Too legit to compete?

A-Mart forced to close amidst mucky business environment

BY ALICIA ROACHE Sunday Finance reporter roachea@jamaicaobserver.com

Sunday, September 05, 2010

WHEN A-Mart closes its door for the last time in mid-September, it won't be a natural transition for a business that has reached the twilight of its life cycle. Instead, according to the proprietor of the 27-year-old super store, A-Mart has fell victim to widespread fraud and counterfeiting that have left ruins across the local business landscape over the years.

An A-Mart in the Springs Shopping Centre, along Constant Spring Road, one of the two branches closed on August 31. The other, at 89 King Street in downtown Kingston, will sing its swansong within the next two weeks.

"We have been losing money for a number of years," Michael Ammar Jr, owner and operator of A-Mart, told Sunday Finance.

"I think from a business point of view I'm glad its over (but) from a personal point of view, it's sad, especially when you have built something over the years. It's sad when you see all your hard work come to an end," said Ammars Jr.

Reports of rampant under-invoicing, containers being smuggled off the wharves and of corrupt businesspersons, customs officers and brokers, have soiled the reputation of Jamaica's business environment for years. And A-Mart is merely one of the casualties of these malpractices, said Ammar Jr.

"For the last 10 years, at least, we have been lobbying the authorities that such closures are going to happen if they don't put a stop to the smuggling and under-invoicing that was allowed to happen," said Ammar Jr, contending that not enough is being done by the authorities to stem the flow of illicit, counterfeit and undeclared goods into the island, making it impossible for legitimate tax paying businesses such as A-Mart to survive.

He said that from where he sits downtown he sees many instances of counterfeit and illicit goods competing with legitimate ones. For example, there are counterfeit Jansport schoolbags being sold downtown for $500 when the price for a legitimate bag is US$15-US$20 ($1305 -$1740), he said.

"The legitimate people who do the right thing and pay the right duties get squeezed," said Ammar Jr, who employed 35 persons across the two A-Mart stores and another 250 at his other store, Ammar's.

All 35 staff members will be deployed throughout the Ammar's stores to prevent job loss.

"Thank God I have Ammar's," he said.

In addition to providing employment, Ammar Jr emphasised that his company pays millions of dollars a year in taxes and other duties, which goes to the government's coffers.

"To me, it is a simple decision who the authorities should support," he noted.

Ammar Jr could not quantify how much A-Mart has lost over the years as a result of fraud , but said: "My answer to you is that I've lost my business... That is a bigger loss to me because not only have I lost the capital invested, I have lost the opportunity to continue to do business because of this underground economy that continues to thrive."

The closure of A-Mart will make way for Ammar's Next Generation, a children's store, and the expansion of Ammar's downtown, which will cater to the fashion needs of women and men as well as offer household and travel items. Ammar Jr said the business model of Ammar's makes it a bit easier to compete because the goods, which are branded, are harder to imitate and attract a different pricing structure.

"There is absolutely no way we could compete against merchandise that has not paid any duty or has not paid the right amount of duties," he said of A-Mart, which targets budget shoppers.

A-Mart is widely believed to be the first discount super store to operate in Jamaica, starting off offering marked-down prices on many items of clothing and other goods, but later accommodating the clearing of merchandise that Ammar's failed to sell. A reflective Ammar Jr said the opening of A-Mart was "phenomenal".

"I have never seen a store that full. I have never seen chaos like that. I remember how hot it was and the customers just attacked the merchandise," he said of the historic opening in 1983.

The scenario has come full circle. With up to 75 per cent off all merchandise in the store and with items going for as little as $100, Ammar Jr said the closing down brings back memories.

"The exact thing is happening again. I think our customers decide to send us off in style," he said.

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Too legit to compete?