Central America beckons - NAFTA Broadens The Field

Discount Store News, Dec 6, 1993 by Tony Lisanti

CANCUN, Mexico -- While the debate over the passage of NAFTA has been settled and the trade agreement becomes law on Jan. 1, many suppliers and retailers are already looking for expansion opportunities beyond Mexico.

This was the keynote message delivered by Henry Davis, chairman of Cifra, and reinforced by other guest speakers, at the second Pan American Retailers Executive Conference held here last month. The two-day meeting was sponsored by ALAS, the Association of Latin American Supermarkets and Department Stores, in conjunction with Antad, the Mexican Retailing Association, and FMI, the Food Marketing Institute. (Alas in comprised of retail trade associations from seven countries -- Mexico, Argentina, Brazil, Colombia, Chile, Uruguay and Puerto Rico.)

Said Luis Minvielle Mendez, president of Almacenes Aurrera, a division of Cifra, "Our buyers have traveled to many countries to see what products are being offered. I encourage other retailers to visit other countries as well. The rewards will justify the investment, and benefit the customer.

"We must make the business contacts and relationships so politicians can change the trade structure," he added.

Bob Fullarton, director of sales for Proctor & Gamble, Mexico, said, "We must develop joint multigovernment agreements like NAFTA. We must provide opportunities for sidebar trade agreements for Latin American."

Fullarton said these types of trade agreements will create the world's largest free trade zone and be a tremendous economic advantage to all countries involved.

A highlight of the conference was the release of research reports on the Mexican consumer and top management issues in food retailing. (The reports were conducted by FMI in cooperation with Alas and Antad. The reports were funded by The Coca-Cola Company.)

The study, "Trends in Mexico: Consumer Attitudes and the Supermarket, 1993," reported that:

* Mexican consumers purchase packaged foods, health and beauty care products, and detergents and cleaning supplies at self-service supermarkets; fresh produce and seafood at supermarkets and outdoor markets; milk, eggs and carbonated beverages at the corner store.

* The majority of Mexican consumers visit three different stores each week.

* Shoppers average 7.7 trips to the store weekly. The most popular shopping time is from 7 a.m. to 1 p.m.

* Store loyalty is extremely strong. Only 18% of consumers reported chainging stores during the past year.

* The average amount spent on groceries each week is N$272 new pesos, or about $88.

* Mexican consumers base their store selection on such key factors as good quality fresh meat, quality produce, clean store, and quality cold cuts.

* When asked what improvements they would like to see, 25% of Mexican consumers surveyed said faster checkout and better parking.

In the area of top management, retailers reported that distribution, merchandising techniques and new store formats as the top operations issues. The key economic issues they cited were inflation, recession and interest rates. The top labor issues were productivity, training and wages.