MEXICO CITY — Mexico’s jeanswear exports are forecast to increase 15 percent to $2.2 billion this year, fueled by strengthening U.S. demand, according to trade consultancy Cedetex’s director Miguel Angel Andreu.
The increase will outstrip a 2 percent gain to 124.8 million pairs last year and help the country recover a 25 percent drop in U.S. market share since 2010, due to rising competition from Vietnam and Bangladesh.
Mexico remains the U.S.’ top supplier (where it sells 90 percent of output at an average of $15 per jean) of men’s and children’s jeanswear but has fallen behind in the women’s category, where it now ranks fifth in the world, Andreu said.
To beat nimble Asian rivals, Mexico must bolster its speed to market and full-package capabilities at a time when only 5 percent of manufacturers fully meet international brands’ fast-fashion requirements.
“We can be there in two to three days but can’t supply twice a week,” Andreu said, noting that firms and the government must step up investment to meet this challenge.
The export rebound will give some breathing room to local brands struggling to win domestic share against Asian and U.S. rivals, which have flooded the country with ultracheap products, according to Andreu.
This year, domestic sales will grow roughly 5 percent to $7.9 billion as Mexicans continue to favor jeans as their top fashion item. Indeed, “vaqueros” are Mexico’s best-selling garment, helped by consumers’ desire to follow global trends but also because of a plethora of cheap brands.
Sales will slightly underperform those in 2014, however, as economic volatility saps spending and the Bank of Mexico prints fewer pesos to stem inflation.
According to Andreu, the women’s, men’s and children’s segments will gain 5.5 percent, 4 percent and 2 percent, respectively. Consumers will continue to snap up leading brands such as Levi’s, Oggi, Lee and Furor, which dominate the market, according to a recent Cedetex survey of 3,000 Mexicans in 15 cities.
The bi-annual study also showed 15- to 34-year-old shoppers account for 50 percent of sales, led by Wal-Mart’s discount retailing and supermarket chains Suburbia and Aurrera, and other no-frills retailer Coppel.
Mass-market brands are set to do particularly well.
“The basics market will grow much more than premium this year” as consumers favor bargain hunting and brands roll out lower-priced items, according to Sears de Mexico buyer Dalia Cervantes.
“Forever 21 and H&M have brought much lower price points. We have more competition,” she noted.
In response, Sears is boosting stocks of affordable, $20 to $25-priced brands such as Verona and Natural and may carry cheaper lines for its Genius and Fukka private labels, Cervantes said.
Overall, she expects the retailer’s denim sales to jump 5 to 7 percent compared to 8 to 10 percent in 2014.
Andreu agreed basics will rule the roost.
Underscoring the trend, he said HEB recently rolled out $5 jeans, in part to compete with the huge flea markets that cater to Mexico’s dominant lower and middle-class consumers, also bound to do well this year.
These flea markets, dubbed “Tiangis,” sell used and marked-down American and international brands popular in Mexico such as Abercrombie & Fitch, Levi’s and Aéropostale, both original (from two to three years ago), as well as counterfeit, Andreu said.
He countered claims that Mexican apparel sales will drop sharply this year amid growing economic uncertainty.
“It’s not a recession but a belt-tightening,” he said.