Tough times at La Plaza?

By G. Romero Wendorf

I went to Dillard’s the other day to buy a new pair of shoes, hadn’t been there in a while, and was struck by the empty feel of La Plaza. Same goes for the entire parking lot. Lot of empty spaces. The only place full was the hotel on the eastern edge of the mall, which was full of DPS trooper cars, in the Valley to help shore up border security.

Security problems and Mexico’s peso devaluation, a double whammy.

American companies investing more dollars into the Mexican economy would help shore up the peso, but security worries are a hindrance. As the U.S. dollar becomes stronger, the Mexican peso becomes weaker. And the weaker the peso becomes, Mexicans buy more U.S. dollars, driving the Mexican peso even lower, like some self-fulfilling prophecy.

For Mexico, a country already struggling, seeing its currency drop approximately 30 percent this past year is just more bad news heaped upon more bad news.

For Mexican shoppers, what used to cost $100 at Dillard’s, they’ll now pay $130 for after converting their pesos to dollars.

The only people really benefitting from the peso decline are the Mexicans living in Mexico who get dollars sent to them from family in the U.S. This year alone, under that scenario, they basically got a 30-percent raise.

Part of the peso pressure is due to declining oil prices. Approximately 30 percent of government revenues are derived from oil sales. Hence, the Mexican government announces spending cuts, which affects the overall economy once gas prices drop thanks to supply and demand.

One of the longtime sales guys I talked to at Dillard’s, known him for years, told me that in his opinion, the shopping traffic from Mexico is off by more than 50 percent over the past year. In fact, according to the financial media, the Mexican peso has taken one of its biggest nose dives in 20 years, and it’s hurting Valley businesses, just when they can stand it the least.

Number one, competition is at an all-time high. How many restaurants are there? Look, there’s a new one going up as we speak? And now, La Plaza is tearing down the old Sears store and wants to put in approximately 60 new specialty shops and a dozen or so new restaurants?

Number two, the Mexican shoppers who are wealthy aren’t driving to the Valley like they used to, worried about security issues on the highway. So, instead, many are hopping an airline out of Monterrey and flying directly to San Antonio or Houston to shop.

Third, Valley chambers and economic people are already gearing up, trying to pump up the Winter Texan business, since the parks registered an approximate 10-percent drop last year.

In November of 2014, about 13 Mexican pesos equaled one U.S. dollar. Today, it’s approximately 17. Not good news for Valley businesses who look to Mexican shoppers to help keep the coffers full.

The good news is, the Valley is much more diversified than it was during the last huge peso devaluation I remember from 1982. Talk about looks of depression. Come the spring of ’83, we were begging the Snowbirds to stay here for the summer.

Now, we have a huge medical community, education community, diversified manufacturing, a maquila industry that didn’t exist 33 years ago. So all in all, we’re better off now despite the pain the Mexican peso is suffering, leading to suffering on the part of border businesses on this side of the river.