MEXICO – Wal-Mart, the world’s largest retailer, currently operates nearly 900 successful ultra-small format stores, and there is a good chance you haven’t ever heard of them.
The Wall Street Journal (WSJ) reports that Wal-Mart is fighting against the street vendors, traditional markets and small stores in Mexico that account for over half of the grocery sales in that country with its own mini-grocer format called Bodega Aurrera Express, which the company launched in 2008.
These stores average around 2,690 square feet of selling space and resemble an oversized mom & pop style store. To put that into perspective, these stores account for just about 3% of the space needed to open a Wal-Mart Supercenter and 7% of the space for Wal-Mart’s Neighborhood Market stores that are proving successful in the United States.
This new format and aggressive strategy came after Wal-Mart’s annual sales in Mexico began to stagnate after years of growth. The retailer hoped they would rejuvenate the Mexican business, which makes up 20% of Wal-Mart’s international sales, according to WSJ.
According to HSBC data, Wal-Mart already controls more than a fifth of all grocery sales in Mexico. That is almost double the market share of its next three big chain-store rivals combined.
After some initial struggle, the sales at Bodega Aurrera Express stores that have been open longer than 12 months have taken off this year. WSJ reports that they saw 12% growth over 2013 for this format versus Wal-Mart’s broader same-store sales, which did not gain at all.
In terms of the U.S., Wal-Mart also saw increases from its roughly 500 Neighborhood Market stores last quarter. As we previously reported, this format posted 5.5% sales increases for the quarter versus the 0.5% increase for Wal-Mart’s total sales.
It will certainly be interesting to see if the successes of these small format stores will affect Wal-Mart’s overall strategy in the U.S. market and abroad.
