WAL-MART IN MEXICO

Wal-Mart in Mexico

Wal-Mart in Mexico

Introduction

Wal-Mart (Mexico) is one of the principal operatives of retail chains in Mexico. “Wal-Mart de Mexico” operates the following commercial chains by its subsidiaries: Bodega Aurrera discount department stores; Aurrera self-service stores selling general merchandise clothing, and goods; Wal-Mart super center hypermarkets; Superama supermarkets; Vips restaurants; Suburbia department stores specializing in clothing; and Club Aurrera-Sam's Club members-only wholesale outlets. Wal-Mart (Mexico) is busy in real estate ventures too, the making of specialized support services to the group companies and the management of real estate companies.

Discussion

Wal-Mart de Mexico's private label products include Great Value (standard), Aurrera (food), Equate (beauty and hygiene), Spring Valley, and Extra Special (gourmet). The company works with over 170 private label suppliers, mostly mid-sized companies, and offers over 1,000 private label products across every category. Though, private label products is not a focus strategy for the company, but more of a complementary tool. For its Bodega Aurrera store format it has adapted products for the low-income segment with smaller packages containing enough product to last 15 days. In Mexico the most frequent payroll method is “quincenas” , a 15-day period , or weekly payments for lower-income consumers. As a result the company has adapted to this condition, knowing that its customers do not have much money to spend. Profit margins are higher than those from established brands as private label products do not see significant investments in advertising and packaging, however it is careful to develop products perceived as offering the same or added value. It is good to observe that several products are leading sales in the market, for example, its private label nail polish. (www.walmartmexico.com)

SWOT Analysis

Walmex works via compound store arrangements, with hypermarkets, discount stores, supermarkets, apparel stores, and clubs. Every Walmex store set-ups presents diverse value offers to magnetize assorted client sectors. This strategy helps Walmex to serve a broad base of customers. However, intense competition could lead to price wars and pressurize the company's margins. (Zellner, 2007)

Strengths

Weaknesses

· Multiple store formats

· Weak performance of the financial services segment

· Debt free capital structure

· Strong revenue growth

Opportunities

Threats

· Improving operational efficiency

· Intense competition

· Expanding market presence

· Slow growth rate of the Mexican economy

· Growing preference to shop online

· Foreign exchange rate fluctuation

Revenue Analysis

Walmex generates revenues through three business segments: self-service (95.3% of the total revenues in FY2011), financial services (0.1%), and other (4.6%). During FY2011, the self-service segment recorded revenues of MXN363,011.6 million (approximately $29,295 million), an increase of 13.5% over FY2010. In FY2011, profits of MXN470.9 million (about $38 million) earned by the monetary assistance section, corresponding to the revenues of MXN181.8 million ($14.7 million) in FY2010. Central America accounted for 13% of the total revenues in FY2011. Revenues from Central America reached MXN49,674.4 million (about $4,008.7 million) in 2011, an boost of 26.8% in 2010. (www.walmartmexico.com)

The Objectives and/or Issues Of Wal-Mart México

The foremost issue faced by Wal-Mart México is the existing fierce Competition between retailers. Modern grocery retailers cover almost every category in retailing with ...