Almost 28 years old, Baja Duty Free, which has 9 locations along the Southern Border, has faced peaks and valleys. 2017 proved to be a challenging year as the political climate between the two countries garnered a feeling of unease. Consumers were facing more border checks and increased security at Customs, which led to previously crowded shops now suffering a drop in sales.
The political climate was not the only factor. Also the devaluation of the Mexican Peso, combined with competition on both sides of the border from the domestic market – particularly the big-box stores – made for a tough market.
Another reason for a brighter 2018 is the successful collaboration with global spirits leader Diageo. Diageo opened a new shop-in-shop inside the Baja Duty Free store at one of the San Ysidro land port of entry, which is one of the busiest land border crossings in the world.
The renovation, led by retail-focused design and production agency, BLOOMMIAMI, created a contemporary environment that features Diageo’s flagship brands such as Johnnie Walker, Buchanan’s, Baileys and Don Julio. The modern space is engaging and interactive. It makes such a big impact, and had contributed to an increased in sales. There is a permanent hostess always in the area promoting the brands. The customers enjoy having more of a collaborative experience as the promotions are presented via a tasting bar and iPads, all allowing for better interactions with the brands.
As the concept has worked positively, Diageo is planning on opening a second store-in-store concept in collaboration with Baja Duty Free in early 2018 in the area of Calexico, California.
Although a small percentage of Baja Duty Free’s customer base is made up of millennials, the core customer is more mature, which differentiates land borders versus airports.
The Southern Border stores are different from the airports: they don’t deal as much with people coming from different countries, in terms of tourists. A lot of the people that cross the border here are commuters – people that come to the United States because they work in the United States, they go to school or they bring their kids to school, so their daily activities take place in the United States. Then, at the end of the day, they go back to their home, which is on the Mexican side.
As a result, Baja Duty Free has to execute its marketing program in the same manner. The market is so broad, you have young people on their phones, but also have a big percentage that is older and more mature. In terms of advertisement, it is important to just keep sending out the message. There’s a loyalty program that 90% of customer base belongs to. Baja Duty Free believes a mix of traditional advertising, loyalty programs, plus social media apps, is a combination that works for its target audience.
As Mexico heads into an election year in July 2018, there is always room for uncertainty. However, Baja Duty Free continues to barrel through it all with its renovations, corporate changes and brand awareness, possibly heading towards a peak year in 2018.