USDA FAS reports: Mexico's retail sector looks for a rebound - The Packer

USDA FAS reports: Mexico's retail sector looks for a rebound

01/03/2011 12:19:47 AM
Tom Karst

Through its entrance into the Mexican supermarket sector, Wal-Mart has redefined the local retail industry, forcing major changes and creating a more modern, dynamic retail segment. Other international retailers such as HEB and Carrefour have entered the market with varying degrees of success.

While HEB continues to grow across northern Mexico, Carrefour has been taken over by Chedraui, a regional Mexican retailer that is expanding nationwide. Local retailers were forced to modernize their businesses, adopting the latest technology and distribution methods. As a result, the Mexican retail segment has become more competitive, offering consumers better quality at significantly lower prices with wider distribution nationwide. Products that were once available only seasonally or in specialty stores in large cities are now available year round throughout the country.

Today, retail practices of all major players in the Mexican retail market are current, mirroring successful U.S. business practices and adapting to meet the needs of the local market. This modern, extremely competitive arena has local retailers such as Soriana and Chedraui in Mexico competing effectively with Wal-Mart and other foreign companies in every segment of the retail market.

Mexico’s retail sector is bouncing back from the all-time low recorded in 2009. For 2010, retail sales are expected to close with an increase of 8.7% over last year, closing at $913 billion pesos or $74.4 billion USD, primarily attributed to new store openings. Retail outlets directed at the lower economic segment of the population are driving growth through new floor space, reaching deeper into neighborhoods where no supermarket presence previously existed.

This supermarket sector is projected to grow 8.1% by year end. The retail segment with the overall highest growth for 2010 was “specialty” stores as defined by the Association of Nationwide Retailers (ANTAD), driven by the 8.8% growth rate in 2010 of convenience stores3. Supermarkets are also implementing new formats such as Bodega Express by Wal-Mart. Bodega Express caters to lower-end consumer markets and is driving growth because of its success in reaching a large segment of the population in Mexico that was previously ignored. Many of these customers are new to the segment and historically conducted most of their shopping in street markets or “tianguis.” These smaller, more efficient retail stores offer U.S. goods increased opportunity to expand into the Mexican market, reaching more consumers throughout the country.

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