the struggling U.S. economy, especially considering the U.S. is the region’s main source of remittances, which account for 10 to 20 percent of the national incomes of some Central American countries.
Despite the slimming wads of money being sent back to Central America from family members working in the United States, a good chunk of cash is still flowing. And those who still have money in their pockets are spending it at the mall, Poma said, although he declined to provide figures.
Some analysts say there are several other factors to explain how Central Americans can continue to pay for their shopping mall love affair.
Cirilo Otero, a Nicaraguan economist and sociologist, says a growing group of Central Americans are operating outside of the formal economy and are making disposable income from black-market activities.
Still many others, he said, are financing their consumerism by using credit cards to buy with money they don’t have.
In Nicaragua alone, an estimated 380,000 people use credit cards despite monstrous 60 percent interest rates. The situation has become so precarious that an estimated 10 percent of Nicaraguan cardholders are currently facing judicial proceedings for unpaid – and in many cases unpayble – credit card debt.
In Costa Rica, more than 1.2 million Ticos hold credit cards and have a combined debt of nearly $1 billion, according to the Costa Rican Ministry of Economy, Ministry and Trade. Perhaps even more noteworthy is the fact that nearly 40 percent of all credit cards in use in Costa Rica were issued less than two years ago, suggesting this is still a nascent and rapidly growing phenomenon.
Regardless of how people come into money, many are showing they’re not afraid to use it. And as spending trends continue, the shopping malls continue to grow.
20% Expansion by 2009
Grupo Roble says for 2009 it is focused on consolidating and expanding its existing commercial centers as well as starting several new ones.
At the end of 2008, Grupo Roble finished the second phase of its Metrocentro mall in Villa Nueva, Guatemala and inaugurated the third-phase of the expanded Multiplaza Tegucigalpa, the largest shopping mall in the Honduran capital. By the end of this year, the company is scheduled to finish the expansion of the Metrocentro mall in Managua.
But the group’s biggest projects this year are in Costa Rica and Panama.
“Our focus this year is the expansion of Multiplaza in Costa Rica and Metromall, a new 80,000 square-meter commercial center in Panama,” Poma said.
The project in Costa Rica at the Multiplaza in Escazú is the fifth and final phase of construction, adding an additional 25,000 square-meters of stores, including a Siman department store.
In addition to shopping mall projects, Grupo Roble is also working on an office park complex and Marriott Hotel resort in Bogota, Colombia, and half a dozen housing developments in El Salvador and Panama. While many other developers are slowing or stopping construction during the economic crisis, Poma says Grupo Roble is opting to muscle through it with a strategy of “continual construction.”
“There are certain benefits to building in a continual process instead of accelerating, braking, accelerating some more, then braking again,” Poma said. “There are benefits to setting certain goals and building continuously to reach those goals.”
Grupo Roble’s goal this year: to increase its shopping mall primacy by 20 percent of its current holdings.
Grupo Roble may in fact be staying head of the curve.
The World Bank’s chief economist Augusto de la Torre last week predicted that Latin America is likely to bounce back from its economic troubles faster than other regions in the world and become a preferred destination for foreign investment. And the Economic Commission for Latin America (CEPAL) this week projected that the economies of Latin America could start to recover as soon as the second semester of 2009.
That would position Grupo Roble in a good spot when the dust finally settles. In the meantime, their malls will continue to provide would-be shoppers with a nice air-conditioned respite from sticky Central American afternoons.