Information collected from media reports over the last month:
- Fiber optics: Japanese fiber optic cable manufacturer Furukawa Electric Group inaugurated a new manufacturing facility in the northwestern border city of Mexicali. The US$4.5 million site is expected to produce cable principally for customers in the United States in its initial phase. (Expansión, December 21, 2017)
- Energy: U.S. gas and oil company Southwest Energy announced plans to invest approximately US$460 million in Mexico’s newly declared Special Economic Zone (ZEE) in the southwestern coastal port of Salina Cruz. Plans include plants for processing natural gas, methanol and synthetic lubricants. (NVI Noticias, December 18, 2017)
- Automotive: French tire manufacturer Michelin reported plans to build a new corporate building in the central state of Querétaro at an estimated cost of US$10 million. The new building comes in addition to the US$510 million the company is investing in a manufacturing plant under construction in the adjacent state of Guanajuato. (El Financiero, December 20, 2017)
- Pet supplies: U.S. pet products specialty retailer Petco, in association with Mexican diversified corporate group Gigante, projects it will open 20 new sales locations in Mexico next year. Investment was not specified for the expansion, which seeks to increase the chain’s total stores in the country to 70. (El Financiero, December 18, 2017)
- Pharmaceutical: Mexican pharmacy retail chain Farmacias del Ahorro plans to open up to 150 new stores in Mexico in 2018, the company reported. Investment of approximately US$14 million is slated for 44 new stores in the northern cities of Torreón and Mexicali alone. (El Financiero, December 18, 2017) Continue reading Recent and upcoming investment in Mexico
When looking at the retail industry in Mexico, it appears that the country’s efforts to move into e-commerce have to be the most important trend currently. Mexico is still playing catch-up to its North American neighbors in the transition to on-line sales, facing hurdles such as low credit card penetration and a strong perception among consumers of high fraud risk in electronic purchases. But while our e-commerce marketplace sorts out its issues, brick-and-mortar stores continue to play a leading role in Mexican retail, and reshuffling among leading chains as well as the entry of foreign chains into the market is driving continued evolution of the retail landscape.
Over the past 20 years, the entry of Walmart into the Mexican market in the 1990s and the rise of regional chains to national prominence has upset the balance of power in the industry. Back in 2007, Gigante, one of the country’s dominant supermarket operators, marked a turning point when it sold its 205 grocery stores to emerging northern rival Soriana. The move effectively signified Gigante’s departure from grocery and general merchandise retailing, although Gigante remained in the retail market operating smaller specialty store chains, and announced Soriana’s entry to the nationally dominant group. In 2015, Soriana further solidified its position in the market with another aggressive move when it acquired 160 grocery stores and three distribution centers from leading retailer Comercial Mexicana. While Comercial Mexicana, now called La Comer, remains in the game to focus on a smaller number of more specialized retail formats, the acquisition by Soriana further cements the Monterrey-based chain’s nationwide presence. Continue reading Acquisitions and new entries change Mexico retail landscape
Occasionally when we notice trendy trends here in Mexico, like cupcake stores or compression socks, we apply the handy formula “Los Angeles minus five years” to figure out when they must have been hot in the United States. It’s usually pretty accurate but recently we noticed a trend in Mexico that for once runs absolutely contrary to what is happening in our influential neighbor to the north. Which is this: Shopping malls are booming here, while by all accounts they are in decline as a retail format in the United States.
Our first inkling that there were more malls going up in Mexico City than really necessary was when, to our eternal consternation, the Seguro Social baseball park was unceremoniously bulldozed in 2000 to make way for a completely superfluous shopping center. Heaven knows we spent a lot more time in those bleachers than we ever did in the subsequent mall, but then again if we were a bellwether for Mexican consumer behavior the local Oxxo would be selling Chassagne-Montrachet. In the succeeding years it seemed like malls were going up on every corner, and, just like with the office buildings and hotels, we really started to wonder when they were going to reach the saturation point. Fancy office and retail space is expensive, so with all this sparkling new commercial real estate going up all over the place, are there really enough customers to provide the return on investment? Continue reading Shopping malls still thriving in Mexico