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Managing Developing Countries: Walmart Latin America - GWU Spring 2013
This document provides an overview of Walmart's operations in developing countries in Latin America. It discusses Walmart's entry and growth in Mexico, Brazil, Argentina, and Costa Rica. In Mexico, Walmart has over 2,300 stores and is the largest private employer. In Brazil it has over 500 stores and is the 3rd largest retailer. Argentina has been more challenging with 94 stores due to lack of partnerships and supplier backlash. Costa Rica has 205 stores since entering in 2003.
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Managing Developing Countries: Walmart Latin America - GWU Spring 2013
- 1. Managing – Developing Countries Alex Caffrey Allison Latham Emily Payamps Hunter Thomas Kacey Urlaub Spring 2013 Walmart Latin America
- 2. Agenda About Walmart Looking to Latin America Classifying Countries Drivers of Success Moving Forward
- 3. About: Walmart 10,130 Stores Worldwide 2.2 Million Employees $470 Billion in Revenue 27 Countries 69 Retail Brands
- 4. Strengths Weaknesses Opportunities Threats Nonunionized Employees Point-‐of-‐Sale Technology Robust Supply Chain Network Supplier’s Involvement Competitors Losing Market Share High Growth Markets New Retail Platforms Expand Cost Leadership-‐Globally Poor Adaptability “American”-‐ centered business model Corporate Governance Economic Recession Various, Local Competitors Government Regulations Shifting Consumer Tastes
- 5. Looking to Latin America ¨ Diverse, emerging markets ¨ High growth opportunities for retail sector ¨ New, favorable trade systems ¨ Rising consumer incomes, improved education ¨ Stabilizing economic and political institutions
- 6. Looking to Latin America Chile Costa Rica Brazil Argentina Mexico 0 25 50 75 100 Control of Corruption Low High
- 7. Walmart in Latin America
- 8. About: Mexico ¨ Population: 115 million ¨ Unemployment: 4.5% ¨ GDP per capita: $15,300 ¨ Stock of FDI: $320.8 billion ¨ Corruption and weak institutions ¨ Poor infrastructure and labor laws People Economics Market Issues
- 9. About: Walmart Mexico Entry: 1993, Joint Venture ¨ Walmart: 227 stores ¨ Sam’s Club: 142 stores ¨ Bodega: 668 stores ¨ Bodega Express: 755 stores 2,353 Total Retail Units Largest Private Employer 16% 28% 4% 32% 4% 16% SuperCenter/Hypermarket Discount Compact Hypermarket Supermarket Limited Assortment Other Restaurant
- 10. About: Walmart Mexico ¨ Significant corruption and bribery issues ¨ Expansive market with varying income levels and consumer preferences ¨ Early entry and diverse store growth ¨ Strong supply chain management ¨ Market leader, continuous growth ¨ Key economic driver for Mexico Challenges Successes Results
- 11. About: Brazil ¨ Population: 200 million ¨ Unemployment: 6.2% ¨ GDP per capita: $12,000 ¨ Stock of FDI: $595.9 billion ¨ Hyperinflation, 1994 People Economics Market Issues
- 12. About: Walmart Brazil Entry: 1995, Acquisition ¨ Bompreco: 118 stores, Northeast Region ¨ Sonae: 140 stores, Southern Region ¨ Todo Dia: 173 stores 558 Total Retail Units 3rd Largest Retailer in Brazil 22% 19% 31% 15% 13% SuperCenter/Hypermarket Supermarket Limited Assortment Groceries and General Merchandise Other
- 13. About: Walmart Brazil ¨ Unique Market Tastes ¨ “Informal” Market Structure ¨ Acquisitions: Local Market Savvy ¨ 10.2% growth during Great Recession, compared to 6% in Brazilian retail market Challenges Successes Results
- 14. About: Argentina ¨ Population: 42 million ¨ Unemployment: 7.2% ¨ GDP per capita: $18,200 ¨ Stock of FDI: $100.4 billion ¨ Localized Retail Trade Market ¨ Competition from European Chains People Economics Market Issues
- 15. About: Walmart Argentina Entry: 1995, Greenfield ¨ Walmart Branded Stores Super Center: 30 stores Super Mercado: 4 stores ¨ Changomas: 41 stores ¨ Mi Changomas: 9 stores ¨ Changomas Express: 10 stores 94 Total Retail Units 32% 44% 11% 9% 4% SuperCenter/Hypermarket Discount Compact Hypermarket Limited Assortment Discount Supermarket Groceries and General Merchandise
- 16. About: Walmart Argentina ¨ No local partnership/knowledge sharing ¨ Backlash from local suppliers ¨ Corruption and regulatory issues ¨ No significant successes ¨ Remains an unprofitable venture ¨ Unable to win over consumers ¨ Specifically, 1/3 of Argentinian spending is on food, Walmart captures just 2.5% Challenges Successes Results
- 17. About: Costa Rica ¨ Population: 5.6 million ¨ Unemployment: 7.9% ¨ GDP per capita: $12,600 ¨ Stock of FDI: $18.59 billion ¨ Weak institutions to support business ¨ New free-‐trade zones are increasing arrival of competitors People Economics Market Issues
- 18. About: Walmart Costa Rica Entry: 2003, Partnership ¨ In 2009, acquired by Walmart Mexico ¨ Pali: 151 stores ¨ Max o Menos: 28 stores ¨ Maxi Pali: 19 stores 205 Total Retail Units Largest Retailer in Region 3% 9% 14% 74% SuperCenter/Hypermarket Discount Compact Hypermarket Supermarket Limited Assortment
- 19. About: Walmart Costa Rica ¨ Very low income consumers ¨ Supply chain and distribution ¨ Centralized operations and market adaptability ¨ Walmart has maintained high sales and store growth, becoming the dominant market leader Challenges Successes Results
- 20. About: Chile ¨ Population: 17 million ¨ Unemployment: 6.4% ¨ GDP per capita: $18,400 ¨ Stock of FDI: $179.9 billion ¨ Relatively none; Chile is one of the most stable Latin American countries People Economics Market Issues
- 21. About: Walmart Chile Entry: 2009, Acquisition ¨ Lider Hyper: 72 stores ¨ Lider Express: 64 stores ¨ Ekono: 172 stores ¨ Super Bodega: 64 stores 329 Total Retail Units 34% Market Share 22% 19% 19% 39% SuperCenter/Hypermarket Discount Compact Hypermarket Supermarket Discount Supermarket Other
- 22. About: Walmart Chile ¨ Local lawsuits and regulatory concerns ¨ High consumer debt ¨ Established supply chain network ¨ Strong IT and infrastructure development ¨ Exceptional growth, strong private labels ¨ Head of Walmart Chile, promoted to Chief of Walmart Latin America Challenges Successes Results
- 23. Drivers of Success ¨ Acquisition for knowledge sharing ¨ Localized, smaller store formats ¨ High growth through store growth ¨ E-‐commerce supports multichannel growth
- 24. Moving Forward ¨ Joint venture or acquisition entry strategy ¨ Adapt to consumer tastes ¨ Replicate supply chain management program ¨ Create higher standards, act within FCPA framework
- 25. Thank you! Alex Caffrey Hunter Thomas Allison Latham Kacey Urlaub Emily Payamps Spring 2013