Mexican retail market slows in the face of weak economic growth
The Mexican economy experienced weaker than expected growth both in 2013 and the first half of 2014, with growth rates of 1.1% for 2013 and an expected rate of 2.3% for 2014. This economic slowdown can be attributed in part to structural reforms and a new tax package passed by the Peña Nieto administration. The adverse economic climate has had a negative impact on the Mexican retailing environment, as many consumers are having to spend a larger portion of their income on gasoline and payroll taxes, for example, and have less left over to spend in retail establishments. The reforms are expected to provide more medium to long term growth for the country, with real GDP growth of 4% per year over the forecast period, which should drive growth rates in retail to accelerate in coming years.
Expansion continues despite weak economic growth
Despite relatively weak economic growth in 2013 and 2014, expansion plans have continued in Mexico. The real estate market continues to expand, with dozens of new shopping centres under construction throughout the country as major retailers and restaurant chains battle for the coveted space. Major multinationals continue to enter and expand throughout Mexico in many different categories, from apparel specialists to pet stores to home furnishings specialists, signalling faith from the market that conditions will rebound.
Mexican consumers cutting corners in order to splurge on affordable luxuries
Thanks to the development of the retailing market in Mexico, consumers are faced with a wider array of products across all product categories. Many consumers are finding ways to reorganise their spending habits in order to be able to afford to indulge in products that give them a sense of satisfaction. For example, consumers may shop at discounters and purchase private label items for food staples or tissue and hygiene products but then use their savings to indulge in a new item of clothing from H&M or a Starbucks coffee. This trend is resulting in strong market growth for private label staples and more premium products that still have relatively low unit prices.
Multinationals flock to Mexico
Despite weak economic growth in the country, multinational retailers are flocking to Mexico. Between 2011 and 2014, dozens of international retailers opened up shops in Mexico. New entrants include the world’s leading apparel specialist H&M, Petco (the world’s largest pet shop), and several important luxury brands such as Michael Kors, Hermes and Bulgari. With construction of premium shopping centres showing no signs of stopping, new players are expected to continue arriving every year and existing brands will continue to expand from Mexico City to other large and mid-sized cities as well as resort areas throughout the country.
Sustained growth expected through the forecast period
The Mexican retail market is expected to continue to develop over the forecast period, picking up some speed as the administration’s reforms provide a more stable operating environment. Moderate, sustainable growth of 3-4% per year, with a growing middle class and a modernising retail environment give an optimistic outlook for the future of the market in Mexico.
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The Retailing in Mexico market research report includes:
- Analysis of key supply-side and demand trends
- Detailed segmentation of international and local products
- Historic number of stores, selling space and values, company and brand market shares
- Five year forecasts of market trends and market growth
- Robust and transparent market research methodology, conducted in-country
Our market research reports answer questions such as:
- How big is the grocery/non-grocery/non-store channel in Mexico?
- Who are the leading retailers in Mexico?
- How is retailing performing in Mexico?
- What is the retailing environment like in Mexico?
- Which channels are winning or losing in the fight for consumers’ money?
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This industry report originates from Passport, our Retailing market research database.