SEARS MEXICO EXEC SEES URBAN BOOM

Byline: Anna Fusoni

MEXICO CITY--Warren Flick, president of Sears Roebuck de México, foresees boom times for department stores outside Mexico's three main urban areas and has urged developers to start building now to accommodate the rush.
"Sears is willing to be a tenant, to go into a joint venture or to do it on our own. We are not going to wait," Flick told attendees last week at an International Council of Shopping Centers symposium here.
An explosion in retail sales in Mexico by the turn of the century has been the industry mantra for several years. Even the country's economic malaise over the last two years hasn't dampened this expectation. Industry officials are holding to the theory that as investment in Mexico grows, so will household incomes, the majority of which are at subsistence levels. As Flick and others see it, consumers will shift their shopping from neighborhood tianguis, or flea markets, and mom-and-pop stores.
But this won't occur if shopping centers aren't constructed beyond the principal cities of Mexico City, Guadalajara and Monterrey, where commercial centers are already opening at a rapid rate, Flick said.
"In Mexico, only 20 percent of the purchasing power is actually achieved by department stores, which means there are significant growth opportunities as the consumer evolves from unorganized retailing to organized retailing," Flick said.
Sears is already in the midst of a major expansion, and will add five stores each year for the next five years to its 45-store chain. Flick estimated that by the early part of the next century, the company will have in excess of 100 stores, representing an increase of 20 percent in selling square footage per year.
Other retailers share Flick's optimism. U.S. competitors, J.C. Penney and Dillard Department Stores are building stores in Mexico and their mass retail competition, including Mexican retail giant Cifra SA and its U.S. partner Wal-Mart Stores, is expanding at a rapid rate.
Addressing naysayers who contend the Mexican economy is a long way from digging out of its Third World roots, Flick noted that investment in infrastructure in recent years has grown 5-6 percent, a trigger for growth and thus consumer spending.
Flick said mall developers have been shortsighted in the scope and scale of the centers, creating opportunities for competition.

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