Texas Mall Lures Rich Mexican Shoppers

By LYNN BREZOSKY
The Associated Press
Saturday, November 25, 2006; 1:09 PM

MERCEDES, Texas -- With a 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 is half the national average and only 15 percent of its residents have graduated from college, towns like Mercedes 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., a subsidiary of Chelsea Property Group.

"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 Tuesday 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," Gomez said.

"They don't have all these stores in Monterrey," Gonzalez said.

Alicia Mansur, a stylish 26-year-old from Ciudad Victoria, Mexico, said she shopped 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.

"Banana (Republic), BCBG, Burberry, Calvin Klein ... the same clothes in Mexico would cost much more," she said.

The outlet is strategic _ 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, just north of San Antonio.

"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.

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 at 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.

With 35 percent of sales in McAllen and 26 percent of sales in Brownsville (the Valley's two largest cities) going to Mexicans, economists at the Dallas Federal Reserve call retailing an "export sector" for the Valley.

Steve Ahlenius, president of the McAllen Chamber of Commerce, said population growth 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, 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. "I think 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."

Private jets fly wealthy wives into the airport in McAllen, 21 miles from Mercedes. The parking lot at McAllen's La Plaza Mall fills every weekend with late model cars and sport utility vehicles bearing Mexican license plates.

Wal-Marts in the Valley accept pesos and have kiosks for filling out forms that allow Mexicans to shop free of sales tax. Lines form on Sunday mornings outside McAllen's Ihop's and Denny's with Mexican nationals filling up on fast-serve American culture.

The wealthiest will fly in, according to the study by the Center for Border and Economic Studies spending about $8,000 a year. The same study found that lower-income Mexicans crossing on foot or in buses spend about $1,000.

North McAllen's succession of strip malls, restaurants, and independent specialty shops, now blends into neighboring Edinburg's.

Already, Mercedes Mayor Quintanilla said, the anticipated tag-along development to the mall is coming, and without financial carrots from the town.

"They're eager and willing, which is great," Quintanilla said.

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.

Meanwhile, diplomatic notes have begun to be exchanged indicating support on both sides for an international bridge that will connect Mercedes to the Mexican border city of Rio Bravo.

Artisans and vendors in Rio Bravo will benefit from U.S. travelers seeking less clogged routes to Mexico as well as Mexican travelers wanting quick access to the outlet mall and other parts of the valley, said Adrian Gomez, Rio Bravo's head of economic development.

"I tell some of the investors here they need to consider Monterrey and Mexico City," Gomez said. "With an international bridge there's going to be crossing through Rio Bravo; they're going to see what we have to offer."