The island’s luxury goods retailers founded an association, ALRA, some time ago, designed to lobby in government circles, on behalf of the luxury goods industry
What makes luxury goods so special, that they require a lobbying body?
I’ll tell you.
All retailers are allowed to set their own prices and decide how much money they want to make on the products they sell. In the luxury goods category the manufacturer of the products sets the price across currencies and continents, the price is the same everywhere, and retailers cannot discount and/or increase the price of a Gucci bag or Prada glasses for example. The price is the price, set by the mother-ship in Italy, France, or Switzerland.
Thus if the government changes the local taxation structure introducing BBO/BAZV/VAT, or any other form of collective punishment, the retailer’s gotta eat it.
Unless the government ‘gets it,’ and makes exceptions where possible, to allow the luxury goods segment of the market to survive.
And that is why ALGRA was founded, to explain to the MinFin and the MinEcon and the MinTour, that we are blessed with exceptionally great shopping retailers on Aruba, and that they are having a tough time, in a tough market, being taxed twice, at the port of entry, AND at the point of exit, could the government consider alleviating it on one end, no matter which, as long as the burden is lessened??
Niet.
Having explained and explained the government still said no. Double taxation, that’s how we like it.
No reduction in import duties, no consideration regarding the levy of BBO/AZV.
So, most luxury retailers ‘got more efficient.’ Meaning they let go of people, and now operate less hours, 8 instead of 12, for example!
Some said adios. If you look at our Mecca of Luxury Goods Shopping, the Renaissance Mall you will see for the first time in decades, empty “For Rent” spaces in the prime corridor.
From an historic perspective, my source at ALGRA told me that in previous meetings with the former MinFin, Nilo Swaen, years back, he listened to the luxury goods retailers’ pleas, and reduced the import duty, a few months after the meeting.
But not this time.
Incidentally, I checked the definition of luxury goods and found they are few strong global brand names, for which the demand increases faster than our income increase. Meaning, luxury goods increase in price regardless of how often we get salary increases, because let’s face it, who doesn’t want to have a Rolex watch? We all do.
A few years ago, pushed by the Renaissance Shopping Mall developers, Aruba saw an amazing influx of international luxury goods retailers. It was part of an overall strategy implemented to help upgrade the island’s tourist profile. The efforts of Eduardo de Veer, and many others resulted in a stellar line up of 5th Avenue stores.
But many of them feel that shopping is never ‘pushed’ in marketing circles, and that no one does anything to promote and improve that segment of the visitors’ experience, which is the second reason, cited by visitors in answer to the question, why they picked Aruba. Most of them mention Beaches & Shopping, as their top two motives.
Shopping used to be promoted here, by the hotels, not any shopping, but DUTY FREE shopping. Those were the days. Look at this old ad from the Aruba Caribbean Hotel, they promote shopping ahead of casino, and beaches!
