Skip to content

Retail in Mexico Porter's Six Forces Analysis

Detailed report on the six forces of Porter applied to the Retail value chain.

Porter's Six Forces framework provides a valuable lens through which to analyze the competitive intensity and attractiveness of the Mexican retail industry value chain. By examining the forces influencing competition, we can gain deeper insights into the strategic landscape and the dynamics that shape profitability and opportunity within the sector.

1. Threat of New Entrants: Moderate. The threat of new companies entering the Mexican retail market is moderate, influenced by several factors. Establishing a significant physical retail presence, particularly large formats like hypermarkets or department stores, requires substantial capital investment in real estate, infrastructure, and inventory, creating a significant barrier to entry for traditional players. Building a recognized brand and securing favorable locations also presents challenges. However, the rise of e-commerce has lowered the capital barrier for online-only retailers, allowing niche players and international platforms (like Shein, Temu, AliExpress) to enter the market more easily. Access to efficient logistics and distribution networks remains crucial, and while building proprietary networks is costly, partnerships with 3PLs can mitigate this. Regulatory hurdles and the need to navigate a complex fiscal environment also pose challenges for new entrants. Despite these barriers, the attractive growth potential of the Mexican market, particularly in e-commerce, continues to draw new players.

2. Bargaining Power of Buyers: High. The bargaining power of buyers (consumers) in the Mexican retail market is high. Consumers benefit from a wide array of choices across various formats, including hypermarkets, supermarkets, convenience stores, department stores, specialty stores, and a rapidly expanding online market. This fragmentation and the presence of numerous competitors vying for their business gives consumers significant leverage. Price sensitivity is a crucial factor, especially in segments dominated by players like Walmart and Chedraui, who compete heavily on price. The increasing availability of information online empowers buyers to compare prices and product offerings easily. The growth of e-commerce further enhances buyer power by providing access to a global marketplace and increasing convenience. Retailers are compelled to offer competitive pricing, diverse product assortments, and enhanced customer experiences to attract and retain customers.

3. Bargaining Power of Suppliers: Moderate. The bargaining power of suppliers in the Mexican retail value chain is moderate, varying depending on the supplier's characteristics and the retailer's scale. Large retailers such as Walmart de México, Soriana, and Liverpool, with their immense purchasing volumes and roles as major importers and wholesalers, exert significant bargaining power over many suppliers, negotiating favorable terms, pricing, and payment schedules. They can also influence product specifications and quality standards. However, suppliers of strong, desirable brands or those with specialized products or limited alternatives may possess more leverage. Nearshoring trends are increasing the importance of regional suppliers, potentially shifting the balance of power in certain categories. For smaller traditional retailers (nanostores), their individual bargaining power is low, and they are more dependent on wholesalers and distributors, who in turn have more power in those relationships.

4. Threat of Substitute Products or Services: Moderate. The threat of substitute products or services in the Mexican retail sector is moderate and evolving. The most significant substitute channel for traditional physical retail is e-commerce, which offers consumers the convenience of shopping from anywhere and having products delivered. This directly substitutes the need to visit brick-and-mortar stores for many purchases. Beyond e-commerce platforms operated by established retailers, the rise of pure-play online marketplaces and cross-border e-commerce further intensifies this threat. Other substitutes include the informal market, which caters to a significant portion of the population and offers goods often at lower prices, albeit with less formal guarantees. Direct selling models also represent a substitute channel for certain product categories. Changes in consumer lifestyles, such as an increased reliance on foodservice, can also substitute grocery purchases.

5. Rivalry Among Existing Competitors: High. Rivalry among existing competitors in the Mexican retail market is high. The market is characterized by the presence of several large and aggressive players, including Walmart, FEMSA (OXXO), Soriana, Chedraui, Liverpool, and Coppel, who compete across various formats and segments. Competition is intense in pricing, promotions, product variety, and geographic expansion. The rapid growth of the e-commerce segment has further heightened rivalry, with domestic players investing heavily in their online capabilities to compete with global giants like Amazon and Mercado Libre. The fragmentation of the market, with a large number of traditional retailers, also contributes to the competitive intensity, although the nature of competition differs between modern and traditional channels. High fixed costs associated with physical infrastructure can also contribute to intense price competition as retailers seek to maximize sales volume.

6. Power of Complementors: Moderate to High. The power of complementors in the Mexican retail value chain is moderate to high and is increasing, particularly with the acceleration of digital transformation. Key complementors include logistics and transportation providers (3PLs), whose efficiency is critical for both physical store replenishment and e-commerce delivery, especially the crucial last mile. Technology providers offering e-commerce platforms, POS systems, inventory management software, and data analytics tools are essential for modern retail operations and can significantly impact a retailer's capabilities and competitiveness. Financial service providers and fintech companies enabling payment processing, offering consumer credit (BNPL), and developing digital wallets are becoming increasingly powerful complementors, influencing customer purchasing power and transaction convenience. Retailers rely heavily on these complementors to enhance their value proposition and operational efficiency.

References

  • beIN SPORTS. (2025, February 28). Liverpool announce losses despite revenue increase. https://www.beinsports.com/en/premier-league/news/liverpool-announce-losses-despite-revenue-increa/2892972
  • Business Wire. (2023, May 9). Chedraui USA Announces Growth and Integration Plan. https://www.businesswire.com/news/home/20230509005962/en/Chedraui-USA-Announces-Growth-and-Integration-Plan
  • ECDB. (2024). Top online stores in Mexico by revenue. https://ecommercedb.com/markets/mx/top-stores
  • El Palacio de Hierro. (n.d.). informe anual | annual report 2021. https://www.elpalaciodehierro.com/documents/informe_anual_2021.pdf
  • El Palacio de Hierro. (n.d.). informe anual • annual report 2022. https://www.elpalaciodehierro.com/documents/informe_anual_2022.pdf
  • HighRadius. (2024, November 26). Liverpool F.C. Financial Performance: Revenue & Treasury Insights. https://www.highradius.com/themed-reports/liverpool-f-c-financial-performance-revenue-treasury-insights/
  • KOF - Coca-Cola FEMSA. (2023, April 27). Coca-Cola FEMSA Publishes its 2023 Integrated Annual Report: Future-Ready – Driving Growth. https://www.coca-colafemsa.com/newsroom/press-releases/coca-cola-femsa-publishes-its-2023-integrated-annual-report-future-ready-driving-growth/
  • KOF - Coca-Cola FEMSA. (2024, October 25). Coca-Cola FEMSA, Third Quarter 2024 Results. https://www.coca-colafemsa.com/newsroom/press-releases/coca-cola-femsa-third-quarter-2024-results/
  • Mexperience. (2024, October 18). Sanborns: Mexico's Eclectic Department Store. https://www.mexperience.com/sanborns-mexicos-eclectic-department-store/
  • Mexperience. (2025, May 2). Directory of Stores, Supermarkets, & Services in Mexico. https://www.mexperience.com/shopping-in-mexico/stores-supermarkets-mexico/
  • Mexico Business News. (2024, January 31). Chedraui to Invest MX$10 Billion on Supercito, Oxxo's New Rival. https://mexicobusiness.news/retail/chedraui-invest-mx10-billion-supercito-oxxos-new-rival
  • Mexico Business News. (2024, March 5). Palacio de Hierro Reports 7.9% Revenue Increase in 4Q23. https://mexicobusiness.news/retail/palacio-hierro-reports-79-revenue-increase-4q23
  • Mexico Business News. (2024, March 6). OXXO Eyes US Expansion After Heineken Share Sale. https://mexicobusiness.news/retail/oxxo-eyes-us-expansion-after-heineken-share-sale
  • Mexico News Daily. (2022, January 18). Chedraui to open 33 stores this year. https://mexiconewsdaily.com/business/chedraui-to-open-33-stores-this-year/
  • Mordor Intelligence. (2024). Mexico Retail Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030). https://www.mordorintelligence.com/industry-reports/mexico-retail-market
  • Public now. (2024, October 23). Walmart de México y Centroamérica Reports Third Quarter and Nine Months of 2024 Results. https://www.publicnow.com/view/1b5017549401b8a17f57d458e6892c1c
  • Public now. (2025, February 13). Walmart de México y Centroamérica Reports Fourth Quarter and Full Year 2024 Results. https://www.publicnow.com/view/f49c52b34993d663c698910181884319
  • SiiLA. (n.d.). Walmart Owns Most of the Supermarkets in Mexico. https://siila.com.mx/insights/retail-en-mexico-walmart-es-la-cadena-con-mas-supermercados-1844
  • SURFE. (2024, November 18). Top 10 Retail Industry Companies. https://www.surfe.com/blog/top-retail-companies
  • The Rio Times. (2025, April 28). Brazil’s OXXO Growth Offsets FEMSA’s Global Challenges in Q1 2025. https://riotimesonline.com/brazil-news/brazil-business/brazils-oxxo-growth-offsets-femsas-global-challenges-in-q1-2025/
  • The Yucatan Times. (2025, January 14). Chedraui plans to open 144 new stores in 2025. https://www.theyucatantimes.com/2025/01/chedraui-plans-to-open-144-new-stores-in-2025/
  • Visual Capitalist. (2022, March 30). Walmart Owns Most of the Supermarkets in Mexico. https://www.visualcapitalist.com/mexicos-supermarket-landscape/
  • Wikipedia. (n.d.). List of department stores by country. https://en.wikipedia.org/wiki/List_of_department_stores_by_country
  • Wikipedia. (n.d.). List of supermarket chains in Mexico. https://en.wikipedia.org/wiki/List_of_supermarket_chains_in_Mexico
  • Mexico Retail Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030).
  • Retail in Mexico | Market Research Report | Euromonitor.
  • Mexico - Distribution and Sales Channels - International Trade Administration. https://www.trade.gov/country-commercial-guides/mexico-distribution-and-sales-channels
  • Mexico Retail Industry Growth Opportunities and Market Forecast 2025-2033: A Strategic Analysis.
  • Retail Market in Mexico Market Growth Analysis - Size and Forecast 2024-2028 - Technavio.
  • Mexico Retail Market Size, Share, Trends and Forecast 2033 - IMARC Group.
  • Mexico Retail Market Size, Online Retail, Key Players and Forecast to 2027 - GlobalData.
  • Mexico's Retail Sector to Grow 5.3% CAGR by 2035 - Mexico Business News. https://mexicobusiness.news/finance/news/mexicos-retail-sector-grow-53-cagr-2035
  • The state of grocery retail in Mexico - McKinsey & Company. https://www.mckinsey.com/industries/retail/our-insights/the-state-of-grocery-retail-in-mexico
  • Mexico Retail Sector Top Companies - Mordor Intelligence.
  • Insights into the Mexican E-Commerce Competition Landscape - CSIS. https://www.csis.org/analysis/insights-mexican-e-commerce-competition-landscape
  • Mexico Retail Foods Mexico trends towards E Commerce - USDA Foreign Agricultural Service. https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Retail%20Foods_Mexico%20City_Mexico_MX2023-0021.pdf
  • List of Retail Companies In Mexico In 2025 - AeroLeads. https://aeroleads.com/blog/retail-companies-in-mexico/
  • Retail Market in Mexico: Segmentation by Product (PAT, personal and household care, AFA, electrical and electronics, and others) and distribution channel (offline and online)--Forecast till 2026|Technavio - PR Newswire. https://www.prnewswire.com/news-releases/retail-market-in-mexico-segmentation-by-product-pat-personal-and-household-care-afa-electrical-and-electronics-and-others-and-distribution-channel-offline-and-online--forecast-till-2026technavio-301477652.html
  • How Tariffs Are Reshaping Global Retail Supply Chains. https://www.kikilatam.com/post/how-tariffs-are-reshaping-global-retail-supply-chains
  • The Largest Mexico Retailers and Department Stores - LiveAbout. https://www.liveabout.com/the-largest-mexico-retailers-and-department-stores-1141341
  • The Giants of Mexican Retail: 10 Companies Control Half of the Country's Shopping Malls.
  • Retail Trade: Wages, production, investment, opportunities and complexity | Data México. https://www.datamexico.org/en/economy/trade/Retail%20Trade
  • The state of grocery retail in Mexico - McKinsey & Company.
  • (PDF) VALUE CHAIN ANALYSIS IN SOUTHERN MEXICO - ResearchGate. https://www.researchgate.net/publication/356099709_VALUE_CHAIN_ANALYSIS_IN_SOUTHERN_MEXICO
  • Mexico POS Market - Size, Trends & Industry Analysis - Mordor Intelligence.
  • Launching a Direct Selling Business in Mexico in 2025—A Complete Guide.
  • Mexico Last Mile Delivery Market Size & Share Analysis - Industry Research Report.
  • Mexico 3PL Market Growth | Industry Analysis, Size & Forecast Report - Mordor Intelligence.
  • Retail and Fashion Logistics - DHL - Mexico. https://www.dhl.com/mx-es/home/sectors/fashion-retail.html
  • Mi Tienda's Inclusive Business Model in Mexico - The Supply Chain Lab. https://supplychainlab.org/mi-tiendas-inclusive-business-model-in-mexico/
  • Financial Companies Regulated of Multiple Purpose in Mexico; an Alternative Model to Manage the Probability of Default of Revolving Loans - SciELO México. https://www.scielo.org.mx/scielo.php?script=sci_arttext&pid=S0186-10422019000100189
  • The BNPL Advantage: Why Next Growth Wave Will Be Payment-Led. https://www.americasmi.com/blog/the-bnpl-advantage-why-next-growth-wave-will-be-payment-led/
  • Non-Traditional Incumbents Lead the Digital Transformation of the Mexican Last Mile.
  • Banking & Finance 2024 - Mexico | Global Practice Guides - Chambers and Partners. https://practiceguides.chambers.com/practice-guides/banking-finance-2024/mexico
  • Convenience matters Serving the new Mexican consumer - PwC. https://www.pwc.com/consumerinsights
  • Business Models: Types and Their Popularity.
  • Empowering Mexican SMEs: Innovation in Credit Access, Financing.
  • ICLE Comments on the COFECE Report on Marketplace Competition in Mexico.
  • Innovations in retail payments - Bank for International Settlements. https://www.bis.org/cpmi/publ/d110.pdf
  • Supply Chains in Mexico 2025: How Tariffs Can Wreck Everything - NovaLink. https://www.novalinkmx.com/blog/supply-chains-in-mexico-2025-how-tariffs-can-wreck-everything/
  • How to Successfully Launch your E-Commerce Business in Mexico - Prodensa. https://www.prodensa.com/how-to-successfully-launch-your-e-commerce-business-in-mexico/
  • Direct vs. Indirect: What is the best distribution model for Mexico? - FrontierView. https://frontierstaging.frontierstrategygroup.com/blog/direct-vs-indirect-what-is-the-best-distribution-model-for-mexico/
  • Insights from Mexico - Visa. https://usa.visa.com/content/dam/VCOM/regional/lac/united-states/sites/commercial-solutions/global-insights/visa-insights-mexico-digital-payment-adoption.pdf
  • Financing Improves a Community's Quality of Life: Atrato - Mexico Business News. https://mexicobusiness.news/talent/news/financing-improves-communitys-quality-life-atrato
  • Mexico Embedded Finance Business Report 2024-2029: Focus on Financial Inclusion, Strategic Partnerships, and API-driven Integration Shaping the Landscape - ResearchAndMarkets.com. https://www.researchandmarkets.com/reports/5958734/mexico-embedded-finance-business-report-2024
  • Flexible Strategies for the Mexico-US Supply Chain - Pegasus Logistics Group. https://www.pegasuslogistics.com/blog/mexico-us-supply-chain
  • Mexico - Market Challenges - International Trade Administration. https://www.trade.gov/country-commercial-guides/mexico-market-challenges
  • Mexico - eCommerce - International Trade Administration. https://www.trade.gov/country-commercial-guides/mexico-ecommerce
  • The Coexistence of Nanostores within the Retail Landscape: A Spatial Statistical Study for Mexico City - MDPI. https://www.mdpi.com/2673-7418/3/4/38
  • Mexico as a supply chain reshoring leader | S&P Global. https://www.spglobal.com/marketintelligence/en/mi/research-analysis/mexico-supply-chain-reshoring-leader-aug-2023.html
  • Best Practices to Streamline Supply Chains in Mexico - tacna. https://www.tacna.net/blog/supply-chain-mexico/
  • The Year in Retail 2024: New Tech and Growing Regulatory Focus - Mexico Business News. https://mexicobusiness.news/retail/news/year-retail-2024-new-tech-and-growing-regulatory-focus
  • IoT, AI, Real-Time Visibility to Enhance Mexico's Supply Chains - Mexico Business News. https://mexicobusiness.news/logistics/news/iot-ai-real-time-visibility-enhance-mexicos-supply-chains