Business Standard

Shopping at well-stocked Venezuelan stores? Better take dollars


By Corina Pons and Mayela Armas
CARACAS (Reuters) - At a luxury hotel in Venezuela's capital, a small store with amply-stocked shelves offers an array of goods ranging from fine wines to imported baby formula, in stark contrast to the crisis-stricken nation's barren supermarkets.
Another store, on the other side of the country in the sweltering western city of Maracaibo, sells American-branded breakfast cereals, soap and truffle salt.
In a country with annual inflation topping 400,000 percent, the stores' prices are the only ones that will remain steady.
"Here we sell in dollars," said Lourdes Torres, manager of the Maracaibo store, as she attended customers waiting to pay with U.S. legal tender.
"We accept cash as well as transfers from American banks," she said, adding that she also accepts payment in local bolivar currency with prices converted at the black market exchange rate that is nearly four times the official rate.
The privately run "bodegones," reminiscent of the "dollar stores" Cuba's government ran in the 1990s, have steadily expanded in recent months as conducting business in the beleaguered bolivar currency becomes increasingly difficult.
Their rise follows a decision by the government of President Nicolas Maduro to loosen a 15-year-old currency control system that made dollar-based commerce explicitly illegal.
It also coincides with the growing dollarization of a collapsing economy in which many professionals - from doctors and dentists to personal trainers - are now charging in hard currency to avoid having their earnings swallowed by hyperinflation.
The clientele of the "bodegones" are primarily well-heeled Venezuelans with earnings in hard currency. But shoppers also include a growing number of residents who receive remittances from some two million Venezuelans who have emigrated to escape hunger and disease.
Reuters visited six newly established stores selling in dollars in Caracas and five other major cities, including the border city of San Cristobal and the once-bustling industrial hub of Valencia, now filled with empty factories.
It was not immediately evident how many such stores have opened nor why the government was not requiring the stores to meet state price controls that are enforced at major supermarket chains.
The Information Ministry did not reply to a request for comment.
The "bodegones" often grab customers' attention with luxury products such as high-end chocolates or high-tech gadgets.
But the most popular items are personal hygiene products like deodorant and toothpaste that are consistently available in greater variety than in supermarkets, according to store managers.
"People are always asking if we have diapers," said the manager of a weeks-old shop in eastern Caracas who, like most shop owners who spoke to Reuters, asked not to be identified. They worry that their operations fall within a legal gray area and could be targeted by authorities.
She said her supply of diapers, displayed next to bottles of champagne, always runs out within a week.
Dollarized prices were unthinkable under regulations created by late socialist leader Hugo Chavez. They put the government in charge of carrying out nearly all foreign currency transactions and setting prices for consumer goods.
Maduro's government, which often blames shortages and inflation on unscrupulous businesses overcharging or hoarding products, in August lifted a prohibition on the free exchange of hard currency. But the government did not create a law saying such operations are allowed, which has left many shop owners trepidatious about speaking to the media.
In September, as the new bodegones were starting to emerge, the government jailed 34 managers of well-known supermarkets on accusations of price-gouging. They were later released and immediately resigned, according to industry sources.
Maria Uzcategui of commerce association Consecomercio said stores pricing goods in dollars do so "at their own risk," while the government has turned a blind eye and gone after big-name grocery chains for political effect.
"The arrests are a show to blame retailers for the country's economic situation," Uzcategui said. "That is why they single out the large chains, and not small businesses or these new 'bodegones.'"
Prices at the dollar stores are exorbitant for those living on a bolivar-based salaries. The minimum wage is around $10 per month, and at least 80 percent of the population skips at least one meal per day, according to a quality of life study known as Encovi carried out by private universities.
Meanwhile, some $1.1 billion in annual remittances have turned into a lifeline for civil servants, retirees and salaried professionals who want to avoid waiting in long lines or scouring supermarkets in search of what they need.
Sonia Ramirez, a 52-year-old retired judge in San Cristobal, shops at the 'bodegones' with the $120 she gets from her two sons who live in the Dominican Republic and Spain.
"They are always well-supplied, but at much higher prices than what the government requires," she said.
(Additional reporting by Isaac Urrutia in Maracaibo, Anggy Polanco in San Cristobal, Tibisay Romero in Valencia and Maria Ramirez in Puerto Ordaz; Writing by Luc Cohen and Brian Ellsworth; Editing by Dan Grebler)

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First Published: Oct 31 2018 | 5:38 PM IST

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