Could this be the end of local stores?

I t is the afternoon of January 5, the eve of Kings Day - when most Spanish people exchange gifts. For stores, it is one of the best days of the year in terms of sales. But one storeowner has a different story to tell. "You see that?" he says, peeking out of his establishment. "There's hardly anyone around."

It is true. The three shops across from him, on López de Hoyos street in Madrid, are empty. There are half-a-dozen women inside his own store.

José Luis Cortés, 78, is the third generation of his family to run Arca de Noé, a local haberdashery whose display window is full of pantyhose, children's clothes, bras and hats. But these days the business is managed by his children, Patricia and David, who grew up among spools of thread and socks.

"This used to be much bigger," recalls Patricia, 35. A blackened plaque reminds visitors that the establishment was opened in 1908. The premises next door, once part of their own business, now house a leather-goods store run by Chinese migrants.

Cortés claims that sales have fallen 50 percent since 2007, although he does not provide any exact figures. "We are in danger of extinction," adds his son David, 41.

Yet the Cortés family is not planning on opening on Sundays, even though they will soon be allowed to. The regional government of Madrid is putting the finishing touches to a new law that will enable any business to remain open 24 hours a day, 365 days a year. The legislation, which is scheduled to be ready in May, will see Madrid become the region with the most flexible commercial schedules in the country.

"I want to get to know my daughter - put that down in your newspaper," says David. "If I work Monday through Sunday from morning to night, when do I get to see her?"

The measure has created two camps, each with opposing views. The small mom-and-pop stores are sure the law will favor big business, whereas the heads of department stores and shopping malls say this is a chance for everyone to sell more. The small players say that profits will go to the big stores, because clients who buy a pair of pants at a mall on Sunday will no longer buy them at a local shop on Monday. The large players contend that sales will grow all round, which will create new jobs.

Miguel Ángel Galán, 51, makes a circle with both hands. "This is the pie, and there is no more of it to share out," he says. A vehement speaker, he runs his fingers along the shelves of his store, Base: Congara, located in the Vallecas district of Madrid. He owns two other businesses and recently shut down a third inside a mall. His is also a family company, which he and his two sisters inherited from their parents. At the time, it was a leather-goods shop, but an 18-year-old Miguel Ángel decided to turn it around and sell sportswear instead.

"I am not going to sell more; if I open on Sundays, I'll just have more expenses for the same turnover," he argues.

There are between 70,000 and 75,000 businesses in the Madrid region, according to estimates. In 2010, sales fell 7.1 percent, a little less than the national average. Catalonia fared worse with a drop of 8.8 percent as did the Valencia region (-7.9 percent). But the Basque Country did not suffer so much (-4.6 percent), nor did Andalusia (-6.9 percent), according to the National Statistics Institute.

Madrid employment also registered a lower fall than the national average (-0.6 versus -0.8), and performed better than Andalusia (-2.6 percent) yet worse than Catalonia (-0.5 percent).

Madrid authorities argue that liberalizing business hours is what enabled the region to outperform national figures, and that expanding them even further will be good for the recovery of the market. In fact, the region's economy chief claims that 20,500 jobs will be created through this initiative.

"This is a measure against unemployment, we are convinced of it," says deputy commissioner Eva Piera, who believes that more tourists will come, attracted by the greater opportunities for shopping.

At the other end of the spectrum, the Madrid small business association Cecoma, which claims to represent 90 percent of the sector, says that 20,000 jobs will be lost under the new system. "For every job that is created in a large store, four will be lost in small ones," said Cecoma president Salvador Santos Campano.

Over 90 percent of businesses are tiny operations with fewer than nine workers, according to the Industry Ministry. At Cecoma, they figure that half their members run family businesses that fall under that category, such as Galán and his sportswear store.

Galán himself hopes to be the last member of his family to remain in the business. "My daughters are not interested, and I hope they stay that way. This is ending with me. I don't want them to go through what I've gone through."

Galán, who is built like a football player, still remembers how he wrapped himself in a blanket and cried nonstop the day he realized that his store at Palacio de Deportes was going to go under. "It was amazing," he says of the shop. "Five-hundred square meters." He opened it inside a mall in 2007 but had to close it in 2008. He was paying 15,000 euros in rent. Galán could see that it was important to have a presence at a mall, because his turnover at his other stores on Saturdays was being affected by Sunday opening.

Cecoma also warns that with the new opening hours, shopping centers will raise the rent. Mall managers deny this. "The point is not for an activity to become uneconomical; I want my premises to be filled with people who sell a lot," says Javier García-Renedo, president of the Spanish Association of Shopping Centers. García-Renedo blames the resistance on what he calls "the pharmacy effect."

"There are interest groups who want to keep office hours, Mondays through Fridays," he says.

The other great business association, ANGED, which represents large distribution companies, also supports the extension of business hours. "Part of society needs to shop on Sundays and holidays, and we want to encourage that demand," says Javier Millán-Astray, director general of a group that includes giants such as El Corte Inglés, Ikea and Fnac. "This is for people who want to take advantage of opportunities - that's what competition is about."

Meanwhile, consumer associations are divided. While OCU thinks it will benefit consumers by giving them more time and greater choice, FACUA believes it will boost compulsive shopping and lead to more business closures. The Regional Federation of Madrid Neighborhood Associations (FRAVM) sees this as the end of the local store. "We are going to witness the destruction of the type of business that is good for the social fabric and for coexistence," says Francisco Cano, of FRAVM. "Authorities are not thinking about elderly people, who need these businesses the most."

"There are more than enough hours in the day to go shopping," says Santos Campano, of Cecoma. "What do they do in the Basque Country, Catalonia or the Balearics?"

This group has started a petition to stop the law from taking effect, but its president rules out tougher protests if it goes ahead as planned. "We are not the type to protest or go on strikes," he says, asking instead for understanding from regional premier Esperanza Aguirre. "We trust that she will listen to us, she has never let us down. [...] This law comes at the worst time for us, after three years of crisis and with consumption down to half."

A little over 2,000 businesses shut down between 2008 and 2009 in the Madrid region, according to the latest figures by the Industry Ministry. Two of them were owned by Juan Antonio Lara, 49. He and his sister used to run two clothing stores in Vallecas, after inheriting the business from their father. One of their stores was inside a shopping center, and this is the one that caused both establishments to fail, they say.

"We were selling, but we were also racking up the debt, and the banks were not willing to extend loans," says Juan Antonio. At least they had enough money left over to liquidate the business, which has now been replaced with an everything-for-a-euro store. These days, the Laras run a social information network for fashion sellers and they organize industry events. Sitting among the mannequins and merchandise left over from his old stores, there is a pile of papers with accounting figures going all the way back to 1974. Lara looks at it and swallows audibly, then says: "There is nothing sadder than losing a family business."