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Mexico 2015 | ECONOMY | INTERVIEW
Graciano Guichard

What is the outlook for Puerto de Liverpool in Mexico?

Mexico will boast a hugely significant workforce within the next 15 to 20 years. The country has never before witnessed such demographics, and the middle class is growing substantially. We continue to expand the company in the upper A, B, and C classes. We are also focusing on a lower bracket as well and opening eight stores. We intend to open 10 to 15 in the lower C market, and we see huge growth opportunity there on the back of the growing middle class.

What needs to be done to promote Mexican retail brands?

Mexicans are highly brand oriented. If a brand is Mexican, people are less likely to buy it unless it has been marketed correctly. Liverpool offers excellent quality shoes and clothing, but the country sometimes lacks design finesse. We are expending efforts to promote new local designers and fashion lines. Another example of this is to be found in jewelry—its offering has barely changed in forty years and is mainly targeted at the tourist market. In that segment, we are promoting young graduate designers. We have a joint partnership with an American company that scans trends from around the world to better inform the sector. We bring in designers to help Mexican counterparts grasp popular trends and designs. We have top brands such as Gap, Aeropostale, and Banana Republic in addition to our own offerings, and those local brands are the ones that we are trying to promote.

How have foreign brands performed in Liverpool?

They have performed particularly well, especially inside the freestanding stores, of which we have opened 90 over the past two years. They remain a fairly new line for us. In terms of sales, we are still learning the freestanding store model. Aeropostale, Gap, Banana Republic, and Chico's have all done really well for us. Since we are so close to the US, most of our customers already know what the brand represents; therefore, it is easier for me to bring them here. Some brands that are of particularly high quality, but remain unknown in Mexico, do not perform well as people are unfamiliar with their message. You have to build a brand in order for it to work.

How do you anticipate your financial services offering performing with Fabricas de Francia?

The key for Fabricas de Francia to work, after opening up with 5,000 credit card holders, is being the first credit issuer for that segment. People are loyal to the credit card, because it is sometimes the only card to have been issued to them. Having said that, the fiscal reforms and new approach that the government has taken will affect the use of the credit card in Mexico for us and everyone else. Cash is becoming more important in Mexico, which is not necessarily a good thing. In 2014, cash and debit claimed a major chunk out of credit, and we see the same thing happening in 2015 although we do anticipate it leveling out.

When opening a new store what strategy do you follow?

Before we open a store, we make a comprehensive demographic study taking into account income per capita to fully grasp the location's potential as that is the driving force. There is a great deal of development going on today, such as the construction of new malls, and occasionally we may not secure our primary choice for a new location. We therefore take the list of options as a guide, and understand that our primary choice may not be available to us. Our upcoming projects are opening in areas where we already have stores, but we are closely monitoring the local demographics.