MEXICO CITY — “It’s a very empty space.”
That’s the way María Luisa Mosquera, a former Venezuelan actress and model, described the current state of El Castillo de las Telas (The Fabrics Castle), one of Margarita Island’s best-known fashion fabric shops that is now crumbling under the country’s accelerating economic decline and increasing political instability, as witnessed by the attempts by Venezuelan President Nicolas Maduro and the nation’s Supreme Court to strip its Congress of legislative powers. The move, since reversed, sparked fears the country was heading toward dictatorship.
Mosquera, who starred in “Macu, the Policeman’s Wife,” a top-grossing, late Eighties Venezuelan film, said the store’s supplies have dwindled 75 percent. She described how the country’s fashion, retail and apparel sectors have withered over the last few years, leaving many talented designers starving for cash to grow in the local or international market.
Maduro’s widely criticized economic mismanagement and unpredictable dollar restrictions have made crucial fabric imports prohibitively expensive and fraught with red tape, undermining brands’ efforts to develop their business.
“During the [Hugo] Chavez administration, there were more dollars available to private citizens and commerce but now, forget it, there are no dollars for anyone,” added Mosquera, who fronted global ad campaigns for Armani/AX Exchange and Kenzo in the Eighties. “The only dollars you can get are in the black market with outrageous rates of over 3,000 bolivares.” The bolivar currently is worth 10 cents. “For any designer to do anything is really impossible unless they have a heavyweight backer.”
Venezuela’s GDP is set to shrink 15 percent this year as plummeting oil production and slumping prices drain the socialist state’s revenues. Inflation is set to rocket 3,000 percent while unemployment could hover at 7.3 percent, according to Raul Lopez, economic development secretary of Venezuela’s Miranda State. Last year, when Venezuelans staged huge “hunger” protests against food and other basic-goods shortages, the economy declined 10 percent, he added.
While Venezuela is the birthplace of Carolina Herrera, one of Latin America’s most esteemed designers, it has failed to produce other globally recognized names except for Angel Sanchez, whose high-end bridal and evening gowns are popular worldwide, and more recently Camila Castillo, who has been in the spotlight with her geometric, origami designs.
“It’s like a war zone,” said Castillo of her country’s social and political crisis. “You have to be here to see the gravity of the situation.” Echoing Mosquera, she said the volatile bolivar is “making it virtually impossible to sew here,” with entrepreneurs taking to social media to more profitably market their products abroad. “Most of us are selling online because the situation is pretty terrible,” added Castillo, who has shown in Los Angeles and Vancouver. “Either you sell online or leave the country.”
Like food and household items, high-quality branded apparel and footwear are increasingly hard to find, according to Castillo. “The stores are empty,” she said. “Salespeople sit on couches or whatever because there is nothing to sell or the stuff you find is very low quality.”
Exceptions are basic leggings, T-shirts or jeans from China, she noted, “but if you want something trendy like Vetements or Kanye West, forget it.”
Crime is also rising in Caracas, now billed as one of the world’s 10 most dangerous cities.
“I live in the city center and have been robbed five times in the past 12 months,” Castillo noted, adding that she plans to move to Los Angeles soon.
Designer Yenny Bastida, who has a boutique in the capital’s trendier Altamira district, said a plethora of clothing shops have shuttered since Maduro took office in spring 2013.
Chavez’s anti-U.S., socialist rule drew many foes but Maduro’s policies have further sickened the economy, critics said.
“There used to be many boutiques and luxury stores but the situation has worsened,” said Bastida, adding that top houses such as Louis Vuitton left the country while prestigious boutiques Casa Blanca and Aprilis have had to sell off-season merchandise to survive.
“There is a lot of political uncertainty. Foreign brands don’t want to operate in an environment of zero returns,” Bastida said. “There is no government policy to support the fashion or apparel industry.”
As the downturn strangles consumers, apparel sales are set to plunge 20 percent in 2017, worse than last year when they declined roughly 15 percent, said Ruby Bautista, marketing director at struggling denim firm Jeantex. “If people bought seven pants a year, they bought one pair in all of 2016,” she said. “Venezuelans don’t have acquisition power.”
Spanish apparel giant Inditex no longer operates its Pull & Bear chain in Venezuela while it has sharply curtailed its Zara network, according to Bautista. Meanwhile, other Venezuelan-consumer favorites Guess, Tommy Hilfiger and Ralph Lauren have also scaled back significantly, she said.
On the upside, foreign brands’ exits have given local ones a chance to gain market share. “Suddenly, there is a space for Venezuelan design,” Bautista said, citing Melao, Pablo Reano and Koneko as having the required scale and product quality to attract consumers.
Bautista said Venezuela’s problems can’t last forever and she recently opened a second shop in Caracas’ Tolon Fashion Mall, home to brands such as Lacoste and Coach, to profit if the economy bounces back. “This is the best mall in Caracas,” she said. “We had to reinvest our profits to grow.”
Tolon Fashion Mall hosts Fashion Lab, a three-week runway event showcasing Venezuelan designers.
Meanwhile, the textiles and apparel industry has been halved, with 350 firms and 350,000 jobs lost in four years. “We have become less competitive against Colombia or Peru and our companies are very indebted,” Bautista explained, blaming the dollar freeze. “There is no specific regulation, cap or limit,” he said of the way the National Center for Foreign Commerce, or CENCOEX, which is in charge of disbursing the U.S. currency, operates. “The CENCOEX official will give you whatever or how much they want on any given day.”
That often means companies without government connections are left out of the import market, Lopez said.
To be fair, Maduro’s administration is working to ease rules to boost exports.
In the past “if you imported $100, you had to give 60 percent back to the Central Bank at the official rate [currently 689 bolivares versus 3,450 in the black market] which was unattractive,” Lopez explained. “Now you only have to hand back 20 percent.”
Maduro’s administration is also focusing on textile production to meet his social programs. On Feb. 9, it unveiled plans to make 5 million school uniform kits or 27,000 garments under Maduro’s “Textiles Plan,” adding that the first production phase will employ 2,000 people.
To turn the corner, Venezuela must step up exports to Colombia, Peru, Ecuador and the Mercosur block comprising Brazil, Argentina, Paraguay and Uruguay. However, it must invest heavily to modernize production and overhaul its industrial policies to make that happen.
“We need a lot of machinery,” Lopez said. “There have been efforts to sell to Dominican Republic, the Caribbean and Panama but we are too weak. We used to have strong jeans, dress shirt, flannel and bathing suits [sectors] but many producers and designers closed or left.”
Bautista said Jeantex owner Telares Maracay recently invested $30 million to build a jeans factory to gradually triple exports to around $100 million. It is also exploring a production joint venture with Dominican textiles major Grupo M.
Meanwhile, the fashion industry can only wait until Venezuela’s prospects improve.
“We used to have a great fashion industry before Chavez,” Castillo sighed, adding that Angel Sanchez and other designers such as Oscar Carvallo and Armando Piquer used to dress wealthy women in then capitalist Venezuela. Following Chavez’s rule, the talented designers started to leave and the Ms. Venezuela beauty pageant began to influence fashion, Castillo said, adding that her designs shine a different light by blending sensuality with hand-sewn artwork.
“The post-Chavez generation is not doing high fashion at all,” Castillo added. “The women who can wear Herrera or Angel Sanchez have all left to New York, Miami or Paris.”