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MEXICO CITY-Adapting to Mexican consumer habits has also been an ongoing lesson for foreign retailers.

Price clubs, for example, which reject credit cards in the U.S., found that they couldn't maintain that policy in Mexico because so many Mexicans use credit cards to manage their cash flow on basic purchases.

In the food section, Mexicans still prefer produce and meat displayed as though they were in the local market. Both Wal-Mart and Kmart offer extensive fresh food sections. Kmart goes even further, displaying whole chickens stacked at the butcher's counter.

"When consumers see pre-packed food, they don't think that it's fresh," said Juan Suberville, CEO, Kmart Mexico.

Many Mexicans, including the upper classes, still buy fresh meat, fresh produce and tortillas at little stores in the neighborhood.

Hypermarkets, both the U.S. imports and their Mexican competitors, have now incorporated small tortillerias to offer corner store freshness.

Mexicans tend to shop as a family as part of a weekend's entertainment so wide aisles are a necessity, said Jennifer Urich, a strategic planner at J. Walter Thompson Mexico.

Retailers also have to accommodate for low car-ownership by placing their stores close to residential areas. If prices are good, Mexicans will borrow cars or take public transportation to a faraway store, but they won't bother unless enticed, perhaps by a circular listing promotions dropped off at the home.

As JWT's Ms. Urich noted, "The lower and working classes tend to be intimidated by `nice' stores and believe that the prices are higher."

Capturing that lower-income market will become increasingly important as the hypermarket chains expand and new entrants put down stakes. Sales in retail chains have grown more slowly than population since 1992, and sales expansion is expected to reach no more than 1.9% this year, according to A.C. Nielsen Co. Retailers will have to look to growth by attracting the estimated 50% to 75% of consumer purchases made outside formal retail chains.

Even though economic growth may pick up next year, dozens of new stores will have to woo lower-income shoppers from street vendors, local markets and neighborhood stores.

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