Mexico’s Middle Class Drives Housewares Market
A couple decades ago in Mexico City, we could always put our hands on a sturdy molcajete or one of those funky metal-alloy lemon squeezers when we needed one. But when we suddenly found ourselves wanting a trigger-action condiment gun or a solid brass coat hook in the shape of a banana, we were usually out of luck. The most common solution was to ask someone to bring it from abroad, and pine away. Those days, mercifully, are now gone, and in recent years Mexican cities appear to be experiencing something of a new dawn in the availability of fashionable kitchen, tabletop and home décor products.
From the outset of the era of questionably useful but nonetheless attractive consumer products in the 1950s, Mexico notoriously lagged behind its North American neighbors. Protectionist trade policies limited the variety of imported products available to the average consumer, and most of the innovation in modern household goods was taking place elsewhere. But then came the North American Free Trade Agreement (NAFTA) in 1994, bringing with it a surge of new splashy-looking products. The takeover of leading grocery and general merchandise retailer Grupo Cifra by Wal-Mart in the late 1990s provided a further boost to the prevalence of foreign products on store shelves in Mexico. Wal-Mart, which carries a range of housewares products, has become by a wide margin Mexico’s largest retailer with over 1,100 stores in the country across its various formats. Wal-Mart’s aggressive expansion has also driven its top competitors such as Comercial Mexicana, Soriana and Chedraui to step up their game with greater variety and innovation in their product lines, including housewares.
There were always some attractive housewares products available for those with the resources to buy them. Upscale department store chains such as Palacio de Hierro and Liverpool have long featured departments offering expensive lines of kitchen gadgets, tableware and home décor items in Mexico, as have stores such as Sears and Sanborns. Regional department store chains such as Chapur in the southeast, Dorian’s in the northwest and La Marina in the central west also have provided similar product lines. The key trend we are seeing now, however, is the fairly recent emergence of dedicated specialty stores exclusively focused on products for the home.
While there are still no branded Bed Bath & Beyond or Crate & Barrel stores in Mexico, their surrogates or local competitors began to find their footing in the market about five years ago. The swankiest domestic outfit, Casa Palacio, launched its first store in Mexico City in 2007 and has since expanded to four stores, with two in the capital area and one each in the resort centers of Cancun and Acapulco. A longtime purveyor of fancy housewares, upscale department store Palacio de Hierro created the specialized Casa Palacio format to provide upper middle class consumers the opportunity to shop for contemporary gadgets and décor items without having to travel to the United States or Europe. The company recently disclosed plans to open a fifth Casa Palacio location in Mexico City’s affluent Santa Fe zone.
Bed Bath and Beyond is present in the market as well, not with its own stores but via a joint venture with Mexican retailer Home & More. The two companies teamed up in 2008, two years after Home & More had launched its first store, and now jointly operate two specialized housewares stores in the Mexico City area. A third competitor pursuing more aggressive expansion is The Home Store, a housewares retail format owned by retail and real estate group Grupo Gigante. Launched in 2009, The Home Store now operates 11 sales locations in six Mexican states, including the Federal District in which Mexico City is located. Joining the party with a format more accessible to a wider range of middle class shoppers is Home Price, with one store each in the cities of Guadalajara, Puebla and Mexico City. Home Price offers kitchen, bathroom, tabletop and décor items with an emphasis on low prices. Rounding out the market are an ever increasing number of independent boutiques with unique or especially creative products.
The development of the Mexican market for housewares products coincides with a phenomenon that has been documented in a variety of recent socioeconomic studies: The apparent expansion of an aspirational middle class in the country. While certainly the average personal income level in Mexico is lower than in the United States and Canada, rising educational levels and the growth of advanced manufacturing and services industries appear to be driving widening markets for the trappings of middle class life, such as computers, automobiles and recreational products. A recent article in the Washington Post (“Mexico’s Middle Class is Becoming its Majority,” March 17, 2012) cites a poll in which 65% of respondents identify themselves as middle class, and presents images of a new breed of suburbanites in mid-sized cities shopping for barbecue grills and practicing their golf swings on weekends. A study published under the auspices of the Smithsonian Institution’s Woodrow Wilson Center in January 2012 examines variables such as GDP per capita, access to credit, home ownership and consumption patterns in concluding that Mexico is now undergoing a self-perception transformation from a poor to a middle class nation. Sociologists are surely already at work imagining the cultural implications of this phenomenon, but for manufacturers and retailers of consumer goods, the meaning is clear: A promising future for sales.