Walmart opens 134 stores in Mexico in 2019 marking biggest expansion in the past six years

Walmart opens 134 stores in Mexico in 2019 marking biggest expansion in the past six years
  • Walmart opens 134 new stores in Mexico in 2019 making it the country with the most Walmart stores after the U.S.
  • Most of these units are from the Bodega Aurrera family, including the smaller Bodega Express.
  • Banorte's analyst says further expansion can backfire on the retailer itself.
  • Walmart had already hit a record for new stores in 2011, launching 365 new stores in Mexico.

Last year, the number of Walmart stores in Mexico reached a total of 3,407, making it the country with the greatest number of stores for the chain (called Walmart de Mexico) after the United States. Walmart launched 134 new stores within 2019 in Mexico, which resulted in a performance boost of around 5%.

Most of these units are from the Bodega Aurrera family, including the smaller Bodega Express that are less pricey and easier to construct as compared to Walmart’s larger setups.

Walmart’s Bodega Chain Operates On Walmart’s “Everyday Low Prices” Strategy

The Bodega chain places a great deal of emphasis on the “Everyday Low Prices” strategy that Walmart has taken pride in for years. The strategy is also directed at helping the retailer make its mark in the informal marketplaces and enhance its approval among the low-income shoppers. According to Banorte’s analyst, Valentin Mendoza, this marks a customer segment that is likely to be the most populated for Walmart.

Aiming at greater sales from the newer stores, Walmart is likely to maintain its growth rate. However, Mendoza also highlighted that since Walmart is already the largest retailer in Mexico, further expansion can also be expected to burden it with added complications in the time to come. According to the analyst, it is rather hard for the retailer to pinpoint the growth rate that avoids cannibalizing the existing sales in the process.

Banorte’s Analyst Says Further Expansion Can Backfire On The Company

In his comment, Banorte’s equity expert accentuated how the company’s recent announcement of further expansion can backfire on itself. What if, he added, the newer branches start to hurt the sales at Walmart’s other stores? Where would they draw the line for expansion?

Previously, Walmart had already hit a record for new stores in 2011, launching 365 new stores in Mexico. Later in 2012, however, the allegations of bribery had resulted in a significant drop in the pace of expansion for Walmart. The added 134 stores in 2019, however, marked the greatest annual expansion for Walmart in the past six years. Walmart had opened 214 new stores in Mexico in 2013.

On the other hand, Central America added 27 news Walmart stores in 2019 despite the regional economy hurting the overall business sentiment. So far, Walmart’s expansion has worked in its favor as December’s report showed a 2.6% increase in sales as compared to the same month last year, for the stores that have been operating for longer than a year. Countrywide sales for Walmart also hiked by 4.1%, as per the report.

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.
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