User Experience Becoming a Defining Priority

Few areas have felt the impact from digitalization as much as retail. New payment methods, online shopping and rapidly evolving consumer habits are creating a much more technology-driven market globally. Although the commerce revolution has been a death knell for traditional shopping outlets like malls, Mexico continues to buck that trend. But evolution requires adapting, and in that regard, Mexico is no different.
The new era for retailers, whether in Mexico or abroad, entails a transformation that emphasizes the shopping experience rather than the product. This is among the factors for the continued success of malls in Mexico and Latin America, says César Medina, CMO of Miniso Mexico and Latin America, who adds that the family and social components are key for retailers in the region. “In Latin America in general, we go to malls to socialize. Malls continue to be the place for family entertainment.” 
While popularity of e-commerce has meant the demise of many malls and retailers in Europe and the US, John Lackner, Country Sales Manager of H&M Mexico, says retailers in the Mexican market will not face the same fate as long as they can effectively bond with consumers. “Global consumers want a company they can relate to and believe in.” This bond also entails celebrating local culture through stores. “To relate to the Mexican consumer, we have tried to celebrate the local culture and local flare.”
The focus on Mexican elements to create a bond with customers obeys to a change in patterns of consumption. “For a couple of years now, there has been a growing interest in locally made products. Before, everything that came from abroad was perfect. However, we have been seeing that more and more people appreciate Mexican products, due to a sense of pride for what this beautiful country has to offer,” says Ralph Simmons, CEO of Tane. 
Even though malls and stores in the country have not experienced the same decline in visitors as those in other countries, Lackner says retailers must also play their part to maintain a healthy influx of visitors. This means generating spaces that put the customer first and have a product offering that addresses the needs of different customer groups. Medina adds that finding products for 
the entire family helps users develop a common topic of communication and thus generates an emotional bond with the shopping experience. 
THE E-COMMERCE CHALLENGE

Although e-commerce has been part of the everyday life of consumers for several years in the rest of the world, Mexican consumers have been late adopters for different reasons. According to the Mexican Association of Online Sales (AMVO), Mexicans that do not engage in online shopping cite fear of electronic fraud as the main cause for not buying online. Other reasons for not choosing e-commerce are fear of introducing bank account details, fear of buying the wrong product and the lack of understanding of how to buy online. 
Despite these factors, online shopping in Mexico is growing. According to AMVO, in 2018, 38 percent of Mexican online shoppers made at least one online purchase per week. While 34 percent made at least one purchase per month. This represents an increase from the 7 and 29 percent rates of 2017, respectively. Given that trust is increasing among Mexican shoppers, retailers have no option but to set up an omnichannel strategy that allows them to participate in different consumption opportunities. 
Carlos Arroyo, Senior Vice President and COO of Walmart de México y Centro América, says the most important asset for consumers is time, which is why e-commerce is becoming more popular in the country. While that may be, Lackner is certain that H&M’s e-commerce channel will not surpass the performance of the company’s physical stores anytime soon. This does not mean that retailers should not put stock in customer experience through digital mediums. “Each customer has different expectations regarding their omnichannel experience,” says Lackner. “For us, it is important to have the same commercial message online and at our stores.”
Medina believes that even though e-commerce is here to stay and that it has revolutionized retail dynamics, it is not a panacea. “I believe e-commerce is overrated; rather than being the ultimate commercialization platform, it is just another one.” Simmons sees e-commerce as a tool to reach more consumers and to boost the number of customers that visit the physical store. However, he says it will not be able to replace the experience of going to the store, given the luxury component of his brand. “We do not expect our e-commerce platform to become our No. 1 store but we are confident that it will perform well as part of the company’s omnichannel strategy.”
OPTIMISTIC CONSUMERS

Ultimately, it is the consumer who will dictate retail success and the data suggests that Mexicans are in an optimistic mood. The February 2019 National Confidence Index registered a 42.1 percent increase from the year-ago period, while posting a 5.9 percent rise on the month before. The National Consumption Index for February 2019 also posted a year-on-year gain of 52.4 percent in households’ openness to acquiring durable goods, such as furniture and home appliances. 
INEGI’s data on private consumption analyzes the evolution of spending on goods and services. Private consumption is the most significant variable for analyzing aggregate demand. The National Confidence Index measures the perception of the current and expected economic situation 
of households across the country and the favorability of the current environment for the purchase and acquisition of goods and services. 
Other data also point to a positive landscape. According to the National Association of Department and Self-service Stores (ANTAD), retailing GDP is growing above the national GDP average. In 2018, the country’s GDP increased 2 percent, while wholesale trade GDP grew 2.4 percent and retail trade GDP rose 3.8 percent. ANTAD, which has 59,000 stores, including self-service, department and specialized stores, among its associates, reports that in 2018, overall trade activities accounted for 19.9 percent of the country’s GDP. Moreover, ANTAD’s total sales registered an 8.5 percent increase in that same year, totaling MX$1.8 billion (US$94 million), with department-store sales experiencing the largest growth at 10.5 percent.
Retail also has an important impact on job creation. Of the 23.5 million people in the formal economy, around 4.04 million work in retail. ANTAD estimates that the opening of a self-service store boosts job creation by 134 percent over a six-year period.