INDEPENDENTS REPORT: Smiley on the beach

It was Catherine's first visit to Costa Rica, and my third during the past year. A beach lover from the time she was a toddler, my 13-year old parked herself on a hammock slung between two trees at the shore on day one of our trip, snapping pictures of the mountains and lush greenery surrounding Tamarindo, a popular surfer's paradise that we visited last month. Also an animal lover, Catherine especially prized her picture of a family of fuzzy black monkeys swinging from the tree limbs high above Dos Pinos Supermercado, a tiny local grocery store.

How soon before Wal-Mart's banner begins to appear in tourist snapshots?

Costa Rica, appreciated for its ecological beauty, old Spanish culture, and seemingly slower pace of life, fondly referred to as "tico time," is currently the fastest-growing economy in Latin America. Geographically smaller than the state of West Virginia, the country, which separates the Pacific Ocean from the Caribbean Sea, is today recognized as one of the world's most exotic vacation destinations. It's home to over 4.5 million residents, 40 percent of whom are estimated to be under 20 years old.

Thus, it came as no surprise for me to learn that it's also now a Wal-Mart market.

Experiencing faster growth in its international division than in the U.S. market (a 11.4 percent increase in 2006 international sales vs. 2005, compared with a 9.4 percent rise and 7.2 percent increase in Wal-Mart and Sam's Club stores, respectively), Wal-Mart in 2005 first captured the attention of Latin America's lower- to middle-income consumer market, which represents 50 percent to 60 percent of the region's population, by acquiring about one-third of Central America's biggest retailer, CARHCO.

CARHCO was at the time operating 375-plus supermarkets and other stores in Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica. The CARHCO-owned stores in Costa Rica included a chain of department stores called Hipermas, as well as a group of supermarkets operating under a variety of banners, including Mas por Menos (More for Less), Pali, and Maxi Bodegas.

The U.S. retail giant strengthened its hold in Central America when it boosted its investment in CARHCO to a controlling 51 percent in 2006 and recently renamed it Wal-Mart Central America.

Wal-Mart promised "no immediate changes in the names of the stores, or in any of the store formats operating throughout the region." It also said the entity "will bring more development opportunities to associates and vendors." However, this summer the company will open, in the city of Escazu, the first store in Costa Rica to fly the Wal-Mart banner, one modeled on its U.S. formats.

Jobs and investment

The move has many in Costa Rica wondering how small local businesses, not to mention the farmers that they've supported for years, will fare. During my most recent visit, I discussed Wal-Mart's initiatives with local consumers and business owners.

As one source who requested anonymity puts it, "Just how long will it be before we turn the corner after visiting one of our beautiful rainforests, only to find a Wal-Mart Supercenter parked next door?"

Real estate owner/broker Mike Fonseca of Coldwell Banker Bay Breeze Realty sees two sides to Wal-Mart's entry into Costa Rica. "On the positive side, Wal-Mart is expected to create over 7,000 jobs for Costa Ricans, as well as the opportunity to shop at a 'normal' grocery or merchandise store," he explains. "I believe Wal-Mart will do well in Costa Rica, and I think it will be a comfort to Americans in this country. For some Americans, to see a Wal-Mart puts their minds at ease regarding moving here or spending time here.

"I also think it will increase the desire of Americans to invest in property here, knowing that Costa Rica is not a third-world country waiting to be overrun by [leftist rebels]. People don't realize that this is a technologically advanced first-world country."

End of the simple life?

But there's another side, which he says he has discussed with neighbors and colleagues. "Some folks feel that Wal-Mart will take away from the charm of Costa Rica. They see a big U.S. conglomerate coming to 'pillage this simple little country.' People live simple lives here. Not everyone is convinced that Wal-Mart fits that character trait. Some see it as the beginning of a bad thing."

Guanacaste attorney Mario Baltadano, who has offices in San Jose and Liberia, views Wal-Mart as a tough new competitor for existing larger supermarkets.

"The perception is that Wal-Mart will indeed offer the consumer more variety, new technology, and more competitive prices," he says. "I believe that two of our larger retailers, Jumbo and Pricemart, will be most impacted by Wal-Mart, as will, to a lesser degree, smaller grocery stores most often frequented by tourists. Jumbo operates big supermarkets, and they are also a chain in the process of restructuring, probably because of Wal-Mart's presence. They do have some inside stores such as pharmacies, but none have fuel stations or automotive centers."

He adds, "Costa Ricans are extremely excited about the variety of electronics and appliances that Wal-Mart is going to offer."

Further, in donating money to Latin American-based charities such as scholarship funds, sustainability projects, and the environment, the company is quickly becoming recognized as an outstanding corporate citizen. Yet there are those living in Costa Rica who remain steadfast in their opposition to Wal-Mart's growing presence.

What changes, good and bad, will Wal-Mart bring to Costa Rica? Only time will tell. My guess is that tico time may never be quite the same.
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