Mexico's Retailers Expect Bleak Christmas
Dec 2, 2002
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It's shaping up to be a bleak Christmas for Mexican retailers.
Consumers are feeling the chill from a lackluster economy generating few jobs, while stiff competition has department stores and appliance sellers battling for every peso.

"It's going to be a sad Christmas," said Mauricio Brocado, retail analyst at IXE brokerage. "There's really no factor to drive sales. Employment is depressed and salaries stopped growing in (inflation-adjusted) terms starting in October."

While the nation's manufacturers are showing signs of a tepid rebound, retailers expect little joy. Total retail sales in the sector might grow in December, but mainly because of new store openings.

Last December, despite the economy being mired in recession, total sales in what is typically retailers' busiest month grew 7.1 percent, according to the National Association of Supermarkets and Department Stores (ANTAD).

"There might be growth in total sales, but very marginal. The forecast is for between 1.0 and 2.0 percent above last year," ANTAD President Luis Santana told Reuters. The estimates include leading Mexican retailer Walmex (Mexico:WALMEXV.MX - News), which quit ANTAD earlier this year.

According to official government statistics, the unemployment rate over January-October 2002 was 2.78 percent, up from 2.47 percent in the same period last year. But most economists said the government's definition of employment is too broad and actual unemployment levels are significantly higher.

Between January and September, meanwhile, wages in the manufacturing sector rose 2.3 percent, while inflation during the same period was 4.4 percent.

December sales are normally fueled by year-end bonuses that most employees receive. Within the tight-spending environment, retailers will be battling each other harder than ever for those extra pesos.

Some traditional retailers of durable goods such as blenders and stereos are seeing the market pinched by competitors, including large supermarket chains.

"Retailers are entering the home appliance business," said Javier Sarro, director general of durable-goods chain Elektra. "It's going to be a very difficult environment, the most difficult in a long time and very aggressive." (Reuters)

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