Diesel Targets Mexican Expansion

The company hopes to operate around 10 stores in Mexico by 2017.

MEXICO CITY — Diesel hopes to operate around 10 stores in Mexico by 2017 as it expands in Latin America’s second-largest economy, according to Nataly Gutierrez, brand manager at the Italian company’s Mexican franchisor OBR .


The denim brand will roll out two standalone stores this year, one in up-and-coming Queretaro and another in Monterrey. The Queretaro shop will open in the new Antea mall in early fall, while the Monterrey unit will be installed in an undisclosed location by Christmas.


The company will also open a corner in the new El Palacio de Hierro luxury department store unit, which is scheduled to open in Antea later this year. Antea is quickly becoming a hot spot for U.S. and international fashion brands looking to profit from Queretaro’s boom.  


Diesel is targeting a 5 percent same-stores sales increase in Mexico this year, up from an estimated 3.5 percent jump in 2013, Gutierrez revealed. She said total turnover should rise 8 percent, up from 5 percent last year.


“This is a very important year for us because the first collection from our new designer Nicola Formichetti will debut this fall and we plan to accompany that with a big marketing campaign,” Gutierrez  said.


She noted Diesel will likely spend more than in past years to publicize the new collection, as well as the brand, in media, outdoor and online platforms. There will be a large focus on advertising in men’s’ magazines catering to the label’s key male consumer target of ages 25 to 35 and messages will be tailored for the Mexican market. The brand may also launch a capsule collection, Gutierrez said.


Like 2013, this year will be challenging for fashion retailers operating in Mexico as consumption is expected to weaken on the back of new taxes and slower-than-expected economic growth.
Mexico recently cut its 2014 GDP growth estimate to 2.7 percent from 3.9 percent as first-quarter growth totaled 1.8 per cent, down from expectations of 2.1 percent.


But Gutierrez said the new openings and marketing push should help propel sales in Mexico, where Diesel runs five freestanding stores, two outlets and 11 corners, two of which are in Saks Fifth Avenue Mexico.


In Mexico, Diesel competes with Pepe Jeans, G-Star, Levis and Hugo Boss. However, Gutierrez said the label’s’ “higher quality and luxury vintage edge” sets it apart. Mexico is one of the label’s most important markets in South America, along with Brazil, Colombia and Chile, according to Gutierrez.