A manicure seems like a small thing. At Liverpool, it is part of a bigger plan to keep shoppers walking through the doors.
The Mexico City company, formally known as El Puerto de Liverpool, is the country's largest department-store operator. It runs 125 department stores, 30 malls, and 196 Suburbia stores that sell affordable clothing.
Liverpool needs every trick right now. Mexico's economy is growing slowly, and jobs are not showing up the way people hoped.
Weak hiring and cautious shoppers have hit Liverpool's stores and malls. Walmart de Mexico, the country's largest private employer, reported weaker-than-expected consumer spending last quarter.
Alsea, which runs Starbucks in Mexico, cut its forecast on soft demand, and El Palacio de Hierro said shoppers are being more selective. Liverpool feels the pinch as well, and it has scaled back corporate hiring and left open jobs unfilled.
Suburbia, its value-priced chain, took the hardest hit last quarter because the World Cup kept people away from stores and cooled clothing demand. The namesake Liverpool department stores slightly outperformed the category.
"We're preparing to continue operating in the environment we're in today through the rest of the year," Chief Financial Officer Gonzalo Gallegos said.
Management is not just waiting for better times. It is changing what a store visit is for.
"The stores are not just places where merchandise is bought and sold; we have turned them into experience and distribution centers," Gallegos said.
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That means nail and barber services at locations that already have restaurants and beauty bars, plus filling most online clothing and accessory orders from store inventories instead of one main warehouse.
That speed matters when you are fighting Amazon.com and MercadoLibre for the same customers.
The bigger shift is finance. Liverpool has traditionally offered credit for store purchases, and now it sees room to grow in personal loans and insurance.
This month it signed a deal with Corp. Actinver, a Mexican financial firm, for a savings and investment account.
Someone who keeps a 20,000-peso balance, about $1,200, earns interest plus Liverpool cashback, and gets Actinver investment options, a debit card, and wire transfers.
Liverpool is not first, but it brings a big chain of stores and a customer base that already trusts it with credit.
The financial business is paying off.
Finance supplied about 10% of Liverpool's 57 billion pesos in revenue last quarter. Retail supplied 88%, and real estate brought in about 2%.
Real estate is also marked for growth. Liverpool's shopping centers house more than 2,400 tenants, and the company recently bought the remaining stakes in the Galerias Metepec mall, a move Gallegos says should lift future revenue.
He also thinks the stock is undervalued. Options include forming a Fibra, a Mexican real estate investment trust, or spinning off certain holdings, though nothing has been decided yet.
The concern is credit risk. Gallegos says management is comfortable with the level of non-performing loans.
Analyst Alejandro Fuchs of Itaú BBA calls the credit business a key strength.
"Liverpool is good at giving credit; they understand credit," he says, and he thinks its interest-free installment plans should help drive sales.
The market is not cheering yet. For investors, Liverpool is showing how to handle a rough patch without waiting for the economy to fix itself.
It is pushing into lending, property, and in-store services, and it still owns a nearly half stake in Nordstrom, a US department-store chain, which gives it exposure beyond Mexico.
Credit is the fastest-growing piece of the business, which is why the 4.7% loan-loss rate matters. If Liverpool keeps that under control, it can keep growing even while Mexico's economy sputters.
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