E sales surge in the US and the north of Mexico.

Following fears of an economic downturn in the US following the sub-prime bust, credit crunch and the negative effects that might have on the Mexican economy, some good news showed up this week with the early December levels of online shopping in the US.

According to data from Comscore (via The Economist) US online purchases, from November 1^st. to December 6^th, increased a healthy 18% versus 2006, with weekly sales peaking at a record e-commerce level of 4.6 billion dollars. So in spite of falling house prices, tighter credit and lower levels of consumer confidence, North Americans appear to be spending more than ever, at least online.

The north of Mexico also seems to be experiencing a surge in online shopping. According to data extracted from Google Trends, Google searches to online retailers, so far in December, have increased significantly in the Monterrey and border areas. This would indicate that innovators and early adopters in the north of the country are beginning to follow what is now a mainstream activity in the US and have begun to take their Christmas business online. This poses a question: as broadband internet penetration begins to accelerate towards 10% of the population, to what extent are retailers in Mexico prepared for the coming e-commerce Christmas opportunities?

Further analysis, using Google Trends, shows a mixed picture. Palacio de Hierro, Mixup and Office Depot show higher levels of searches compared to amazon.com. Office Max, Liverpool.com and Sanborns.com show lower levels.

The quality of site content and “shopability” varies from state-of-the-art, at Office Depot, Sanborn’s and Mixup, to rudimentary at Palacio de Hierro and Liverpool. The latter sites being more focused towards the wedding gift market than the Christmas shopper. Palacio de Hierro projects a festive spirit but offers a limited selection of gift ideas and does not offer a secure shopping cart. Customers have to call a sales operator. Hardly state of the art e-marketing.

The leading Mexican brand, in terms of e-commerce potential, would appear to be Mixup.com. With its advantage in music and video products, the strongest selling e-commerce categories, Mixup.com might just emerge as the amazon.com of Mexico. Next up would be Office Depot and Sanborn’s, two strong national brands backed by the awesome technology and financial resources of Carlos Slim. Palacio de Hierro clearly has potential too, but would require a significant forward commitment to technology and digital content in order to compete effectively.

If actual buying online has yet to take off in most of Mexico, using the internet for browsing and information gathering peaks strongly during the Christmas season. Interest in the iPhone, for example, appears to be strong all over Mexico. Search traffic for video games also appears to be strong. Probably from parents looking for information on exactly how much an Xbox or Wii is going to cost them.

With the expected surge in broadband internet penetration and e-commerce in Mexico, the above should serve as a loud wake-up call to Mexican retailers. The horrendous pre-Christmas traffic alone should be enough of an incentive for thousands of frustrated Mexico City shoppers to take their shopping online.

Best wishes for the holiday season.

Let’s go to the Movies!

After a dip in 2003, the movie business in Mexico has been growing steadily and looks to be on the way to a record year in 2007. Attendance reached 165 million tickets sold in 2006 and is expected to top 180 million this year, according to AC Nielsen. It is estimated that nearly 10% of Mexican middle class adults (over 18) can be classified as “frequent moviegoers”, i.e. go to the movies at least once a month. That’s a lot of popcorn! It is also an opportunity for innovative marketing in the growing area of brand entertainment.

The growth in Mexican box office receipts can be attributed the success of the modern multiplex theatres that arrived in the mid nineties and now number over 200, with over 3,200 screens. The leading exhibiter is Cinéopolis with 49% of ticket sales in 2006, according to AC Nielsen, followed by Cinemex with 17%, MMC, Cinemark and the independent exhibiters.

Cine complexes have become a major component in urban retail development, due to their proven ability to generate traffic. The busiest multiplex in 2006, according to A.C. Nielsen, was the Cinéopolis at Universidad 19, in Mexico City, with 2.2 million visitors. As malls and modern commercial centers continue to expand in the major cities and to outlying provincial markets, the multiplexes are involved in all major development projects. So the total number of screens could pass 4,000 by 2010.

Film production is now approaching 500 titles a year and 2007 has been a good year for hit movies in Mexico, the top ten summer releases so far grossing 189 million dollars up to September (according to Variety - Nielsen data): Spiderman 3 grossed $35.3 million dollars; Ice Age 2, $29.2 million; Harry Potter $24.9 million, closely followed by Pirates of the Caribbean and Shrek the 3^rd; Transformers; The Fantastic 4; Ratatouille; The Simpson’s and KM 31 rounding out the top ten. It is interesting to note the number of sequels in the list. It used to be that sequels rarely matched the gross of the original title, today most sequels gross higher with each release.

Movies and multiplex theatres now offer a significant audience to marketers through a number of channels: traditional on screen advertising; product placement in the movie itself; in theatre promotions and free tickets as promotions, rewards and incentives.

Hollywood Movie Money is a company that specializes in movie ticket promotions and branding programs. Utilizing new technologies, HMM has recently announced a number of product innovations and branding platforms which include prepaid plastic cards, print at home tickets via the internet and cellular telephone ticketing.

With DVD sales and rentals now accounting for more than half of total industry revenues, the main threat facing the movie industry all over the world is piracy. According to the MPA (the Motion Picture Association) in 2006 producers lost approximately $483 million dollars of DVD and VHS revenue to piracy in Mexico, or 61% of potential revenue. Things are a lot worse in China and Russia, where loses to piracy have reached 90% and 79% respectively.

One response to the piracy threat to DVD revenues could be to reduce prices and attract brand partners and sponsors, as television does. Meanwhile: Lights! Sound! Roll ‘em! and keep the popcorn coming this way please!