Laredo, Texas
Merchants in this border town on the brushy banks of the Rio Grande have pretty much given up on a Merry Christmas. But they're still optimistic about a Feliz Navidad.
Sales to U.S. customers are slumping here like everywhere else. But Mexicans account for roughly half the retail business in Laredo, which like dozens of border cities has built up a bi-national shopping district that has boomed in recent years.
J. Michael Short for The Wall Street JournalPurchase-laden pedestrians pass over International Bridge I on their return to Nuevo Laredo after shopping downtown Laredo, Texas, Nov. 26. So as the American economy tanks, retailers and civic leaders in Southwestern cities such as Laredo are courting Mexicans more heavily than ever, hoping that they will save the holiday shopping season.
There's just one problem: Mexico has its own economic woes. Its currency has tumbled, crimping the purchasing power of Mexicans who cross the border to shop, just when U.S. retailers need them most. The exchange rate, which was 10 pesos to $1 in August, is now about 13.25 pesos to $1.
"We've learned to work with the economies of two countries here in Laredo, but we usually only have one struggling at the same time," said Carlos Villareal, Laredo's city manager. "This is a double whammy."
Although sales tax receipts for last month aren't available yet, Laredo officials estimated that sales had dropped for the first time in months. Retailers are hoping their promotion efforts to lure Mexicans will save the holidays for them.
J. Michael Short for The Wall Street JournalA bilingual sign promotes the Relaxation Station to shoppers at Mall del Norte in Laredo, Texas. Moneyed Mexicans who come to the U.S. in search of bargains and trendy fashions generate roughly $8 billion in sales annually from Texas to California, according to research earlier this decade by the University of Texas-Pan American.
"We have Wal-Mart in Mexico now, but I drive two and a half hours to come here because the same pair of pants can cost half what I pay at home," Mexican shopper Armando David Sanchez said as he walked through a Laredo parking lot filled with cars bearing Mexican license plates. "Sales in the U.S. are simply better."
The two-nation shopping economy means double the upside during prosperous times -- especially for smaller cities such as Laredo, an inland port of 217,000 people two hours south of San Antonio, and McAllen, another border city with a sprawling shopping complex. While most U.S. retailers bet big on Black Friday, border merchants also get a boost from November's Dia de la Revoluci%26oacute;n holiday, when Mexicans celebrate the modern founding of their nation -- and then shop.
"If you're going to buy a little birthday present, you will do it here in Mexico. But if you are going to buy a wardrobe, you are going to Texas," said Silvia Garza, a vice president of a McAllen Chamber of Commerce branch in Mexico's Monterrey.
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