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A mom and pop corner store: under threat. A mom and pop corner store: under threat.

Future not bright for mom and pop stores

Corner stores hampered by old-fashioned business practices, outdated business model

Can Mexico’s beloved mom and pop-run corner stores survive amid the proliferation of multinational convenience stores and changing shopping habits?

The short answer is yes, but if the status quo continues and the small abarrotes or grocery stores are left to carry on with old-fashioned business practices and an outdated business model, the future perhaps doesn’t look so bright.    

For years experts have said the same thing over and over again: Las tienditas de la esquina (little corner stores) could disappear. Indeed, many of them already have.

But if the trend continues, the consequences — especially for the store owners and their families— would likely be dire.

An estimated two million people across Mexico are self-employed in the stores, they support five million people in total, sell half of all groceries across the nation and are the most common kind of small business, according to data from small business alliance Anpec.

They are also a vital part of local communities, allowing cash-strapped consumers to buy in smaller quantities than is normally possible and they often offer credit or flexible payment plans to regular customers.

“You can buy one aspirin. Or one diaper. Or one razor. I love that,” an expat wrote on the blog Mexican Trailrunner, describing a small store in the Lake Chapala region.

The regional director of Fundes — an organization that promotes the development of small and medium-sized businesses — also believes that the tienditas play a key role in both the local and national economy.

“It’s the kind of store that is fundamental to the local economy and to the business economy,” said Alejandra Angarita Chahín.

But Fundes’ overall assessment about their future is concerning.

“Neighborhood stores are extremely vulnerable; most are informal and [their owners] are poor and uneducated. [They are] established in disperse locations, don’t operate in an optimal way and offer a limited range of products and services,” the organization said.

Despite that vulnerability, along with other small, independent businesses, tienditas sell a huge proportion of all products sold by multinationals such as Coca-Cola and bakery company Bimbo, Angarita said.

In that seemingly incongruous dichotomy between massive multinationals and little stores, Fundes sees a solution.   

Investment from the large companies and collaboration with small businesses is not only necessary but also mutually beneficial, Angarita argued.

Helping the stores modernize their business practices could “increase sales by approximately 15%” and also cut costs by almost 10%, she said, citing accounting and inventory management as areas needing improvement where multinationals could help.

Many of the small stores have failed to embrace technology while some owners have limited business knowledge, she added.

Angarita also questioned why large companies haven’t offered financial aid already given that their sales would also likely increase.

“Suddenly you turn around and ask yourself, why isn’t is being done? How is it that they haven’t been investing in these little stores for years? It doesn’t matter, let’s start doing it now and from a business perspective,” she said.

The president of Anpec believes that multinationals need to consider small, neighborhood stores as their social partners and that the survival of small grocery stores is a matter of the utmost importance.

“The supply [of food] is a national security problem, that’s why strengthening the traditional method [of buying] is essential,” Cuauhtémoc Rivera said.

However, the scale of the challenges the tienditas face cannot be underestimated.

“It’s clear that Mexican families are buying through other channels, they’re increasing their purchases via modern methods and more and more ways to shop are being added,” consumer behavior company Kantar Worldpanel reported.

An increasing number of multinational supermarkets and convenience stores, with far greater purchasing power, continue to encroach on a market once dominated by the little guy, drawing customers and their hard-earned pesos away.

Oxxo and 7-Eleven are particularly destructive, according to the Mexico City Secretariat of Science, Technology and Innovation.

For every new convenience store that opens in the Mexico City metropolitan area, between 10 and 15 neighborhood stores close down, statistics show.

But still, many of the tiendas continue to operate despite their origins and practices being firmly rooted in the last century.

Fifty-eight per cent of retail purchases in Mexico are still made at the small stores, according to Neilsen, well above a 40% average across Latin America.

Fundes cites less prosperous customers and the fact that many do not have a car as two reasons why small neighborhood stores have continued to survive.

Loyalty to local store owners who customers know on a personal level as well as long-held habits are also likely factors along with the experience of shopping at a store that has its own individual idiosyncrasies and harks back to a time gone by.

Source: El Universal (sp)

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