Mexico as a Sourcing Partner to the Retail Industry

Abstract

Mexico represents the third largest trading partner with the United States after China and Canada, yet the retail apparel industry has not embraced Mexico as a preferred sourcing partner. Imports from China and Southeast Asia far outweigh imports from Mexico in terms of the retail staples of apparel, footwear, and accessories. Mexico, however, is increasingly becoming an ideal venue for U.S. retail sourcing as Chinese wages and inflation rise. Mexico has become cost competitive with China and it is much more conveniently located. In this honors thesis, I explore Mexico as a sourcing partner for the apparel and footwear industries. I also explore Mexican logistics and transportation and the opportunities for our local Tucson, Arizona community to become a major inland port for future Mexican imports. I review why apparel retailers have not yet embraced Mexico, and the catalysts required for apparel retailers to transfer more sourcing opportunities to Mexico. Finally, I challenge both perceived and real obstacles to Mexican manufacturing and sourcing and conclude that Mexico will emerge as a dominant partner to the U.S. retail industry within the next generation.