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 Business News | November 2006 
Mall Lifts Poor Border Town
 Lynn Brezosky - Associated Press
| | Mercedes' strategic location lures Mexicans seeking luxury goods. |
MERCEDES, Texas – With the blare of mariachis and a platform sagging under the weight of public officials wanting to take part, this impoverished Mexican border city recently cut the ribbon on a $50 million outlet mall that boasts status labels like Burberry, Izod and Coach.
Although the median household income here is half the national average and only 15 percent of its residents have graduated from college, Mercedes and towns like it are the jackpot for retailers who find their stores accessible to Mexican luxury shoppers, particularly from the mansion-filled hills of Monterrey, 120 miles away.
And so far, cross-border holiday shoppers have helped keep cash registers ringing at Mercedes' new Rio Grande Valley Premium Outlets, owned by Simon Property Group Inc.
"The Mexican consumer really likes to go shopping in the United States," Chelsea president John Klein said. "We have had that experience in other malls in the Valley; it's a family event."
Augustin Gomez, 31, and Jesse Gonzalez, 28, drove from Monterrey this week for a daylong trip to Mercedes. Both said they spent about $400 on clothes and shoes for their children.
"We come for the prices, and we'll be returning before Christmas," Mr. Gomez said.
Alicia Mansur, a stylish 26-year-old from Ciudad Victoria, Mexico, said she shops in the U.S. about six times a year, usually spending about $1,000 at a time. She said her friends told her about the new mall, and she couldn't wait to come.
"The same clothes in Mexico would cost much more," she said.
The outlet is strategically placed – less than 45 minutes from several international border crossings and well within the zone for which Mexicans need only a short-term visa to travel. U.S. Customs and Border Protection has inland immigration checkpoints about 70 miles north of the border.
It's also aimed at shoppers who used to drive more than four hours from the border to the high-end outlets at San Marcos.
"When they were going to the outlet centers in San Marcos, they would have to get two permits, then they would have to get past two checkpoints," Mercedes Mayor Joel Quintanilla said. "The Mexican families that we talk to here at the outlet centers are very excited. They can spend more time shopping instead of being on the road."
Mercedes put about $500 million into infrastructure to accommodate a mall that, when full, doubles the town's population. A new water treatment plant and water tower were built. Roads were added. Eight police officers were hired.
Mr. Quintanilla and representatives of other Rio Grande Valley cities traveled to Mexico to promote the mall and work out deals with bus companies. One company is running a Christmas special that takes Mexicans from Tampico to Harlingen. The trip includes a trip to the outlet mall in Mercedes and to Harlingen's Wal-Mart and Target – just as attractive to Mexican shoppers as the outlet malls – and lodging. Other buses are arriving daily from McAllen.
Steve Ahlenius, president of the McAllen Chamber of Commerce, said population and industrial growth along the border since the 1994 North American Free Trade Agreement has made for a retail explosion. He said he expects holiday sales to be as much as 10 percent higher than last year's.
While entry-level retail jobs may be low-paying, Mr. Ahlenius said, they are a boon for students who commute to the two state university campuses or for those looking for second jobs. And many end up in management positions, he said. The corresponding rush of construction and maintenance jobs all contribute to the area's spending power.
"In terms of income, we are still the lowest in the country, but you mix in the Mexican nationals, and all of a sudden things even out," he said.
"It's only natural that this has been an untapped market. ... What we're seeing today is a result of that market being realized and a rush to get into it as quickly as possible."
Already, Mr. Quintanilla said, the anticipated tag-along development to the mall is coming, and without financial carrots from the town.
A Chili's Bar and Grill has opened alongside the mall, a La Quinta Inn is under way, and other retailers and hotel operators are eyeing property, he said. Developers are planning a 60-home development and new gas station.
"They're eager and willing, which is great," Mr. Quintanilla said. |
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