Boston, MA -- (SBWIRE) -- 03/31/2014 -- Mexico's retail sector is booming, with healthy economic growth ensuring that 80% of households will be in the middle-income wage bracket of US$10,000+ by 2018. Six out of 12 headline retail sectors will average double-digit growth over the 2014-2018 period, buoyed by a large population that shows no sign of slowing down. Health spending, however, is the underperformer by quite a way, with spending growth to contract by 3.4% per annum.

Mexico's economy is strong, with real GDP growth of 3.5% anticipated for 2014 - above the global average of 3.2%. This is a marked improvement from the 1.5% estimated for 2013, with economic growth set to average 3.7% between 2014 and 2018. This will be helped by higher public and social investment in Mexico's 2014 budget, which is to be 8.8% higher than 2013 levels. The country has the second-largest population in Latin America, and bucks the global trend in terms of household size. Most developed and developing countries are witnessing a contraction in household size, while Mexico's is to remain static over the forecast period, at four persons per dwelling.

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Personal care & effects is to be the outperformer over the 2014-2018 period, with spending growth to average 15.9% per annum. Health spending is the only headline retail sector set to suffer a contraction, declining by 3.4% per annum, a fact that could be linked to the country's obesity epidemic. According to the UN's Food and Agricultural Organisation, almost 33% of the Mexican population is obese and the country has the world's biggest weight problem. A 'soda tax' has been implemented in a bid to curb the country's health problem; if it works, health spending could increase, although this has the potential to dent spending on non-alcoholic drinks.

Recent Developments:

- In January 2014, it was reported that US fashion retailer Chico's FAS was to launch its first Mexican store in spring 2014, in an exclusive franchisee deal with El Puerto de Liverpool. The first Chico's outlet, a stand-alone boutique, will be opened at Perisur Mall in New Mexico. The second stand-alone boutique will be opened in Villahermosa, Tabasco. Meanwhile, Liverpool itself plans to open six new department store shop-in-shops in H114.
- In January 2014, it was reported that stocks of Mexican retailers, including Grupo Commercial Chedraui and Grupo Sanborns, had dropped, with same-store sales registering a decline. Shrinking sales have fuelled concerns that higher taxes are taking their toll on consumer demand. In December 2013, retail sales dropped by 0.4% at stores that had been operational for over a year, according to retail trade association Asociacion Nacional de Tiendas de Autoservicio y Departamentales.

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