Carlos Lecueder: “Today, Argentina Is a Paradise for the Global Shopper”

Buenos Aires, Argentina — Carlos Lecueder manages eleven shopping centers in Uruguay, in addition to the World Trade Center Montevideo, a free trade zone for services in the country’s capital city with six office buildings, among several other projects.

He is one of the most important and experienced businessmen in Uruguay, and is the main responsible for the arrival of brands such as Starbucks, H&M, Forever 21 and Mango. For this reason, among others, he was included in the first edition of Bloomberg Linea´s 500 most influential people in Latin America.

The director of Estudio Luis E. Lecueder, founded by his father in 1971, encourages the arrival of Argentines with the capacity to invest in Uruguay, and praises the administration of President Luis Lacalle Pou for having managed to “face the pandemic without having the deficit skyrocket”.

At a time when Argentina’s parallel exchange rate hovers around US$200, he says that the country is “paradise for the global shopper” because of the “cheap” prices for those who enter the country with American dollars.

In an interview with Bloomberg Línea, he warns about the volatility of the different exchange rates in Argentina and Argentines’ lack of confidence in their own currency, which affects the competitiveness of the Uruguayan peso. For this reason, Uruguay must move forward in its search for free trade agreements, he says.

The following conversation was edited for length and clarity.

Bloomberg Línea: Many Argentines moved to Uruguay during the pandemic: To what do you link this and how much impact is it having in boosting the Uruguayan economy?

Carlos Lecueder: What happened during the pandemic was the last straw, the sum of a lot of factors, almost since the military periods that both countries lived through between the 70s and the 80s. From that moment on, when democracy returned, we have Uruguay, where the three main parties in power rotate: Partido Colorado, Partido Nacional and Frente Amplio. Despite that, certain State policies have been kept, and do not change when a certain president takes office, but it’s almost Uruguay’s way of being, that is to say, to respect the rules. This has allowed Uruguay to increase its GDP per capita much more than Argentina over the last 30 or 40 years. That makes Uruguay a more tempting country to work in, because stable figures attract any businessmen. If we add to that the fact that, in my view, the Uruguayan government’s answer to the pandemic has been excellent, that cause some people to say: “I am really going there, I will be better off, I will be more comfortable, I will have less risk, I will know how things are in the short, medium and long term”.

There are very high profile executives such as Marcos Galperín, Gustavo Grobocopatel. What are the Argentines who are moving and settling in Uruguay investing in?

Today we are basically seeing two situations. The names just mentioned are clearly coming and working in their sector, one with Mercado Libre, the other with agriculture. They find Uruguay to be comfortable place to develop their business. We also have older Argentines who have come here and want to live a more quiet life. So they don’t necessarily invest, but in any case they spend here. Uruguayans need to grow their markets. I manage shopping centers, I would like Uruguay to have 6 million people living here, not 3. We would sell more. The more people come, the more we boost the economy, and then there are also investors who have come, or plan to come, who are investing in the real estate sector. In Uruguay there have been a series of important real estate developments and today we see Argentines coming in to develop businesses, or to buy apartments as medium and long term investments.

I come back to that point about the population of Uruguay. It has been difficult for it to grow during the last decades, to what do you attribute this phenomenon and what impact could immigration have in the coming years?

Uruguay has a very European behavior, where the reproduction rate is very low. The typical Uruguayan marriage has fewer than two children, which means that Uruguay is going to depopulate. Today, Uruguay’s problems are precisely that the place where more children are born is in the poorest sectors, which have more children, and this is an issue that generates more problems of education, development, care, etc. I believe that Uruguay should promote some kind of measure to achieve a higher birth rate. During the 70′s, 80′s and part of the 90′s Uruguayans were leaving and today they are leaving less, and people are coming. Those who have come from Venezuela, Cuba, the Dominican Republic, plus those from Argentina now, make Uruguay’s immigration flow comfortably in a positive trend, but that was not the case before. Uruguay should try (and is trying) to get people to come and settle here, live here, boost the economic activity, and those jobs are a good way to make room for social policies. That means not giving away money, but paying salaries and giving work to the people.

Can the immigration of Argentines become relevant enough to move the needle of Uruguay’s population in the coming years?

This is the deal. There are 3 million of us, if 100,000 come, they move the needle, don’t they? That could be something important. People tell me “I don’t want Argentines to come”. Yes, I want many of them to come, but I also want them to come and invest and move the economy.

How do you evaluate Lacalle Pou’s government in general, especially in terms of economic results? It represented a shift in Uruguayan politics compared to the last decade and a half.

Undoubtedly, Lacalle Pou’s government has a very different line compared to the one we had for the last 15 years, when Uruguay grew very well and had some very good non-distributive strategies. But unfortunately in the last years two things happened: we spent too much during half of that time and made the fiscal deficit grow a lot. Today, Dr. Lacalle’s government tells us that it wants to be a government that continues to maintain social policies. What we do have is a better management of funds. Suddenly, with less money, things are being done better. We have put a lot of money into education in the last decades and yet education did not improve as much as it should have. The Lacalle administration did its homework in terms of attacking the fiscal deficit. It was able to face the pandemic without the deficit skyrocketing and today, the figures are almost where they were before the pandemic. Uruguay has to reform its social security system. It must be more fair and have less financial imbalance. It has to open up more to the world. Mercosur was once useful to do so, then it ceased to be so, and today we are talking about a possible free trade agreement with China. We have the support of the Brazilian government, we have a sidelong glance, not very sympathetic, from the government of Argentina, we are going to see how the Uruguayan government does to move forward on this path. In Uruguay there is a State policy which is “we are few, we have a small market, we have to go to big markets”, so in order to grow we need to be able to export to the world, right? When Uruguay produces meat, is it going to export to Argentina? Argentina does not buy meat, the meat goes to China and when Uruguayan meat arrives in China they have tariffs imposed, because we do not have a free trade agreement. Uruguay needs to free that up so more moey comes from there. Argentina needs it too, and that is something that we believe the Lacalle administration is doing well. This is not a liberal government that leaves people behind, but liberal when it comes to the economy and progressive in the social area.

How is the devaluation of the Argentine peso impacting Uruguay’s competitiveness?

That is the big issue facing Uruguayans and the whole area. Competitiveness has three parts: one, is for the country to be efficient, because I do not want competitiveness at the expense of low wages. I want competitiveness because of efficiency and a living wage that allows us to export. Secondly, a State that is not burdensome and makes the economy more expensive. Third, a balanced exchange rate. Today we have a State that continues charge many taxes, has many delays, a lot of bureaucracy, lots of costs. The most urgent thing is the exchange rate. If we want to be competitive in a week’s time we have to devalue. We have a Uruguayan currency that Uruguayans trust. The problem is that we have neighbors, especially, and I apologize, like Argentina, that do not trust their currency. It is very difficult to compete against a country that has different exchange rates. Who saves in Argentine pesos? In Uruguay there are people who save in Uruguayan pesos, and companies place bonds with the State in Uruguayan currency. When the currency is subject to inflation of several tens of percentage points, and when there is no confidence that the dollar will or will not jump, those things are more difficult. Obviously for us to be competitive with Argentina in an environment of distrust is very difficult. I was with an Argentinean some time ago who was going to spend a few days in Punta del Este. Before returning to Buenos Aires, she told me “this is expensive”, and I told her “no, you are cheap”, because today Argentina is paradise for the global shopper. If we take a European or American citizen to Buenos Aires and I tell him “hey, look at the prices” and he buys anything because everything is cheap, right?

Going over to Lecueder’s operations, what are the main projects that you manage and in which you are also shareholders?

We develop projects and as a demonstration to investors we invest 5%-11%, and the rest is placed with investors. The main role of the firm today is the development of shopping centers, some of them with bus terminals. We are building our tenth. We manage five in Montevideo, and the fifth one opened in the pandemic, it was the most difficult project of all. We divided it into three stages to be able to inaugurate it. It had three floors, so we inaugurated first the first floor with a supermarket, pharmacy and services, then a basement with a huge Sodimac and then the upper level which is the first shopping outlet in Montevideo, and that was from November last year until two weeks ago. The second activity is the World Trade Center complex. We built four office towers to operate in the plaza, then we built office towers that are free trade zones for services in Montevideo. We have set up a workplace for companies from all over the world that come to settle and work from Uruguay for the rest of world. We are starting the construction of a World Trade Center in Punta del Este to give that opportunity to people who want to live there. What is working for the world? Carrying out all kinds of activities that can be done in the countries to which the services are provided, but they are done from here with good stability, with a good workforce, and with tax exemptions. We hope that this building will generate a different movement than the one Punta del Este has, with more people working and therefore with more people throughout the year. That obviously generates more projects. We are working on a new shopping center in Punta del Este.

How has consumption been reacting in general terms in Uruguay in the post-pandemic period?

In July the country reopened and we started living again, in a voluntary confinement, because the Uruguayan government said “responsible freedom: those who want to close do it those who do not want to, don’t”. Car sales skyrocketed, real estate business skyrocketed in the suburbs. New projects that are in more central areas today are hesitating to make the effort in more suburban areas because people want more open spaces, and the buildings in those areas require amenities. The consumption of Uruguayans today is high and very good in terms of real estate investment. Durable consumption, everything related to clothing, which is the main consumption item for shopping malls, is growing slowly, and if we continue like this, by the first half of 2022 we will be at 2019 values. The efforts that the government is making to promote the construction of real estate and providing jobs is generating a drop in unemployment, which will surely bring consumption associated with that, so we are optimistic that consumption will recover quickly by 2022.

What was Lecueder’s revenue in 2019 and 2020?

The shopping malls that the study manages had in 2019 versus 2020 a drop in the order of 23-24%. From 2020 to 2021 we will have a recovery of 15%, that is, we will still be 10% below 2019. By 2023 we will have already recovered that drop, and we are ready to grow again.

What kind of transformation are you thinking about in order to continue attracting people to shopping malls, with the advance of e-commerce?

The future is going to be hybrid. I believe that when human beings shop, they live an experience, they touch, taste, feel, contact and communicate, and these are things that will hardly disappear. There are areas where e-commerce will grow more, and others where it will grow less. During the three months in which shopping malls were closed, an important Uruguayan chainstore that in February 2020 had 9% of its total sales in e-commerce and 91% in physical e-commerce, went on to have around 90-95% of its volume in the former. When the shopping malls opened, this percentage decreased. Shopping malls have to work on the visiting experience, the shopping experience, that social feeling of being able to go to a place, park, eat something, have a drink, see a novelty, things that are in fashion, all in the same place. Add entertainment, gastronomy. You have to take care of prices, because e-commerce has that great factor: it tends to be cheaper, as well as the convenience of buying from home. I have to talk to the person who buys in total comfort. In the United States there are also virtual companies that are setting up physical stores, because they realize that they are missing some aspects. I was in the city of Seattle, in Amazon books, and the shopper told me: it is spectacular because all the artificial intelligence they use for their buyers is applied here.

If people demand and want to use bitcoin in a shopping mall, would you implement that form of payment?

That is precisely an issue we are working on. Today in Uruguay this does not exist yet, and we are looking at the possibility that it could happen, because it is obviously a way to avoid rigidities, to encourage the consumption that interests us, it being a different form of payment, which are changing every day. They are all innovative things that make it easier and easier to pay and that will encourage consumption. We want to incorporate all these things to our operations, in the case of bitcoin I still cannot give an opinion because we do not have it clear yet. Maybe at the level of each store or that the shopping center is a kind of transaction intermediary.