wal-mart in Mexico

Topics: Department store, Wal-Mart, Retailing Pages: 2 (429 words) Published: October 17, 2013
Walmart in Mexico

Entry Mode: 1991 joint-venture with Grupo Cifra SA de CV (Cifra), a well-established retail chain in Mexico.

1997 Wal-Mart consolidated its position in Mexico after it acquired a major stake of 62% in Cifra.

2001 it controlled nearly half of the Mexican retail market. 2003 Wal-Mex became Mexico’s largest private employer.

Success factors:
1. entry through a joint venture with an established local player. Cifra provided Wal-Mart with the necessary understanding of the Mexican market and helped it fine-tune its strategies to suit the Mexican customer.

2. Low price for customers:
Nearly 70% of the population in Mexico lived below the poverty line and they depended largely on informal street shops for cheap food and clothing. The low-price strategy suited the socio-economic conditions of Mexicans, which led to the company's immediate acceptance and quick growth. Through its low-price strategy, Walmex was able to strategically penetrate into markets which otherwise depended on unorganized vendors.

3. Walmex into banking in 2007.(see details below)

4. Positive image: During its initial years, Walmex published price comparisons showing how much cheaper its prices were compared to other retailers.

When Mexico experienced an economic setback in 1994, other foreign retailers like Sears Roebuck & Co. and Kmart sold out their stakes and quit the country, but Wal-Mart stayed on. During this time, the company established and improved its market share in Mexico's retail sector and that indicated its own confidence in the Mexican economy's long run prospects.

5. target different socioeconomic groups with its diverse chains. Its Bodega Aurrera supermarkets, for example, serve lower-income areas; the more upscale Superama supermarkets offer items such as imported teas along with every-day produce. Wal-Mart also acquired Cifra's Suburbia department stores for the mid-brow...
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