GLOBAL ECONOMY

Corporate Wal-Mart 'bodegas' taking hold in Mexico, extending big-box retailer's reach

 Shoppers enter and exit a Wal-Mart, in Walpole, Mass., Wednesday, May 11, 2005.  Wal-Mart Stores Inc. reported a 14 percent increase in first-quarter earnings Thursday, May 12, 2005,  but the results missed Wall Street estimates. The world's largest retailer also warned that second-quarter results would likely be lower than expected.  (AP Photo/Steven Senne)

Shoppers enter and exit a Wal-Mart, in Walpole, Mass., Wednesday, May 11, 2005. Wal-Mart Stores Inc. reported a 14 percent increase in first-quarter earnings Thursday, May 12, 2005, but the results missed Wall Street estimates. The world's largest retailer also warned that second-quarter results would likely be lower than expected. (AP Photo/Steven Senne)  ((AP Photo/Steven Senne))

Wal-Mart’s biggest competitor in Mexico is not a rival big-box retailer, but the ubiquitous street corner shops, or "bodegas," and markets that dot the country and make more than half of all grocery sales in the country.

To expand its hold in Mexico – Wal-Mart already accounts for more than one-fifth of all grocery sales in the country – the Bentonville, Ark., based company began a mini-grocer format called Bodega Aurrerá Express in 2008. (Aurrerá was a supermarket chain that Wal-Mart bought in 2001.)

The move was not only meant to compete with the country’s mom-and-pop grocery stores but also to fit into congested cities and towns as well as to “rejuvenate” the Mexican business, which accounts for 20 percent of Wal-Mart’s international sales. The Bodega Aurrerá Express stores average 2,690 square feet of selling space – or about 3 percent of the area needed to open a Wal-Mart Supercenter.

While Bodega Aurrerá Express – whose mascot is Mamá Lucha, a pudgy cartoon homemaker garbed as a masked wrestler who does battle with high prices – has had some growing pains, the chain has really taken hold in the last 12 months throughout Mexico, where it has expanded by 12 percent over 2013 and far outpaced the growth of its bigger name commercial sibling. 

Wal-Mart executives realized that many of the brand's customers in Mexico fit somewhere between middle-class and poor in terms of income bracket – making both cheap pricing and close proximity important priorities.  

“We’re concerned about how to reach the low-income segment,” Cristian Barrientos, head of the Bodega Aurrerá format in Wal-Mart de México, told the Wall Street Journal. “Most of the mouths are concentrated there.”

While more traditional bodegas and street vendors still have a firm grip on a big share of the Mexican market, as well as in the rest of Latin America, there are indications that corporate players are having success with these smaller venues. 

Big supermarket chains such as Grupo Pão de Açucar and Carrefour have both opened stores of about the same size as Bodega Aurrerá Express in Brazil and have gained popularity there. 

Even in the U.S., Wal-Mart’s approximately 500 smaller-format Neighborhood Markets posted a 5.5 percent sales increase in the third quarter of 2014, compared to only 0.5 percent gained by Wal-Mart proper during that same time.

The success of Bodega Aurrerá Express in Mexico comes after years of bad press for Wal-Mart in the wake of revelations in 2012 that local company officials had authorized millions of dollars in bribes to speed up building permits and to gain other favors.

The Associated Press contributed to this report.

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