The effects of the peso devaluation on cross‐border retailing

Abstract

Abstract Retailers in South Texas border cities were surveyed to determine the impact of the December 1994 Mexican peso devaluation on their sales and retailing mix strategies. Results indicate that sales consequences are strong, averaging a 41.8 percent decline, but vary by city, store type, distance from the border, and relative domestic market size. Adjustments to the retailing mix were primarily defensive in nature, aimed predominantely at reducing costs and conserving cash. Proactive changes to retain or increase business were limited. Reducing prices was the dominant aggressive tactic employed. Public policy initiatives are consistently seen as having a positive impact on the situation. Research results provide limited support for Clark's (1994) theory describing the impact of national boundaries on firm marketing strategies. The importance of relative distance from the border and relative market size is confirmed. The hypothesized consequences for firm level marketing strategies were not observed, however.