Mexico: the other thriving American market
The USA’s buoyant economy is bolstering the performance of French and European fashion brands active on the US market, but North America as a whole is enjoying a positive start to 2022. As a genuine bridge between the USA and the promising Latin American markets, Mexico has some seriously interesting opportunities to offer.
A country with 130 million inhabitants, Mexico is attractive as a market for its economic stability and its openness to foreign trade, having no fewer than 12 free-trade agreements in place. “[Mexico] is an almost obligatory stepping stone for brands that want to expand across the Atlantic,” said the staff of Business France, the state agency that supports French companies in their export efforts. Business France emphasised that Mexico is increasingly keen on luxury and premium consumer products, and is hungry for European novelties in particular. In an interview with FashionNetwork.com, Pascaline Léon, head of the art of living department at Business France Mexico, pointed out that, to drive post-Covid recovery, tapping this need for catalogue renewal could indeed favour French labels.
FashionNetwork.com: How is the Mexican economy performing?
Pascaline Léon: It has been growing at a steady pace, between 2.5% and 5%, for nearly 10 years, and the pandemic did not slow down the trend, since the economy went back to business as usual as early as 2021. [Mexico’s] neighbour, the USA, plays a major role in this stability, but there is more to it. The country’s 16 million middle-class and affluent consumers are a strong growth driver, further boosted by the use of consumer credit. [Mexico’s] leading credit card provider isn’t a bank but Liverpool, the country’s number one department store chain!
FNW: What are Mexico’s affluent consumers looking for?
PL: In a country where the average age is 29, the advent of social media has amplified the importance of personal image and aspirational consumption: brand image is therefore important, especially if the brand in question is already present in the USA. But the most recent innovation is that wealthy Mexicans no longer travel to buy these products, they consume them domestically. Mexico has become the leader in luxury goods shopping in Latin America, and the 10th worldwide. The growth prospects are staggering: the fashion sector as a whole is forecast to grow 74.03% by 2025, and luxury alone to grow by 106.54%.
FNW: Do French brands need to have a luxury positioning to enter this market?
PL: Not necessarily, even though French products are renowned mostly in this segment, and labels noticeably premiumize once they enter the Mexican market. But there is also room for innovative brands that develop well-defined designer and ethical concepts: natural and sustainable materials (derived for example from seaweed or nopal cactus), and ethnic motifs developed in collaboration with local communities, are especially popular. It must be borne in mind that Mexico is a producer country, with only 30.7% of the market catered for by imports. The fast-fashion segment and highly specific products like for example jeans are therefore cornered by local giants such as Grupo Axo and Diltex.
FNW: Which products offer the most opportunities then?
PL: On the apparel side, we might mention swimwear (which posted 35% growth in 2021 for both women and men) and men’s suits, back in demand after the pandemic. Like everywhere in the world, athleisure is currently a must (the segment grew by 25% in 2020 and 2021), with a marked increase recorded by sneakers and hats. Notably, both luxury leather goods and watches (whether automatic or digital) are hugely popular, proof of the rising influence of middle-class consumers.
Country Presentation Mexico
FNW: Have Mexicans switched to online fashion shopping due to Covid-19?
PL: E-tail has certainly made advances during the pandemic. The value of multi-sector online sales jumped by 91% in 2020. But the incidence of online sales in fashion remains modest: e-tail accounts for only 6.6% of fashion sales. In-store shopping remains the preferred mode: 25% of sales are made via the country’s two top department stores, Liverpool (123 branches) and Palacio de Hierro (13 branches). However, the success of online promotional operations like Hot Sales and Cyber Monday could be a game-changer in the next few years.
FNW: What advice do you then give to French exporters?
PL: Even though it requires significant investment, a presence in department stores is highly recommended: many shopping malls took advantage of the pandemic to overhaul their assortment, it’s time to make a move. It is also possible to establish an online presence via a specialised site like Appartement Français, or generalist sites like Mercado Libre, Coppel and even Amazon Fashion. But to make a brand’s presence felt, marketing is key: do not hesitate to tweak your positioning as advised by your import partner, and keep listening to them, as they often have a creative, pragmatic approach in terms of business model.
And [French brands] should not hesitate to rely on our Business France services that are available to support them, but also on the French community which is very active in Mexico, a total of about 70,000 people, including 30,000 in Mexico City alone.
In September 2023, Business France will feature French Fashion Corner, a showcase to promote French fashion labels and establish connections with Mexican and Colombian importers.
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