SAKS FIFTH AVE. CONFIRMS PLANS TO OPEN UNIT IN MEXICO CITY

Byline: Joanna Ramey

WASHINGTON--Saks Fifth Avenue is completing plans to open a store in Mexico City with a joint venture partner there, a company official confirmed Tuesday.
"We are working on a deal," said Gary Witkin, vice chairman, in a telephone interview from the firm's New York headquarters. He declined to name the partner and projected date for the store's opening. These details will come in a forthcoming announcement, he said, responding to reports that plans for a store were in the works.
Witkin said officials at the 45-store specialty chain have been exploring the market for almost two years as a way to directly target a loyal Mexican clientele.
"We are already enjoying a strong Mexican and South American customer base in some of our southern tier stores," Witkin said, referring to shoppers who make trips to locations in Texas, southern California and Florida. "We think the market is real."
One site Saks is eyeing is in the posh Polanco section of the capital where its neighbors would be the Pabellon Polanco mall and the Avenida Presidente Masaryk shopping district. Along the Masaryk are boutiques like Fendi, Max Mara, Gucci, Hermès and Christian Dior. The mall's anchor is Sears de México, which is an upscale version of its sister company in the U.S.
Saks is banking on future growth in Mexico's retail market, just as competitor Neiman Marcus is doing with plans to launch a Mexican catalog, or other U.S. retailers that are already building in Mexico, such as Dillard Department
Stores, J.C. Penney Co., and smaller specialty stores that have been shopping for locations, such as Talbots, Hingham, Mass.
"We see an exciting potential market for a growing upper-middle-class customer and middle-class customer, as well as a very strong top-end customer, who we have enjoyed in the States for a number of years," Witkin said.
Currently, only a small percentage of Mexico's 80 million people are considered to have enough disposable income to afford high-end, or even mid-market, merchandise, although that portion is still considered by analysts to be underserved by the current Mexican retail scene.
"I've always thought that Saks, as well as Neiman's, Bergdorf's and Bloomingdale's have such strong international franchises that they could move into key international markets like Mexico," said retail analyst Thomas Tashjian, First Manhattan Co., New York. "There is still opportunity in the high-end market in Mexico, which has been handled until now through international franchise specialty stores.
"The population isn't there in a widespread fashion to currently support a lot of high-end retailing, but let's face it, it's going to occur over the next few years. So it's worth putting your stake in the market," said Tashjian.
M.G. (Buddy) Herring, a Dallas-based developer who has several shopping mall projects underway in Mexico, including the expansion of Plaza Fiesta San Agustin Mall in Monterrey to accommodate Sears, Dillard's and Penney's, said Saks will do well in Mexico. If the centrally located Polanco site goes through, Saks will have an immediate customer base, drawing on tourists as well as high-income locals, he said.
Despite downturns in the Mexican economy over the last two years, Herring said retailers should remain bullish in locating in the country.
"Retail space per capita as compared to the U.S. is very small," he said.
--Fairchild News Service

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