Mexico, like most countries, has been hit hard by the COVID-19 global pandemic. Although the number of confirmed cases in Mexico is still relatively low compared to the United States, the impact of containment measures on the economy has been severe. With just over one full month of shutdown behind us, financial institutions are already projecting 2020 GDP growth for Mexico in the range of -9% and potentially worse. Facing this outlook, retailers are scrambling just to stay in business first, and then to plan for an extended period of bleak near to mid-term consumer spending. Continue reading Mexican retail scrambling under COVID-19
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Guarded outlook for Mexican retail in 2019
The Mexican retail sector registered a sluggish year in 2018, posting same-store sales growth of just 0.1% and all-stores growth of 3.5% for the year, according to the National Retailers Association (ANTAD). Retail performance showed deceleration at year-end, posting the slowest fourth quarter expansion since 2014. On the plus side, sales during Mexico’s four-day “Buen Fin “ (Black Friday) promotion in 2018 grew 8% with respect to the previous year, the national chambers of commerce, services and tourism (Concanaco Servytur) reported. On-line sales during the promotion jumped 50% for the same period, demonstrating ongoing advances in consumers’ shift to shopping on line.
ANTAD is adopting a cautious outlook for 2019, projecting a 2.2% increase in all-stores sales but a contraction of 1% in same-store sales for the current year. The growth of electronic commerce remains a leading trend for the industry, with Mexico striving to exceed US$20 billion in on-line sales for the year with the hope of surpassing Brazil as Latin America’s top e-commerce market. Industry analysts project that policies proposed by the new Mexican administration could provide a boost to retail. These include monthly stipend programs for qualifying members of segments such as youth, elderly and the disabled, as well as a 16% increase in the minimum wage. Bodega Aurrerá is expected to benefit in particular from these measures across its formats. Also, the new government reduced the VAT tax in the northern zone along the U.S. border to 8% from 16%, which is expected to provide a sales bump to store chains well established in the area such as Soriana, Walmart, Casa Ley, HEB and Super Norte.