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Wal-Mart is Changing Mexico′s Retail Marketplace

Are you planning a vacation or trip to Mexico? Don't worry about forgetting something, while you're there, you can shop at a local Wal-Mart. As Mexico's largest private employer, Wal-Mart has nearly 150,000 employees. Just as its success changed many business practices in America, Wal-Mart is changing Mexico's retail marketplace, too.

As of January 2006, Wal-Mart had over 783 supermarkets, supercenters, Sam's Club, and even restaurants. Wal-Mart Mexico now boasts of 948 stores in 158 cities. Heck, there are even have taxis lined up outside of some Wal-Mart stores waiting to take shoppers back home or to their resort hotel, just like an airport!

Wal-Mart now sells about 30% of all of the food that is sold in Mexican supermarkets, and 50% of it's Mexican sales are food products. Just as Wal-Mart transformed much of the retail market place in the U.S., it is having the same effect in Mexico.

In cities and small towns across America, many mom-and-pop type of retail stores have closed or had to remake themselves upon the arrival of Wal-Mart down the street, or in the town down the road. Many small-scale farmers can't meet the standards that Wal-Mart sets. They don't participate in the economic boom that the giant retailer can bring to suppliers.

Other supermarkets in Mexico were forced to expand and many now have anchor stores in shopping centers and malls. They, too, have had to update their operations to remain competitive. Small farmers who used to sell to local supermarkets are now being cut out of many parts of the food supply process for these large chains as well as Wal-Mart.

According to a recent press release "two-thirds of Mexico's population has less than 20% of the country's income." In the past, large stores haven't catered to this segment of the population because they are so poor. There has been a recent explosion of activity as retailers now want to court this segment of the marketplace since it represents such a significant part of the population.

Wal-Mart has a no-frills supermarket named Aurrera. They also have a new bank, Banco Adelante. Both were formed to target consumers who are in lower income brackets and the working class neighborhoods in Mexico. While Wal-Mart has found success in America and Mexico, their efforts have failed in German and South Korea. Their stores in Japan and the United Kingdom aren't doing as well as Mexico or the U.S. either.

"The Wal-Mart model is not universally appreciated. Mexico is still their only international success," said Indiana University Professor James Biles, who specializes in economic geography. Perhaps Wal-Mart will not take over the world. What do you think?


Source: associatedcontent.com

Publication date: 9/17/2007


 


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