In Corporate Mexico, Street Vendors Trump Retailers During Tough Times Patricia Laya - Bloomberg News
go to original August 21, 2014

A vendor assists a woman shopping for fruit at an outdoor market in the La Condesa neighborhood of Mexico City, Mexico, on Aug. 15, 2014. (Susana Gonzalez/Bloomberg)

As crowds of people make their way through the twisting aisles of one of Mexico City’s largest street markets on a Sunday morning, customers fight for room to peruse everything from blenders to mobile phones to jeans.

These shoppers are choosing cheaper, tax-free, used or contraband merchandise over visiting shopping malls or department stores like Sears, owned in Mexico by billionaire Carlos Slim’s Grupo Sanborns SAB.  Competition from so-called informal vendors is part of the reason Mexico’s retail association reported an increase of only 0.7 percent in same-store sales in July, missing the 1 percent average increase estimate of analysts compiled by Bloomberg.

Retailers are seeing growth slacken as Latin America’s largest economy after Brazil struggles to pull consumer sentiment and spending out of the doldrums. Gross domestic product will rise as much as 2.8 percent this year, down from a previous forecast of 3.3 percent, the central bank said last week. This means retailers are unlikely to see a significant pickup in annual sales growth until next year, when confidence improves, said Banco Ve Por Mas SA analyst Juan Elizalde.

“The informal economy is one of the main competitors to these department stores,” Elizalde said in a phone interview. “The clients are evaluating the new reality of their pockets, and it’s much cheaper to buy used appliances at a market, if it’s good quality, than pay it by installments in Elektra or Famsa,” he said. He was referring to two other retailers, Grupo Elektra SAB - owned by billionaire Ricardo Salinas - and Grupo Famsa SAB.

See the original at Bloomberg News

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