Retail Goes South

Of the border, that is.

Hordes of spend-happy young Mexican shoppers are successfully attracting specialty apparel retailers from the U.S. and Europe – and, as mentioned in a recent report by Wall Street Journal, Walmart is feeling the pain.

Spanish teen retailer Zara has the biggest foothold in Mexico, with 246 stores, and the success of the Inditex-owned chain (plus relaxed tariffs on imported apparel) has prompted U.S. fashion stalwarts Gap, American Eagle Outfitters and Forever 21 – along with Swedish counterpart H&M – to jump on the south-of-the-border bandwagon. Just since last September, the four have opened stand-alone stores in Mexico, providing clothing options for the country’s younger, hipper shoppers – and chipping away at Wal-Mart de Mexico’s slipping sales results.

While Mexico’s retail landscape has plenty of obstacles – knock-offs and stolen goods are big business in the country, and will surely erode outsiders’ sales potential – it’s clear that Mexico is now a priority at least among the youth-oriented chains. AEO chief Robert Hanson told WSJ that his chain’s Mexican sales could top the $300 million it does in Canada. “You have to go where the opportunity is,” he told the paper.

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