MCALLEN, Texas - Mexican shoppers’ share of Texas border city retail activity has decreased in the nearly two decades since the Global Financial Crisis, according to a new report by researchers with the Federal Reserve Bank of Dallas.
Expanding big-box retail in northern Mexico and lengthy border crossing waits may have motivated cross-border shoppers to stay closer to home, say Isabel Brizuela, Jesus Cañas and Robert Leigh.
Brizuela is a business economist in the research department of the Dallas Fed. Cañas is a senior business economist in the same research department. Leigh is a research analyst there.
“Mexican shoppers have traditionally represented a considerable share of Texas border cities’ retail sales, as high as 40-45 percent in Laredo, for example. But over the past 20 years, that contribution has declined as northern Mexico’s economy grew and residents experienced income growth,” the researchers say.
“Competition from Mexico’s expanding big-box retail sector is providing locals more shopping choices closer to home. Moreover, increased security and longer wait times at U.S. ports of entry may also deter would-be shopping trips to border retailers in the U.S.”
The views expressed in the report are solely those of the authors and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System.
The researchers conclude:
“Texas retailers may still have an edge because they generally still carry a greater variety of items, have the latest styles and often sell at lower prices than in Mexico. Wages in Mexico are also rising, aiding consumption. The federal government there has increased the minimum wage about 135 percent in real terms since December 2018, with further wage increases planned in 2026. Meanwhile, peso appreciation in recent years has also benefitted Mexican consumers.
“While these factors should contribute to the long history of net positive exported retail sales along the Texas-Mexico border, Mexico’s retail industry is undergoing a major transformation. The number of high-end and warehouse stores in large and medium Mexican cities is eroding some of the advantages retailers still offer in the U.S.
"Longer crossing lines, plus increased presence of U.S. agents in parking lots of border department stores as well as immigration raids pose an unwelcoming reality that may further deter Mexican shoppers.”
Editor’s Note: Click here to read the full report.
