Friday, February 15, 2008

Walmart vs. Neighborhood Tiendas

According to an article at Forbes.com.......

Mexican leading retailer Wal-Mart de Mexico will aggressively compete with tiny family-run shops and convenience stores to boost its presence among low-income earners struggling with meager wages in a slow economy.

Wal-Mart de Mexico, or Walmex, plans to open 60 "Mi Bodega Express" stores in big cities across the country, snuggling the new store between the traditional mom-and-pop and the company's most successful, no-frills "Bodega Aurrera" format.

San Miguel de Allende is getting some kind of Walmart store just on the edge of town toward the old train station. Construction is underway. There are rumors that it is a full-size Walmart and there are rumors that it is the no-frills Bodega Aurrera. I give more credence to the Bodega Aurrera rumor because I doubt that at this point that the population in San Miguel can support a Walmart but you never know. San Miguel does have a growing middle-class and so far both Gigante and Mega grocery stores seem to be doing okay although the Gigante store has been sold to the Soriana chain but so far the name hasn't changed. The big covered mercados still seem crowded with people so I don't know if the new grocery stores have affected them.

Now this announcement that Walmex has decided to go up against the mom-and-pop stores....the neighborhood tiendas. This makes me sad. What will happen to some of our neighbors and their tiendas? I can quickly count five tiendas within a block or so of our house. The tienda is in the front room and the family lives behind the store.

I can understand that Mexicans might want to shop where the prices are better and maybe they can get all they need to buy at one place but the hidden cost will be the jobs of some of their neighbors. We Americans have seen what happens when the large box stores or e-retailers come into a market segment. Deserted buildings in town squares. A loss of regional identity. So on one hand this announcement makes me sad. On the other hand, who am I to tell the Mexicans what they should have or not have. But the times, they are a'changing.

7 comments:

wayne said...

The town closest to my farm in Minnesota had 700 residents. The one across the river in Wisconsin had 1200. That did not stop WalMart from building a super store there. Ruined the economy of the small river town with its' quaint little shops and forced the grocery stores out of business. So don't tell me that they only build in big cities. I know better.

But you hit a good point. Who are we to tell Mexicans what they can or can't have. And, I must say, I am grateful for the WalMart in Cancun. I shop there regularly.

Billie said...

Wayne, sorry about the hometown. I've seen it happen in lots of small towns around Texas.

If we want to we have the option of getting in the car and going to Celaya or Queretaro to go to Walmart or Costco but many of our neighbors don't have a car. They can get around town in taxis and buses so I'm sure they want the economy and convenience of these kind of stores here in SMA.

Anonymous said...

Billie,

First - In the US you more often than not see Walmarts in the small towns - so I am sure SMA is a good target for their strategies.

I think the mom and pop tiendes will die a lot harder in Mexico than they did in small town USA via Walmarts.

The people simply do not have enough transportation to drive to even a local Walmart - they will continue to shop on the corner - at least the poor and lower middle class here.

There is an entire network of 'middlemen' that take buses to Coatepec or Xalapa to buy for the many in the colonias and pueblos. The profit margins required to support the small tiendes can even beat the huge buying power of Walmart for some time to come I think ;-)

And yes the times are changing.

Juan

Theresa said...

Where our little tienda across the street makes it's money is in selling small quantities of stuff. They sell single cigarettes, one package of condimento, a quarter cup of raisins (I bought that,so I know).Their customers usually are living on a day to day basis.They literally buy their daily bread there.They aren't going to spend the extra $10 pesos to ride the bus round trip to Walmart. In fact, I have seen Kirkland products, such as toilet paper, for sale in a few little tiendas,I don't doubt that the owners shop at WalMart too.
regards,
Theresa

Billie said...

Theresa, you are so right. They will sell one diaper, one bandaid, 1 cup of dogfood.

However, the neighbors who have cars (few of them in my 'hood) do go to the super markets. And the taxi's wait in line at Mega to take people home with their groceries and there is a place for the buses to pull in to collect passengers. So these low-end Walmart stores are going to have to really have amazing prices to be able to draw in the truly lower-income folks who will need to take a bus to get there or to get home.

Another issue is that many of these lower income families don't have refrigeration so it isn't like they can go buy groceries for a week.

I don't understand how the Walmex marketing plan will work but obviously they think it will.

mcm said...

There are many "convenience store" chains, at least here in Yucatan. And most of these (Seven-Eleven, OXXO, Extra) are national. I don't see the Walmart plan as very different from these, which are often located in neighborhoods as well. The small tiendas seem to do fine, and, as was pointed out -- small store owners do shop at the big chain supermarkets, and take advantage of their low prices.

Anonymous said...

Part of the Walmart package, which it delivers to each township or small community where it decides to open, Is punishment. Not only to the wage slaves producing the goods, but hardship and pain for the small local stores as well.
We in San Miguel should be proud that we can take a bit of misfortune.
Other wise we would have to respond
signed:
A.resident