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Clothing and Footwear - Mexico
1 Apr 2008
EXECUTIVE SUMMARY
Clothing imports continue increasing
Clothing and footwear sales in Mexico increased mainly due to a rise in imports, which offered lower prices in the mainstream market, and better availability of designer brands in the premium market. Research suggests that Mexican producers are working on improving their designs and making theirprices more competitive in order to regain lost market share and ultimately to survive in the face of stiff competition. The intensity of competition is growing in all market segments. The most popular imported products in the mainstream market come from North America, Asia and Brazil, while imports from Europe are more popular in the premium market.
Consumer credit schemes drive sales
Retailers drivesales of clothing and footwear by offering different credit options, including traditional interest-free monthly instalments, department store credit cards, and deferred payment schemes. As income levels are gradually increasing, so too is customer confidence and more people are willing to use these credit options as a means of purchasing products. These two factors combined to provide significantimpetus to clothing and footwear sales. These schemes are most commonly used by the emerging medium-low market, which tends to be fashionably dressed, Mexican women, who buy several items at a time using either credit cards or monthly payment options.
Changes in retail sales distribution
The emerging middle class facilitated change in distribution channels for clothing and footwear. The largestincrease in sales of clothes was through grocery stores and specialist multiples. The black market for clothing and footwear continues to hold an important share of the market, estimated to be almost 50%. This is the only product category where the black market has an important presence at all socio-economic levels.
Alternative distribution channels gain in importance
The network of supermarketscontinued to expand rapidly and many are now introducing more clothing, and in some cases footwear, to their product mix. The accessibility of these stores, both in terms of location and long opening hours, underpinned their growing importance as an alternative distribution channel for these products. Another alternative channel that experienced rapid growth was direct/catalogue sales, with highunemployment rates pushing Mexican people to look for other ways to generate income. Catalogues are distributed among friends, relatives or colleagues in an effort to bring in sales. This form of selling is most common in footwear aimed at medium and low income levels.
Boutiques chains lead the market
Large national and multinational chain stores lead the Mexican clothing and footwear retail arena,particularly at the middle to upper end of the market. The most important national brands include Julio, Ivonne, Marsel, Roberts and Scappino, while the most important multinational brands include Zara, Milano, C&A, Massimo Dutti, Bershka, Liz Claiborne and Loewe.
KEY TRENDS AND DEVELOPMENTS
Casual clothing gains in importance
Companies in Mexico relaxed their dress codes in recent years. Itstarted with ‘casual Friday’ and since became more common throughout the week. It is now acceptable to wear smart casual in offices, with smart pants, shirt without tie and a jacket replacing a suit and tie for men. Women are now more likely to wear a skirt or trousers with a blouse than a dress or suit. The financial sector remains the most formal in terms of dress.
Another reason for a rise incasual dress is the high unemployment rates, which reduce the need for formal attire. This resulted in a rapid rise in the share of sales attributable to casual clothing over the review period, from 25% in 2001 to 35% in 2006.
Outlook
It is likely that more companies will adopt casual dress codes in the coming years, as society in general becomes more casual than in the past. Many business owners...