24 Feb 2017
Optimism and Uncertainty Stalk Mexico's Premium Gift Sector
Exhibitors at Expo Salpro, Mexico's premier jewellery and gifts event, expressed mixed emotions, with some believing that new opportunities were opening up, while others maintaining that regional concerns would possibly stall the local economy.
As Expo Salpro, Mexico's premier jewellery, decoration and gifts show opened its doors for the 73rd time earlier this year, the country was still reeling from a 20% fuel-price rise imposed just weeks before, not to mention the subsequent riots and looting. For many of the exhibitors, it was clear that the price rise – and its knock-on effect on transport costs – was already undermining customer confidence, something that didn't bode well for their range of handbags and holdalls, mirrors, china and glass, lanterns and lamps, baskets and cushions, candlesticks and crucifixes.
Gifts and novelties are at the very heart of this particular exhibition, and the more than 500 exhibitors who occupied the event's 25,000 square metres of floor space were kept busy, whatever the economic concerns of the general populace. Most stands had two, three or even four people, all of whom were kept busy processing orders via laptops and printers. One exhibitor even initiated a ticketing system, ensuring that would-be customers were processed in a suitably orderly fashion.
Commenting on her own experience at the event, Sarah Lina, Sales Manager of Guadalajara-based Top Gifts, said: "We have two people here just to record orders and, when the show is busy, they are kept working all of the time. We had a line of buyers here on Monday, but that is quite usual on the first day of the show."
Despite the clear interest in her merchandise, Lina confessed that she was less confident about future prospects, saying: "The economy is very unstable because of all the changes that are taking place, as well as things like Trump, the falling peso and fuel prices. All of this will affect every part of our economy, including the gifts sector.
"Most of our products are imported and they are nearly all sourced from China, with just a few made here in Mexico. As a result, we have to buy in dollars and we now expect to have to put our prices up this year."
For importers, the value of the peso is now proving to be a real challenge. Already trending downwards throughout 2016, the Mexican currency dropped 15% in value overnight following Trump's electoral victory back in November.
This year, the largest stand at the event came courtesy of Mexico City-based EVA Accessories, with the company keen to promote its eye-catching range of scarves and jewellery. Explaining his company's presence at the event, Commercial Manager Jose Cobo said: "We have been attending this show for 25 years. While we have the biggest stand, we are not necessarily the biggest company represented here. It is very competitive sector.
"By and large, this is a show for small shops or chains of small shops, which typically buy from us for $10 and sell for $20. It is a very well-targetted show, though, and the majority of visitors are here to place bulk orders. There are very few walk-in buyers. People are ordering now for spring fashions, as well as for the summer.
"There are other exhibitions later in the year – April for summer goods and August for autumn and winter. January, though, is always very busy, with three events here in Mexico City and one in Guadalajara."
As well as uncertainties relating to currency and commerce, the vagaries of the climate also have an impact on local businesses. Highlighting this, Lina said: "The weather used to be very predictable – this month dry, the next month wet – but now it is far more changeable. That means our fashions have to be more flexible.
"Most of our products are imported, as there is very little textile industry left here. Basically, we import from India and China, although India is becoming less significant every year.
"We will have a buying trip to China in April. We don't, however, just go to buy whatever is available. Chinese designs are quite different to what people here tend to go for, so we ask them to change their products a little. We get them to produce something to our specifications that suits the Mexican market, and then we talk about volumes, exchange rates, payment terms…
"In terms of the future, the US trade policy will have a real impact on our accessories and textile industries, as well as on the automotive sector. Overall, I imagine the country will manufacture less over the coming year. Fashion is fashion, though, and people will still want the latest styles."
Despite – or perhaps because of – such gloomy prognostications, cuddly toys seemed to be the hottest property in the gifts sector. One company specialising in such novelties is Aurora World Mexico, with its stand featuring an astounding floor-to-ceiling display of Tubbie Wubbies, Wobbly Bobbleys, Kika and Koko Sharing Hugs, and, of course, Flopsies, Tushies and Yoo Hoo and Friends.
Introducing her company's range, Michelle Ramirez, Aurora's Business Manager, said: "We have more than 700 different soft toys. They have mainly been sourced from China and Indonesia, although some have come from Los Angeles. Typically, they come in collectable families, such as the Flopsies from Indonesia, which include Gie-Gie the giraffe, Xie-Xie the panda, a baby harp seal and a pink pony.
"For the coming year, we have a number of strategies in place. We have several reliable customers, including department stores, and we aim to do more marketing and attend more events like this. We are also looking at specific product placements, in zoos and restaurants for instance. Overall, we are quite hopeful about 2017."
In the gifts category there is always the opportunity to make a big impact with something genuinely new and, this year, it was Daniel Valencia with his Calor in a Click novelty that was proving to be a hit. Despite not seeming to meet any fundamental human need – other than curiosity – his range of plastic bags, containing a coloured solution and a catalyst, sold out rapidly.
Demonstrating the product, Valencia said: "Just press the metal clip inside and see what happens." One attendee followed his instructions and watched in amazement as, within seconds, the whole bag solidified and became hot.
Explaining the appeal of Calor in a Click, Valencia said: "We have been marketing it to athletes and the elderly as something to apply to strained muscles, as it stays warm for up to 30 minutes. Overall, though, everybody wants to buy one just for fun."
Taking more of a high-end approach was Mexico City-based Giftique, which had brought along a range of designer items from the Netherlands. Explaining the thinking behind the selection on offer, Lorena Felix, a Director of the business, said: "We are focused on goods with the highest levels of design, prize-winners in fact. We normally look to source a variety of brands, but this week we are showing a range of products from XD Design, a young Dutch company.
"Last year, we introduced the Bobby – an anti-theft backpack that carries batteries and a charger for your laptop or tablet. This year, courtesy of the same designer, we have a range of solar chargers."
Intriguingly, these compact solar chargers have been designed in the form of a vase of flowers and come accompanied by a windmill with expanding wind vanes in order to catch the light and a compact pair of speakers, complete with an integrated solar panel. Giftique also offered a range of kitchen goods, including a cheese grater, oil and vinegar containers and salt and pepper pots – all beautifully designed in the Netherlands and manufactured in China.
One peculiarity of the Mexican market is the enduring popularity of Catholic iconography, statuettes, crosses, pictures and wall hangings. Throughout the country, hundreds of saints are honoured, with every village having a church dedicated to one of them, complete with its own annual festival, while families also create their own household shrines. Unsurprisingly, then, several local companies had stands dedicated to such items, including Agape, Michel Yutain Sacred Art and Max Valiano.
The largest such stand came courtesy of Pachua-based Articulos Religiosos y Decorativos, with the company manufacturing small and large statuettes in resin and fibreglass, ranging from 20cm tall to almost life-size. Explaining the back story of the company, Rodrigo Ballesteros, the son of its founder, said: "We used to export all over – Puerto Rico, Portugal, Chicago USA, Managua, but we stopped because of the transportation costs, as well as on account of the difficulties other countries face when dealing with Mexico's trade rules. At one time, for instance, we had good exports from here to the USA. After 9/11, though, they effectively stopped.
"The recent fall of the peso, though, actually benefited us. I believe it's a great opportunity for us to expand our exports, although my father is not so positive, believing any such move will involve a lot of paperwork."
Beyond the currency and price-hike issues, the prospects for Mexico overall are still seen as being strong. The World Bank and the Organisation of Economic Co-operation and Development (OECD) are both predicting growth for the country in 2017 – 1.8% and 2.3%, respectively. While these figures may be somewhat lower than might have been expected six months ago, Mexico remains one of the comparatively few South and Central American countries that is still growing, making it quite different to Brazil, the other big regional economy.
While much of the event, though, was a testament to the global free trade in gifts and accessories, some exhibitors were clearly finding it difficult to remain competitive. Addressing her own experience, Laura Macias, founder of Bronzes y Artes de Mexico, said: "This fair has been going for 20 years now. Originally, it was all local producers and manufacturers and we had a lot of handmade Mexican goods on show from artisans and traditional craftsmen. Now, though, it is very difficult for us to compete with all of the imported items.
"Previously, we sold to the US, Venezuela, Canada, Colombia, Italy, France and New Zealand. While we can still compete on price with our handmade resin sculptures, we don't maintain a large stock. While a lot of the exhibitors here are fulfilling orders directly from their stocks, we would prefer to take orders here and then prepare and dispatch the goods later.
"I remember being at one fair the day the Gulf War started. No one could sell anything and people were watching TV screens all around the show. That is what it feels like today. It should be getting easier for us as the peso drops, but there is too much uncertainty. People are not buying."
Expo Salpro 2017 took place from 10-13 January at the Banamex Exhibition Centre, Mexico City.
John Haigh, Special Correspondent, Mexico City