Businesses suffer as hard-hit spend less or return to Mexico
February 13, 2009
By Dick Woodbury
For the price of $25, with a rebate coupon, the digital TV converters looked like a good buy. But there were few takers. In fact, there were no customers to be seen in the Radio Shack on South Federal Boulevard at lunch hour on a day last week.
Not surprising, said clerk Jose Martinez, considering the woeful economy. "Business is down, construction is down, people have gone away."
Elsewhere in Brentwood Center, a locale for Hispanic shoppers, the landscape was depressingly similar, with empty stores, few passers-by and employees doing their best to stay busy:
* Standing amidst a clutter of furniture at Aaron's rentals, sales manager Sarah Gould said, "Look at our showroom, it's usually half-empty. But now people can't pay their bills so they're returning things.
"We're all nervous about what's ahead for us," she added.
* Down the street, just a few doors from the nail salon that recently folded, the crew at Cost Cutters wonders like everyone else where the customers have gone. The $10 Tuesday haircut specials have been an inducement, but beautician Geri Mendoza said, "Somedays, it's hard to stay busy."
* Over at Rainbow Liquors, proprietor Jin Ye dismisses the notion that drinkers don't change their habits in down times. "People are drinking less," he said, "and it's cheaper wine, cheaper beer."
Up and down the main avenues of Hispanic commerce in a metro area that is more than 20 percent Hispanic, merchants and service providers are feeling the pain of the recession like everybody else - but with a couple of twists that make it doubly worse for them.
Spending power sapped
Their Hispanic clientele is largely worse off than the general population. They've been hit harder by the subprime housing mess, and their work force tends to be concentrated in construction and hospitality trades, among the most devastated.
As if that weren't enough to sap the spending power of a number of Hispanic families, some in desperation are picking up and leaving the region, most of them with hopes of better opportunities back in Mexico and other Latin American countries.
Though information is mostly anecdotal, the outflow apparently is significant.
"People are looking for honest work, and some of them now see better opportunities back home, or at least a situation that is not as bad as it is here," said Eduardo Arnal, the Mexican consul general in Denver. His office, which oversees eight states, now processes a steady flow of reverse migrants.
"A person who is now unemployed is thinking that returning home may make better fiscal sense for himself and his family," said Laura Sonderup, managing director of Hispanidad, an arm of Heinrich Marketing.
The exodus of consumers combined with layoffs and cutbacks are having a severe impact on businesses across the board.
The fear factor
"Everyone to some extent is being impacted," said Mark Martinez, regional president of Lakewood's Solera National Bank, which focuses on the Hispanic market.
"People are getting more serious in saving, and that's a double-edged sword with a consumer-driven economy. There's a fear factor that has a domino effect."
Among the hardest hit are mom-and-pop businesses tied to remittance payments that migrants send home.
Last week, Mexico's central bank reported that for the first time money transfers fell in 2008. Many stores, Sonderup said, have developed relationships with these unbanked customers, helping them with the transfers, cashing paychecks and selling them goods.
At V's Check Cashing in the Federal Village Center, manager Nam Yoon said, "No construction means no labor. We're cashing $100 to $200 checks instead of ones for $700 and $800.
" Fewer people are working. A lot of my customers are going back to Mexico. They just say it's cheaper to live."
Across the way at El Cuscatleco, Daniel and Marcia Pena are hanging on to their Salvadoran-Mexican eatery despite a 60 percent drop in business.
She is cooking and waitressing after most of the staff was laid off. "Every day we're coming out negative," said Pena, who closed his Lakewood nightclub last December. "The problem is customers with less money and out of work. And now they are going home."
Bypassing fancier cuts
Even chain food stores such as Azteca Ranch Markets are feeling the pinch as more cautious shoppers bypass fancier cuts of meat and pricier labels to save a dollar.
Azteca is responding with more tortilla, hot wing and chorizo promotions, among others. For its part, Rancho Liborio says its five Colorado stores are employing aggressive pricing practices and striving to operate on lower margins.
Along East Colfax Avenue in downtown Aurora, the mood is equally grim.
At the Mexican Dollar Store, one of the few brisk sellers is luggage, reflecting the departure of migrants.
Next door at the Family Dollar Store, racks of Valentine's candy beckon, but shoppers are inclined to pass them up for specials of the day such as soup, detergent and other staples.
Down the street at La Plaza Mexicana - a hodgepodge of 14 vendors clustered under a cavernous roof - a handful of shoppers barely disturb the tranquility.
Owner Jeremiah Kong describes the sales climate as the worst in his 30 years in Denver.
"Everyone's hurting," Kong said. "Taxes, garbage, insurance - they've all gone up. Our business is down by half from 2007."
Pawn shop busy
At Pasternack's Pawn Shop, a Colfax fixture for nearly 90 years, there's scant time for complaining because business is so brisk.
Shoppers pick among the mishmash of bicycles and snow blowers, tools and TVs, even as others are unloading their jewelry, exercise gear and lawn mowers for pawn or sale.
"We're seeing a lot more loans than a few years ago," said manager Scott Pasternack, fingering a glass eye that some poor soul failed to reclaim.
Other customers likewise are now more inclined to grab their money and never return to redeem their stuff.
"People didn't need the money then like they do now," he added.
"People are desperate, they're scraping the barrel," owner Mona Pasternack said. "They're bringing in more family heirlooms, firearms and grandma's ring. Saddles and wrestling belts - you name it.
One lady brought in a whole kitchen to get $100."
With no early turnaround in construction likely, Azteca CFO Hugo Hernandez predicts that Hispanic unemployment, now nearly 10 percent, could rise to 17 percent by year's end.
"The little businessmen here are facing huge problems," said Arnal, the consul-general.
With that scenario, it will take an extra measure of fortitude to get by, as Jeff Campos, Hispanic Chamber president, pointed out.
"Most small business owners are adapting," he said. "Those who thrive amid today's economy are those who are prepared."
Source: The Rocky Mountain News
February 13, 2009
By Dick Woodbury
For the price of $25, with a rebate coupon, the digital TV converters looked like a good buy. But there were few takers. In fact, there were no customers to be seen in the Radio Shack on South Federal Boulevard at lunch hour on a day last week.
Not surprising, said clerk Jose Martinez, considering the woeful economy. "Business is down, construction is down, people have gone away."
Elsewhere in Brentwood Center, a locale for Hispanic shoppers, the landscape was depressingly similar, with empty stores, few passers-by and employees doing their best to stay busy:
* Standing amidst a clutter of furniture at Aaron's rentals, sales manager Sarah Gould said, "Look at our showroom, it's usually half-empty. But now people can't pay their bills so they're returning things.
"We're all nervous about what's ahead for us," she added.
* Down the street, just a few doors from the nail salon that recently folded, the crew at Cost Cutters wonders like everyone else where the customers have gone. The $10 Tuesday haircut specials have been an inducement, but beautician Geri Mendoza said, "Somedays, it's hard to stay busy."
* Over at Rainbow Liquors, proprietor Jin Ye dismisses the notion that drinkers don't change their habits in down times. "People are drinking less," he said, "and it's cheaper wine, cheaper beer."
Up and down the main avenues of Hispanic commerce in a metro area that is more than 20 percent Hispanic, merchants and service providers are feeling the pain of the recession like everybody else - but with a couple of twists that make it doubly worse for them.
Spending power sapped
Their Hispanic clientele is largely worse off than the general population. They've been hit harder by the subprime housing mess, and their work force tends to be concentrated in construction and hospitality trades, among the most devastated.
As if that weren't enough to sap the spending power of a number of Hispanic families, some in desperation are picking up and leaving the region, most of them with hopes of better opportunities back in Mexico and other Latin American countries.
Though information is mostly anecdotal, the outflow apparently is significant.
"People are looking for honest work, and some of them now see better opportunities back home, or at least a situation that is not as bad as it is here," said Eduardo Arnal, the Mexican consul general in Denver. His office, which oversees eight states, now processes a steady flow of reverse migrants.
"A person who is now unemployed is thinking that returning home may make better fiscal sense for himself and his family," said Laura Sonderup, managing director of Hispanidad, an arm of Heinrich Marketing.
The exodus of consumers combined with layoffs and cutbacks are having a severe impact on businesses across the board.
The fear factor
"Everyone to some extent is being impacted," said Mark Martinez, regional president of Lakewood's Solera National Bank, which focuses on the Hispanic market.
"People are getting more serious in saving, and that's a double-edged sword with a consumer-driven economy. There's a fear factor that has a domino effect."
Among the hardest hit are mom-and-pop businesses tied to remittance payments that migrants send home.
Last week, Mexico's central bank reported that for the first time money transfers fell in 2008. Many stores, Sonderup said, have developed relationships with these unbanked customers, helping them with the transfers, cashing paychecks and selling them goods.
At V's Check Cashing in the Federal Village Center, manager Nam Yoon said, "No construction means no labor. We're cashing $100 to $200 checks instead of ones for $700 and $800.
" Fewer people are working. A lot of my customers are going back to Mexico. They just say it's cheaper to live."
Across the way at El Cuscatleco, Daniel and Marcia Pena are hanging on to their Salvadoran-Mexican eatery despite a 60 percent drop in business.
She is cooking and waitressing after most of the staff was laid off. "Every day we're coming out negative," said Pena, who closed his Lakewood nightclub last December. "The problem is customers with less money and out of work. And now they are going home."
Bypassing fancier cuts
Even chain food stores such as Azteca Ranch Markets are feeling the pinch as more cautious shoppers bypass fancier cuts of meat and pricier labels to save a dollar.
Azteca is responding with more tortilla, hot wing and chorizo promotions, among others. For its part, Rancho Liborio says its five Colorado stores are employing aggressive pricing practices and striving to operate on lower margins.
Along East Colfax Avenue in downtown Aurora, the mood is equally grim.
At the Mexican Dollar Store, one of the few brisk sellers is luggage, reflecting the departure of migrants.
Next door at the Family Dollar Store, racks of Valentine's candy beckon, but shoppers are inclined to pass them up for specials of the day such as soup, detergent and other staples.
Down the street at La Plaza Mexicana - a hodgepodge of 14 vendors clustered under a cavernous roof - a handful of shoppers barely disturb the tranquility.
Owner Jeremiah Kong describes the sales climate as the worst in his 30 years in Denver.
"Everyone's hurting," Kong said. "Taxes, garbage, insurance - they've all gone up. Our business is down by half from 2007."
Pawn shop busy
At Pasternack's Pawn Shop, a Colfax fixture for nearly 90 years, there's scant time for complaining because business is so brisk.
Shoppers pick among the mishmash of bicycles and snow blowers, tools and TVs, even as others are unloading their jewelry, exercise gear and lawn mowers for pawn or sale.
"We're seeing a lot more loans than a few years ago," said manager Scott Pasternack, fingering a glass eye that some poor soul failed to reclaim.
Other customers likewise are now more inclined to grab their money and never return to redeem their stuff.
"People didn't need the money then like they do now," he added.
"People are desperate, they're scraping the barrel," owner Mona Pasternack said. "They're bringing in more family heirlooms, firearms and grandma's ring. Saddles and wrestling belts - you name it.
One lady brought in a whole kitchen to get $100."
With no early turnaround in construction likely, Azteca CFO Hugo Hernandez predicts that Hispanic unemployment, now nearly 10 percent, could rise to 17 percent by year's end.
"The little businessmen here are facing huge problems," said Arnal, the consul-general.
With that scenario, it will take an extra measure of fortitude to get by, as Jeff Campos, Hispanic Chamber president, pointed out.
"Most small business owners are adapting," he said. "Those who thrive amid today's economy are those who are prepared."
Source: The Rocky Mountain News
