Mexican Retailers on Track for Return to Pre-COVID Performance

In recent months, the growth in consumption at physical stores has gained ground compared to previous years. This is encouraging for retailers, who could reach the growth they had in the pre-pandemic context.

This second half of this year has many positive aspects for brick-and-mortar stores with  some important trends in Mexicans' purchasing habits.

If we compare 2022 against 2019 (the pre-pandemic year), July 2022 posted a 31 percent decrease in visits to the interior of stores; however, July also posted the best monthly performance so far in 2022. As a result, we are projecting that by the end of this year, the level of store visits will be equal to 2019.

In this context, the purchase conversion rate grew 15 percent and the average ticket was up  25 percent. This had a direct implication on revenue, which was practically the same as 2019.

2022 Performance Versus 2021

To measure how much interest a store generates among people passing by, it is important to know the attraction rate.

In July, this indicator had its best performance of 2022. The interest of people to enter a store is gaining greater relevance than in previous months and also compared to the last two years. Stores in commercial spaces in Mexico received almost 30 percent more people inside the stores than they had in 2021.

The second half of 2022 also began with a consumption behavior that was similar to 2019. People have two objectives inside a store: to buy and to compare prices. This is reflected in the decrease in purchase conversion, which compared to 2021 fell 21 percent.

Despite the fact that not everyone who enters a store is buying, sales revenue has held a year-on-year growth trend. Sales revenue increased 18 percent compared to 2021 due to the fact that the average ticket per transaction also grew 16 percent compared to the same period a year ago.

Regional Segmentation

In such a diverse country with social and cultural differences, there are divergences between buyers of the same profile, so consumption in Mexico does not behave in the same way between states.

In the second half of 2022, the region with the best performance so far has been the eastern part of Mexico, which includes the states of Hidalgo, Puebla, Tlaxcala and Veracruz. In this region, store visits increased 35 percent year over year, the average ticket increased 26 percent and this resulted in a 27 percent growth in sales. 

This behavior has kept constant throughout this year. Since the reactivation of the post-pandemic economy, Veracruz has been one of the states with continuous growth in influx and sales.

In contrast, the region in Mexico that had the lowest performance at the beginning of the second half of 2022 was the southwestern region, which includes the states of Chiapas, Guerrero, Oaxaca.

In these states, the attraction rate fell 28 percent compared to 2021. Visits inside stores only grew 9 percent year on year.This caused the purchase conversion rate to decrease 16 percent compared to 2021, which is why sales fell 7 percent in the same period.

Retail Sector Standouts 

Throughout 2022, the footwear industry has been the best-performing sector. For the beginning of the second half of this year, the average ticket grew 14 percent, sales increased 30 percent and visits inside stores were 40 percent more than the previous year.

The industry with the lowest performance was home improvement and construction. Despite the fact that they presented the same number of visits to stores as in 2021, their sales decreased 19 percent, the attraction rate was  10% less and purchase conversion decreased 17 percent.

Remember that these stores presented the most growth during the confinement of previous years. Today, in this new retail scenario, it makes sense that people have already made the necessary adjustments to their spaces and it is not a priority expense.

Special mention goes to the accessories stores, which posted 26 percent growth in average ticket sales compared to 2021. This wasn't enough to have a positive impact on revenue, but it does mean that a strategy of adding items is keeping these metrics consistent.

Sports stores presented the greatest increase in sales compared to the previous year, reaching 31 percent growth. They are the most visited places in retail with 55 percent more influx. 

In this analysis, we see how shoppers are spending more time in brick-and-mortar stores and returning to some old pre-pandemic purchasing habits, although technology is now undoubtedly working as a key factor for retailers and as well for buyers.