"Studies by research firm Global Data shows, the overall retail expenditure in Mexico is likely to grow 29 per cent to reach £285 bn by 2022. The country’s expenditure on clothing and footwear is forecast to grow by 45 per cent to £27bn – driven by a 167 per cent rise in online sales. The nation is currently flooded by British brands like Ted Baker, Karen Millen and AllSaints that are expanding through license and franchise partnerships."
Studies by research firm Global Data shows, the overall retail expenditure in Mexico is likely to grow 29 per cent to reach £285 bn by 2022. The country’s expenditure on clothing and footwear is forecast to grow by 45 per cent to £27bn – driven by a 167 per cent rise in online sales. The nation is currently flooded by British brands like Ted Baker, Karen Millen and AllSaints that are expanding through license and franchise partnerships.
Factors like a large and growing population, increasing personal wealth, urbanisation, growing economy and a greater stability along with an increasing demand for retail make Mexico an appealing destination for UK and European brands. A striking example of this is premium womenswear brand BCBG which has 36 partner-operated stores and concessions in Mexico
Cultural similarities with the US also give Mexico an appeal over other destinations. The nation, being heavily influenced by the US culture and language, it is easier for global brands to trade in Mexico rather than Asia-Pacific countries. Spanish womenswear brand Desigual, entered the market in 2015. It currently has 13 franchise stores operated with upscale Mexican department store Palacio del Hierro, and more than 100 multi-brand points of sale.
Challenges in the market
However, the Mexican market has its own set of challenges. It is highly competitive and proximity to the US mega-brands and big retailers adds to its difficulties. The massive marketing budgets of brands like Tommy Hilfiger and Guess spill over into the Mexican market making it more difficult for a British brand to enter the market, unless it has some serious marketing support to create a buzz.
Mexico is a logical next step in expansion for British brands having a strong US presence. International fashion house specialising in women's fashion Karen Millen leveraged its experiences in the US market to target Mexican shoppers. The brand now operates in the market via a franchise partnership with an undisclosed partner.
Good environment triggers online sales
According to the Pitney Bowes Global Ecommerce Study 2018, nearly 90 per cent of consumers in Mexico shop online with 22 per cent shopping online at least once a week. There is a growing interest in well-known online British brands like Heritage and luxury brands that are otherwise difficult to get hold of in the domestic market. The environment for online sales is good with high urban density. It is the obvious route to understand demand without the risk of investing in property and locations.
Mexico’s logistic network is not fully equipped despite huge investments in it. Payment methods in the country differ from other markets. The use of credit cards is not very common with only 48 per cent of consumers using an ‘e-wallet.’
Finding a perfect trade partner
Apart from ecommerce, franchise and licensing can be the key to succeed in the Mexican market. Marquee Brands, the US owner of BCBG and Ben Sherman, operates with partners in Mexico, although the precise nature of the partnership structure is not known. This partner experience proves invaluable in tariffs, import processes, shipping mall rental agreements and department store logistics. Though Mexico has its challenges, a burgeoning appetite for international brands, growing consumer base and US connections should place the market firmly in the sights of UK and European brands seeking to expand.