Economy & Trade, Headlines, Latin America & the Caribbean

/REPEAT/ ECONOMY-PUERTO RICO: Local Businesses Threatened by Megastores

Carmelo Ruiz-Marrero

SAN JUAN, May 23 2001 (IPS) - Locally-owned small and medium-sized businesses are being displaced by foreign-owned megastore chains, such as Wal- Mart, with nefarious consequences for the local economy, warns the Puerto Rico United Retailers Association (Centro Unido de Detallistas/CUD).

The organisation, which represents close to 20,000 businesses that provide a combined total of over 200,000 jobs, is fighting the proliferation of these giant retail outlets through public education campaigns in the media, legislative lobbying and litigation.

The CUD has sometimes sued Puerto Rico government agencies, accusing them of not enforcing their own rules when it comes to construction permits for giant retailers.

This Caribbean island, which measures 100 miles from east to west, currently has 22 million square feet of shopping malls, not counting hallways and parking lots, according to Estudios Técnicos, a local consulting firm.

Large retail chain stores like Sam’s, Home Depot, K-Mart and Macy’s recently established themselves in Puerto Rico, competing with older, more established retailers like Sears and JC Penney, which have been here for decades. U.S.-based retail giant Wal-Mart has nine stores on the island.

CUD president Emilio Torres is quick to refute megastores’ claims of job creation. “Those businesses destroy more jobs than they create. And the jobs they do create are largely fictitious numbers because they’re part-time jobs.”

“Small businesses may have less employees, but they work 40 hours a week. In Puerto Rican-owned stores you see employees who have been working there for 10 to 15 years. But megastores hire and fire employees every week.”

Torres is far from alone in claiming that megastores actually increase unemployment.

According to a study by Professor Donella Meadows, of the Dartmouth University in the United States, a typical Wal-Mart outlet creates 140 jobs in its surrounding community, but at the price of destroying 230 other higher-paying jobs.

And an independent study cited in The Ecologist, a UK-based publication, concluded that small and medium-sized businesses create 106 jobs for every 10 million dollars in sales, whereas a Wal-Mart creates only 70 jobs for the same amount of sales.

Researchers at the University of Massachusetts have also looked into the economic effect of giant retailers, and found that a dollar spent on a locally-owned business has four to five times the economic spin- off of a dollar spent at a Wal-Mart, according to a report in the Wal-Mart Watch newsletter.

“(The megastores) are destroying our market niches in every sector”, said Torres.

“The problem is not that these retail chains are foreign. At first they used to establish themselves here to sell just one type of merchandise, like shoes or clothing, so their impact on existing businesses was small. But now these retailers have bakeries, furniture and hardware stores, and sell items as diverse as photo equipment and paints, all under one roof. Wal- Marts, for example, have grocery stores, pharmacies, flower shops and candy shops.”

The large retail stores claim in their defence that they provide much-needed tax revenue to communities in which they establish themselves.

But Torres disputes that claim too. “You have to calculate also the incentives they are given. Municipalities give them tax exemptions and economic incentives, including low municipal taxes.”

Local environmentalists are also concerned about the proliferation of giant retailers.

“Megastores like Wal-Mart tend to establish themselves in agricultural lands. They also make big extensions of land impermeable to rain water, which causes huge problems of sedimentation and erosion”, said environmental consultant Sarah Peisch, of the San Juan-based Centro de Acción Ambiental, an environmental NGO.

Torres made it clear that he and his group are not against free enterprise. “We believe in free enterprise and competition, but as long as it is among equals. The uncontrolled proliferation of businesses eventually leads to monopoly. That’s not free enterprise anymore.

“If they (the giant retailers) eliminate us, only they will remain, and they alone will dictate prices. And customers won’t have anywhere else to go.”

In the book “The Case Against the Global Economy”, authors Kai Mander and Alex Boston warn that if megastores win the battle against smaller businesses, “the small, diverse, family-run neighbourhood stores, which are the economic and cultural backbone of communities throughout Asia, Europe and South America, will soon give way to the mighty, homogenising global retailer.”

 
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Development & Aid, Economy & Trade, Headlines, Latin America & the Caribbean

/REPEAT/ ECONOMY-PUERTO RICO: Local Businesses Threatened by Megastores

Carmelo Ruiz-Marrero

SAN JUAN, May 23 2001 (IPS) - Locally-owned small and medium-sized businesses are being displaced by foreign-owned megastore chains, such as Wal- Mart, with nefarious consequences for the local economy, warns the Puerto Rico United Retailers Association (Centro Unido de Detallistas/CUD).
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