Department Store Industry Analysis in Mexico

Mexican Department Store Industry The department store industry in Mexico functions just like the majority of department stores around the world. They target the middle to upper class people with money to spend on popular brands, food and entertainment. While the department store chains in many countries tend to focus on one line of products (e.g., clothing), the department stores in Mexico have diversified products and services that helps to decrease direct competition, but it also makes it more difficult to predict a competitor’s next move. As the middle class population grows in Mexico, the market becomes more attractive, but many possibly new entrants are kept out by the high barriers of entry.

Porter’s Five Forces Assessment
Competition
There were many department stores that opened up in Mexico, but now less than ten competitors remain in the industry. With Grupo Carso and Liverpool dominating the market, companies in the industry must monitor changes in their strategies and react accordingly. Figuring out the right response to competitors actions is slightly challenging due to the blend of Mexican and predominantly foreign department stores in the industry, but the main players have been able to learn the rules of the game from their two or more decades of past competition. Because the market is not very saturated and is experiencing growth, department stores in Mexico have more control over their strategies. Strategic stakes are relatively low for competitors in this industry because they are in Mexico for the sake of expanding profits instead of achieving a goal that would drive a larger corporate strategy. However, constantly finding ways to diversify product lines and services is extremely important in the department store market in Mexico because it keeps the department stores from having a tight cost competition. Although department stores in Mexico will generally try innovative strategies to attract customers instead of directly competing,