| | |  Business News 
Small is Good for Mexican Wal-Mart
 Cyntia Barrera Diaz - Reuters
go to original
March 01, 2010
Mexico City - Wal-Mart Stores Inc (WMT.N) is betting on a tiny supermarket format to spearhead expansion in Mexico, where it will also bolster its bank unit, but it isn't expected to aggressively grow in Central America.
Wal-Mart de Mexico (WALMEXV.MX), or Walmex, said last week its Bodega Aurrera Express stores - located in densely populated urban areas with heavy foot traffic - will account for two-thirds of store expansion this year, but executives are eager to tweak the format to attract even more clients.
"Walmex's 2010 investment plan reveals that the company has decided to fine tune its retail platform before it pursues faster growth," UBS analyst Gustavo Piras Oliveira said in a report.
The brainchild of recently appointed Walmex Chief Executive Scot Rank, the format combines the easy access of mom-and-pop corner stores with low prices that convenience outlets can't match. It was launched last year.
The company has said it will improve logistics, marketing and development of proprietary cheap brands to increase traffic to the stores.
"Management feels the format needs to be further improved for them to accelerate its sales floor expansion," said Scotia Capital in a report.
Soriana (SORIANAB.MX), Mexico's No. 2 supermarket chain, is betting heavily on its own new format, which is aimed at small towns and which analysts see as a response to Walmex's Bodega formats.
Soriana Express could account for about half of the 40 store openings planned by Soriana this year, Morgan Stanley said in a report.
Walmex, which also has restaurants and clothing stores, aims to open a total of 300 outlets in Mexico this year. It will invest 12.5 billion pesos in store and distribution center openings and use some money to remodel older units too.
BARE-BONES SERVICES
Walmex's bank, launched in 2008 and the first such operation for parent Wal-Mart Stores in the world, is another priority for the company this year after a slow start.
The bank did not expand at the rate it was expected to upon launch and the leadership of the unit has been reshuffled, bringing a savvy Citibank (C.N) executive on board.
With a more visible marketing and brand awareness campaign in place, Walmex now expects to open at least 165 bank offices in 2010.
Rank told reporters last week that Banco Walmart, which offers bare-bones savings and withdrawal services at in-store branches and supermarket cashiers, plans to issue credit cards to customers in the first quarter.
CENTAM ON THE BACKBURNER
Walmex recently bought 519 stores in Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica from its parent but it could take at least a year before growth in Central America takes off.
"Central America is a slow process, a digestive one," Wal-Mart's Latin America boss Eduardo Solorzano told Reuters this week. "Very probably, this will be a year of transition."
Wal-Mart may try to export another of its successful small store formats - Mi Bodega Aurrera - to Central America, Solorzano added.
This year, only 30 news stores will open in Central America but Walmex will start consolidating the regional results next month.
"This is an important challenge in the coming months," said IXE analyst Raquel Moscoso. "The region offers great potential and opens an opportunity for growth as there are no multi-format competitors in the area, giving Wal-Mart a very important competitive advantage."
(Editing by Richard Chang)
|
|
| |
Vallarta Weddings
Tell a Friend
Site Map
Print this Page
Email Us