Managing – Developing Countries Alex Caffrey Allison Latham Emily Payamps Hunter Thomas Kacey Urlaub Spring 2013
Walmart Latin America
Agenda
About Walmart
Looking to Latin America
Classifying Countries
Drivers of Success
Moving Forward
About: Walmart
10,130 Stores
Worldwide
2.2 Million
Employees
$470 Billion in Revenue
27 Countries
69 Retail Brands
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
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
Looking to Latin America
Chile
Costa Rica
Brazil
Argentina
Mexico
0 25 50 75 100
Control of Corruption
Low High
Walmart in Latin America
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
Drivers of Success
¨ Acquisition for knowledge sharing ¨ Localized, smaller store formats ¨ High growth through store growth ¨ E-‐commerce supports multichannel growth
Moving Forward
¨ Joint venture or acquisition entry strategy
¨ Adapt to consumer tastes
¨ Replicate supply chain management program
¨ Create higher standards, act within FCPA framework
Thank you! Alex Caffrey Hunter Thomas Allison Latham Kacey Urlaub Emily Payamps
Spring 2013
