Anyone who has strolled through a mall parking lot in El Paso on a Saturday – passing many cars with Chihuahua, Mexico, license plates – knows Mexican shoppers spend a lot of money on this side of the border.
But to some of the big name stores that El Pasoans yearn for, those shoppers might as well not exist. The market data they use to gauge the El Paso market often stop at the border, leaving out the buying power of 1.3 million Juárez residents.
That’s why the organizers of last week’s retail conference, attended by almost 200 builders, brokers and retail industry bigwigs from across Texas, invited an economist to give the keynote presentation on the spending patterns of Mexican nationals in El Paso.
Steve Nivin, the chief economist of the SABÉR Research Institute, an economic think tank in San Antonio, has put a number on how much Mexican nationals spend in stores and restaurants in El Paso County, as well as 19 other counties in south, central and west Texas.
The institute estimates Mexican nationals spent $446 million in El Paso County in 2012, according to the most recent data available.
“We had all this sort of anecdotal evidence, but it is hard to put a number on it,” Nivin told El Paso Inc. “We were finally able to make connections with Visa to do it.”
Spending by Mexican nationals in El Paso was second only to Hidalgo County, home to McAllen, according to the study.
And overall, Mexican nationals spent more in El Paso County than in Bexar County, home to San Antonio, where spending by Mexican nationals was estimated at $374 million for 2012.
“When you get people in town and get them talking about the impact of the Mexican shopper and how much business El Paso retailers are doing, word gets around,” said Bob Ayoub, president of Mimco, one of El Paso’s largest shopping center developers. Mimco was an organizer of last week’s event, the West Texas Idea Exchange of the International Council of Shopping Centers.
It’s tricky teasing out exactly who is spending what, especially since shoppers from Mexico often make purchases with cash, Nivin cautioned. And he emphasized that the data used by the SABÉR institute is based on some assumptions.
SABÉR used detailed transaction data provided by Visa, one of the world’s largest credit card suppliers, that showed how much was spent in El Paso County by customers who have addresses in Mexico. So the study was unable to account for Mexican nationals who might have an El Paso billing address.
The institute then used data on the shopping habits of Mexican nationals that shows how much they typically spend using cash, credit, travelers checks and other payment methods, to extrapolate the total spending.
The study also did not include real estate and business investments, since credit cards aren’t used to buy houses, for example.
So $446 million is a conservative number, Nivin said. How conservative is a matter of debate.
Attempts by local economists at the Federal Reserve Bank of Dallas El Paso Branch and the University of Texas at El Paso to estimate how much Mexican nationals spend in El Paso have put the number closer to $1.6 billion – that’s 15 percent of the roughly $11 billion in total retail sales.
At El Paso’s most popular malls, the figure is probably closer to 25 percent to 30 percent of total retail sales, they estimate.
“While we can spend all day talking about what the size of the impact is, maybe the most interesting thing from the (SABÉR) study is what Mexican nationals are buying,” said Roberto Coronado, assistant vice president in charge of the Federal Reserve Bank of Dallas El Paso Branch.
Mexican nationals spent far more on clothing in 2012 than any other spending category – $205 million – according to the SABÉR study. They spent more than $53 million on appliances and furniture and more than $44 million at restaurants.
Since Mexicans traditionally eat lunch and dinner later than Americans, their business can be a boon for restaurants in El Paso, extending the lunch and dinner rush. That has come as a surprise to some of the national chains, like P.F. Chang’s, when they first entered the El Paso market, Nivin said.
While missed sometimes by high-end chains wary of being the first to test the El Paso market, the opportunity to cater to Mexican nationals has not been missed by local malls.
Last fall, the Outlet Shoppes at El Paso bought a shuttle bus and began ferrying shoppers from one of the busiest pedestrian border crossings in Downtown El Paso to the Westside mall, offering free rides to shoppers.
“We know there are a lot of people who walk across the border and are looking for some kind of transportation to get around,” said Gina Slechta, vice president of marketing for Horizon Group, which is an owner of the mall.
Slechta said they know Mexican shoppers have a significant impact on sales at the mall’s nearly 100 shops and gauge the impact by tracking the number of tax-free purchases made at the mall, although the data is proprietary.
The mall has advertised in Mexico since before it opened in 2007, Slechta said.
When the first shops opened at the new Fountains at Farah shopping center on the Eastside, some like the 30-year-old national restaurant chain la Madeleine Country French Café announced opening-week sales records.
Trying to reconcile the success of stores in El Paso, especially high-end stores, with local market data – which describe a county of 827,718 people with lower than average incomes – is impossible without accounting for the shoppers from Mexico, Nivin said.
“The only thing I can attribute it to is the Mexican nationals,” Nivin said.
West Miller, president of Centergy Retail, the company that operates The Fountains, has been recruiting retailers to the center for eight years now. He thinks the amount being spent by Mexican nationals in El Paso is much higher than the SABÉR institute estimate.
But it’s hard to track exactly how much Mexican nationals are spending at The Fountains, he said, because so much of it is cash and isn’t recorded by credit card transactions.
Nonetheless, having more data showing that Mexican nationals have a big impact north of the border does help when recruiting retailers, he said.
Otherwise, it often requires convincing company executives to visit El Paso to see the rows of cars with Chihuahua license plates in person.
“It’s always good to be able to quantify what we are telling retailers and restaurants,” Miller said.