Wal-Mart in Mexico Competes Against Small Vendors with New Chain of Mini-Grocers Amy Guthrie - WSJ.com
go to original December 31, 2014

LA GUADALUPANA - Wal-Mart Stores Inc. is taking on its biggest competition of all in Mexico: the street vendors, traditional markets and small stores that account for over half of grocery sales in the country.

The attack comes as Wal-Mart's annual sales in Mexico have stagnated after years of standout growth. The Bentonville, Ark., company says it needs to "rejuvenate" the Mexican business, which accounts for 20% of Wal-Mart's international sales, making Mexico one of the retailer's biggest global markets.

Yet finding new sources of growth isn't easy in a country where Wal-Mart has already conquered more than a fifth of all grocery sales, nearly double the market share of its next three big chain-store competitors combined, according to HSBC data.

Space for supermarkets, not to mention big-box stores, is hard to come by in Mexico's congested towns and cities, where consumers tend to shop in family-owned shops or markets. Across Latin America, these small grocers and markets feed around half the population, the majority of whom are poor.

Wal-Mart's solution for Mexico is a mini-grocer format called Bodega Aurrera Express, which the company launched in 2008. The store looks like an oversize mom-and-pop shop, with products stacked high against the walls. Bodega Aurrera's mascot is "Mama Lucha," a chubby cartoon homemaker dressed like a masked wrestler who fights for the best prices.

After some initial growing pains, sales at Bodega Aurrera Express stores open more than 12 months have exploded this year, expanding by 12% versus 2013 while Wal-Mart's broader same-store sales haven't gained at all in Mexico.

Wal-Mart has nearly 900 of the mini-grocers open.

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