SAN JUAN, Puerto Rico -- A pair of nearly 5-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, where nearly half the population lives in poverty.
While a nearly decade-long recession forced many Puerto Ricans to seek a more affordable life on the U.S. mainland, some of the world's priciest retailers have stores at The Mall of San Juan, a $475 million shopping center that opened Thursday alongside a public housing project with a crime problem.
"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."
Retail sales grew 0.5 percent over the past year to $37.6 billion, with a 17 percent increase in sales at women's clothing stores, according to government statistics. At the same time, the government is struggling with $73 billion in public debt, and U.S. investors worry some of the island's public agencies could go bankrupt.
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 U.S. 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 mindset is on full display at the Plaza Las Americas, the largest shopping center in the Caribbean. It generates roughly twice the sales per square foot of the average U.S. mall and draws up to 70,000 visitors daily.
Angel Diaz, who was shopping there with his girlfriend recently, 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-story, 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 center: Puerto Rico's first Nordstrom and Saks Fifth Avenue.
Developers expect to attract strong sales from a mix of tourists and locals because of the mall's 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 neighborhood," 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."
Business on 03/27/2015