by
John C. Cross, Ph.D.
Certainly, what made street vending the preferred mode of commercialization in the premodern world is usually what makes it a viable enterprise in the modern world: the fact that it takes advantage of public space and forgoes the security of fixed site construction, which reduces capital investment costs in the form of rent. On the other hand, for reasons to be discussed further below, street vending usually implies a greater investment of labor relative to inventory and often implies size limits, both factors leading to a tendency towards low inventory. Yet, even here there are advantages in terms of flexible market response that, particularly where capital is relatively more scarce than labor, helps to explain the relative advantages that street vendors enjoy even in the modern world.
Street vending, because of its location in public space, responds to different legal and market situations than do fixed retail sites. Legally, in many areas of the world street vending exists either in opposition to local regulations, or on the margins of a regulatory system that tends to be written primarily with fixed retail operations in mind that are easier to regulate (and thus preferable to street vending from the stand point of regulators). For this reason, the exact nature and variety of street vending will tend to vary according to different localities. In terms of market interaction, the location of a business in public space also differentiates such a business from a fixed location retail operation in a number of respects. Inventory must be watched more carefully to avoid theft, and must be taken down and stored in another location at the end of the day. Thus, inventory control tends to be more labor-intensive and greater trust needs to be placed in employees (explaining why street vendors would prefer to use relatives when available). Both of these factors tend to limit growth of individual enterprises to the availability of household members or close relatives or acquaintances who can be trusted or supervised closely. But the low inventory also allows vendors to respond rapidly to changes in consumer demand, switching inventory to what may be seasonally available or in demand.
Street vendors are also ideally suited to take advantage of the þcasualþ buyer or pedestrian, since they are located on the right-of-way. Not only are their wares immediately viewable (although they do not have the facilities to rival the showy þdisplayþ windows of department stores), the pedestrian can enquire about them and subsequently purchase them without the inconvenience of stepping out of his or her way into en enclosed store where they may feel more psychologically intimidated (being on private property and thus needing a þreason to be thereþ) than they would on the street. Indeed, the illusion of public space that shopping malls and large departments stores deliberately attempt to create in order to make customers feel comfortable is provided quite naturally on the street, where the client feels as þat homeþ as the vendor.
This number represents, moreover, a large variety of different situations and retail strategies. For example, members of various associations of the blind were allotted permits to set up metal kiosks at strategic intersections throughout the city in the 1970s. Given their locations, they were ideal sites for taco stands, and the blind permit holders, among others who received permits through more dubious circumstances, soon leased them to others. Some are even run as a chain of mini- restaurants. At the same time, street vending re-emerged in the old areas of the city center in the working class neighborhoods of þTepitoþ and þLa Mercedþ and soon invaded the intervening streets behind the National Palace, spreading out like a fungus growing out of control.
While street vending is often seen merely as an activity that captures the interest of passing pedestrian by providing cheap and flashy or necessary items, such as cigarettes, snacks, etc., (and plenty of this exists in Mexico City as well) these downtown areas served as magnet market zones for the entire city. Vendors in La Merced, a wholesale district dating back 200 years, specialized in the sale of fresh foods, kitchen goods and branched out into economical clothes for the housewives who frequented the market. Tepitoþs fame dates back to the establishment there of the þsecond-hand goodsþ market in the last century, and was at times called the þthieves marketþ due to the fact that at times goods were separated from their first owners under dubious circumstances. It branched out into not only petty industry (reparation of the goods) but also the sale of contraband in periods of high tariffs, and therefore established itself as one of the key suppliers of electronic goods in the city. By 1990, close to 20,000 vendors worked in these central areas alone, and similar magnet markets existed in other areas of the city, although none as large or as important.
In these magnet markets the key to success was the concentration of similar products in the same area, although this may appear perverse from a competitive perspective. Thus, whole streets would be given over to the sale of leather jackets, others to fancy dresses, others to stereos and television sets, and yet others to electronic components. But this was a logical adaptation to the fact that, while no single stall offered a sufficient variety of goods to attract potential clients to them, and obviously none had the potential for mass advertising, collectively the vendors provided a large assortment of the specialized commodity in a competitive environment that allowed purchasers to browse and choose among the different offerents. In this situation, the emphasis was on low margins and rapid turnover, thus providing an effective attractant for clients to come from throughout the city if they wanted to find the best selection and price for these goods and creating durable þword of mouthþ advertising for the entire street and neighborhoods.
Following the period of street vendor repression in the late 60s, the city government began to allow a special kind of street market in residential areas, called the tianguis. The word, derived from the word for market in the Aztec language, came to signify a special form of rotating market which would operate in a circuit, setting up in a different neighborhood each day of the week. From an administrative perspective, it resolved many of the complaints that immediate neighbors had about vendors invading their street, because it reduced any inconvenience to only one day a week. But it was from a marketing perspective that the idea really took fruit.
By operating in this fashion, the tianguistas (as vendors in these markets are called) have the advantages both of a fixed market and of a mobile market. In effect, rather than just having a single market zone, they now had seven, since housewives could save up many purchases to be made from the tianguis. Plus, since they appear only once a week, they are always something of a novelty (rather than a store or market that is available constantly), while their regularity also meant that they could over time build up a clientele at each location. Many of these advantages only exist, however, to the extent that clients feel reasonably sure that they can anticipate lower prices in the tianguis than at other retail outlets, such as neighborhood stores or nearby markets. Thus, like the downtown magnet markets, tianguistas were better able to develop a market area if they could follow a high-turnover, low mark-up strategy--a strategy facilitated by their multiple sales locations. Also, as with the magnet markets, it was important to build the market up to include as many vendors that the neighborhood could support in order to attract clients from all over the neighborhood.
Because of both the need to build up and organize market zones as well as to negotiate with officials, almost all street vendors are members of associations of vendors that effectively manage market zones like corporations. Indeed, organization has been imposed by city officials themselves not only to facilitate the regulation of street vending but also to incorporate vendors into the ruling party (the Partido Revolucionario Institucional, or PRI). But as the growth of street vending itself attests, the organizations have been very successful in fomenting the growth of this activity even when this implied resisting numerous attempts by city officials to restrict them and even though some organizations have left the PRI to join opposition parties since 1988.
Marta and Temo both came from families where street vending had been practised occasionally as a way of making ends meet, but they both went into factory work in their youth. After marriage their combined income was barely enough to scratch out a living, and was reduced even further when Marta had to quit work to take care of their children, several of whom died due to their poverty. After working all week at the factory, Temo would spend Saturdayþs shining shoes downtown, while Marta looked for odd jobs washing clothes and cleaning. Originally living in a two-room shack covered with a laminated roof that absorbed 40% of their income, they were forced to move into a 3 meter square room that they had to share with three of their children over the next 6 years.
It was Marta who, inspired by a friend who was selling there, began selling avocados in front of the tortilla mill. Temo was opposed to the idea, seeing it as both demeaning and dangerous, since in the early 60s street vending of any form was strictly banned. But on her first day, working only 4 hours, she was able to earn over 25 pesos--several times the minimum wage of the time, and he soon changed his mind.
Since the street vendor ban was rigorously enforced by a special market patrol, it was necessary at this time to work early in the morning before the first patrols. Thus, a typical selling day would be from 5:30 to 7:30 in the morning. This is why the market grew outside a tortilla mill, where housewives would congregate early in the morning to buy the breakfast tortillas. Despite their care, the market was broken up several times during this period and Marta had to run, leaving her possessions behind. On one occasion, a neighbor helped to hide her from the police and on another the owner of a furniture store secured her money and merchandise that she had had to leave in the street. On yet another, she left her children behind, and they were found several hours later sobbing and crying in a hollow tree stump.
Later, the police changed their tactics and stopped trying to arrest the vendors. Instead, they simply confiscated the merchandise they were selling, which was more effective in damaging their livelihood.
Because of the early hours, Temo and Marta would often travel to the wholesale district in bus at 3:30 in the morning, returning with their merchandise again by bus. Crime was often a problem, since criminals knew that merchants would be going into the area with cash and returning with goods.
But despite their early hours and the dangers and discomforts of their trade, their economic situation immediately and radically improved. Selling seasonal vegetables and fruits and toys in the Christmas season, Marta and Temo were able to make sure they had the best goods by going buying as early as possible and always paying cash.
In 1966 the Governor who had ruled Mexico City for 14 years--Ernesto P. Uruchurtu, was finally pushed out of office. When he left his policy of repressing street vending was replaced by a much milder regime, and the vendors at Martaþs market approached Celia Torres, then a young politician in the PRI, to get her support. In negotiations with officials it was agreed to change the market into a tianguis, meaning the vendors had to exchange their stable location for a circuit.
The change was arduous but beneficial. On the negative side, they had to give up the market location they had built up over the last few years and build up new locations. Furthermore, they were initially constantly relocated because of neighborhood complaints in some cases or, more often, the complaints of the established market vendors. In some cases, they were assigned areas that were virtually uninhabited and had to petition for relocation themselves. There were many days, indeed, when they would spend the whole time looking at each other rather than receiving any real clients.
But, as they began to establish themselves in viable market areas and, more importantly, began to attract the business of local residents in each area, business began to take off. One change that Temo and Marta went through during this period was a change in product line. While seasonal vegetables and toys during the Christmas season made sense in their fixed location, they now saw the need for the new tianguis to have high level staple goods that could attract customers. Also, as noted above, they realized that the rotating market system provided an excellent opportunity to provide these goods at reasonable prices by adopting a lower mark-up and more rapid turnover than fixed neighborhood stores could provide. Finally, their new legality meant that they could afford to invest more money in their merchandise, since they no longer faced the threat of arrest or confiscation. As a result, they switched from vegetables and toys to the sale of fish.
Selling fish represented a substantial risk in many ways. First, it is far more expensive to purchase in bulk than vegetables and far less durable than toys. Secondly, it required substantial labor costs in terms of supply, transportation and storage. As noted above, the legality of the new markets and their access to multiple market zones over the course of the week helped substantially to alleviate these risks by offering rapid turnover and stable market patterns. Secondarily, the new legality and resultant growth of the markets in terms of both numbers of vendors and quantity of produce also spurred the growth of a secondary service sector tied to the market of truck drivers and þdiablerosþ who provide transport, storage and þset-upþ services for a fee. Still, Temo and Marta had to spend inordinate amounts of time with their growing business, getting up in the early hours to go to the fish wholesale markets to get the freshest fish as they were trucked in from the coast, and then arranging for transport back to their market areas. (Later, however, they purchased two trucks of their own so that they could have more control over transport and storage of their highly perishable goods.) While they might grab a few hours of sleep after this, they then had to set up and occupy their stalls before 9 a.m., when vacant stall spaces were usually assigned to occasional vendors in order to make sure that the market was always full.
But selling fish became a bonanza for them, since it was a product that was only partially available, despite its cheap cost relative to chicken and beef, in the working class neighborhoods that the market serviced. Further, it is a product that is specifically prescribed by Catholic tradition on Fridays and during the holy week, thus providing a regular peak in sales that could be anticipated. Holy week, indeed, became the most hectic and profitable time of the year for them when they would turn over, on occasion, over a thousand dollars a day. Marta recounts one early morning on a recent Holy Week when she was held up at gunpoint near the wholesale market with $3,000 hidden in her socks, an area that the thieves did not think to investigate, thus leaving with the equivalent of a little less than a hundred paltry dollars.
Despite the fact that they now had permits and were not subject to constant harassment, the street markets continued to be informal in all other respects. Thus, growth was limited to the availability of family labor and the labor of a few trusted relatives. Furthermore, growth within the market system itself was limited by regulatory rules that stated that vendors could only have a single stall space in each circuit. Vendors got around this rule mostly by using þprestanombresþ (relatives or friends who would agree to put their name down as the nominal owner), but this was then limited by the first factor. Naturally, as husband and wife, Temo and Marta were able to double their stall space in the market and then, as their children grew and thus increased the available labor and supply of þnamesþ, they spread out into other markets. Thus, they began to operate two or three stalls a day as their five children grew up.
They also began to þdiversifyþ into other areas, although none of them particularly successful. In terms of human capital, the eldest two children were supported through university until they received engineering degrees, but neither could get a job that came near to approaching the level of earnings they received at the stall. While the eldest daughter, Elsa, did work for several years as a quality control inspector in a textile factory she was given no opportunity for advancement and a salary that often fell below the wages of manual workers.
Another attempt at diversification was the purchase of a stall in a fixed market near their home. This, however, was a dismal failure, since sales were so low that it wasnþt cost effective to sell there every day, and they opened up only two days a week as if it were a tianguis site. Elsa, who ended up working there most of the time, paradoxically blamed the failure of the market on a close-by tianguis that took away their clients.
A final attempt at diversification was into urban transport, when they bought a mini-bus with a permit to work a route from their suburb to the city center. Again, like their other diversification ventures, this was managed by one of their sons but it was again not cost effective, since the earnings were far lower than their accustomed earnings from fish sales.
Most of this diversification occurred fairly late in their career, as their children grew up. Before that time, they had invested some of their income in real estate (purchasing a few lots in subdivisions in different areas of the country and for their home) and in building their own house, and on somewhat extravagant touring of the country. By any rational standard, a lot of their money was also wasted by Temo and as the children grew they made sure that Marta took control of finances out of his hands.
In terms of savings, the primary systems used were again informal--the þtandaþ, or rotating credit association (in which a group of people agree to make set payments on a daily, weekly or monthly basis and take turns receiving the entire lump payment--effectively given an interest free loan to those who receive the first payments and an interest-less savings account for those at the end), and a savings plan offered by the association itself. Both of these were short term, however, and generally focused not on þsavingsþ as much as on reducing income on a daily basis in exchange for receiving an occasional lump sum--thus compelling oneself to defer consumption. The lump sum could then be used for a major purchase (refrigerator, television set, or as partial payment for a vehicle) or for a major social event (marriage, important birthdays, religious ceremonies) that had to be marked by a festival to which local dignitaries could be invited, thus reinforcing the position of the family in the market and other social realms. Only later did they begin to use the formal banking system, but largely as a secondary system for long- term savings.
In a certain sense, many of these decisions may seem wasteful from a profit-oriented perspective, but it should be kept in mind that distrust of formal financial institutions and the permit procedures (and purported corruption) involved in setting up a formal commercial business, as well as the radically lower anticipated earnings from such things as a formal business or savings account, limited their investment options largely to what they could work with directly with their own labor. Beyond these considerations it is also necessary to take into account that, while their sale of fish required significant skills and knowledge that would possibly confound Lee Iacocca, they were very different skills from those which would be required in order to open up a formal store under rational accounting procedures and responding directly to the regulatory and fiscal regimen of the state. In this light, it again makes sense that such attempts at diversification in these directions took place as their children--far better educated than themselves--grew into young adulthood.
Furthermore, it must be kept in mind that while Temo and Marta are certainly entrepreneurs in the sense of developing their own business, their basic logic was not directed towards expansion as much as towards providing the needs of their family. Thus, as their children have grown older that have systematically provided them with housing out of their earnings and allowed them to take over more and more responsibilities for specific market stalls until they are able to take them over for themselves.
Indeed, the education of their eldest children and the diversification into other areas were only themselves responses to the desire to provide each of their children with their own economic base, although the children have largely returned to street selling because of the higher earning potential. Thus, when the eldest son married, he was allowed to take over several stalls for his new family, and when the youngest daughter was married she was likewise provisioned. Purchasing is still done in common, however, giving the family the flavor of a small franchise network. As a result, the core business carried out by Temo and Marta has over the years declined as their children have graduated from helpers to semi- independent businesspeople.
In recent years sales have declined slightly due to the growth of the tianguis system itself, which now incorporates over 1,100 market sites and almost 180,000 stalls (or an average of 157 markets and 27,000 stalls a day), as well as the increase of both small stores and large new multinational-based super stores. In their specific markets other vendors have also begun to sell fish, thus increasing competition for them specifically. Finally, the cholera scare of the early 1990s was inexplicably tied by the media to sea products, which led many people to veer away from purchasing them. Still, as Marta complains about her poverty, she still stuffs bills equivalent to hundreds of dollars into her bra by the end of the day.
Thus, street vending, like other informal economic activities, tends to be more important under situations in which capital is relatively scarce and labor is relatively high. This is evident from even a cursory glance at an active street market where, each stall being run by one or two individuals, the number of sellers often outnumbers the number of clients for long stretches of the day. Thus, a tianguis like that of Temo and Marta may have over 1,000 vendors who, between them, might retail the same value of goods as a modern supermarket.
While this may seem inefficient, again it is important to point out that labor-saving is not the point here since, on the one hand, the individual vendors are primarily concerned with simply earning a higher global income than they could earn in another setting and, on the other, their increased use of labor is offset by the overhead and inventory savings that they are able to effectuate. Indeed, the success of the tianguis and other forms of street vending in the face of ever increasing competition from þmodernþ retail outlets is in the final analysis the only proof a rational economist would need to see that they are indeed economically efficient and from that standpoint highly rational institutions.
But retailing in street markets also share certain similar problems with retailing in a formal setting. For example, there is usually an attempt to put similar goods together, rather than randomly distributing them throughout the market, so that clients can go to a specific section of the market to find an assortment of vendors selling the types of items they are interested in. While this is most obvious in the huge downtown markets, it is also apparent on a smaller scale (albeit to a lesser extent) in the neighborhood markets. The neighborhood markets, however, are much more careful in placing þkeyþ goods, such as meats, dairy products and other items that are everyday consumer items, at a central location as far away from entrances to the market as possible in much the same way that supermarkets have the annoying tendency to put milk and meats at the back of the store. From a retailing perspective the advantage is obvious. Just as in the supermarket, one is compelled to pass (and thus suggested to peruse) all manner of other items before getting to what one really came for, so in the street market one is forced to edge by stalls selling clothes, accessories, perfumes, magazines, flowers, and other assorted goods before finding the original object of attraction, by which time it is hoped that the client has seen something he or she also needs, or thinks he or she needs.
But there is another element to the street market which will always be missing from the comparatively rarefied atmosphere of the supermarket or department store, which is the carnival-like atmosphere of the enterprise. It would be hard to quantify the economic value of this atmosphere, but it certainly exists, since a conglomeration of humans tends to attract more humans and--between the promise of seeing new things or picking up an odd fancy or item for the house; of watching other people as they go by and perhaps chatting with a neighbor (or a favorite vendor and negotiating a discounted price); and of þdining outþ at one of the prepared food stands--the street market offers a multivaried set of sensual experiences that even the most sophisticated shopping mall can only dream of emulating (despite obvious attempts to do so). The modern shopping experience ultimately rests on the capacity of the client to justify his or her presence through an economic transition that is always psychologically and socially problematic for the individual. But, by its location in public space, the street market cannot demand any justification on the transients who pass through it. It must therefore remain primarily a social space within which economic transactions take place as if they were merely by-products of these social relations. As, in fact, all economic transactions truly are.
This atmosphere attracts not only the clients, but also the vendors themselves, and thus the social attraction of the street market become one of the þfringe benefitsþ of such an existence. While not all street vendors agree--some find it boring and degrading--I clearly remember a discussion I had with one of Temo and Martaþs sons in which he expressed the concern that the changing policies in Mexico City and the influx of foreign commercial capital associated with NAFTA may spell doom for the street markets. I told him that he was assured of many more years of income yet, but that wasnþt enough. "I want to be a tianguista forever," he told me. "I hope the tianguis never dies."