Walmart in the Mexican Region

INTRODUCTION:

The case gives a broad overview of Mexican retail industry, the big players of the retail industry and the role of Wal-Mart in changing the scenario of Mexican retail industry. Commercial Mexican S.A. (Comerci) faced a major competition from Wal-Mart's entry in the Mexican region. With Wal-Mart owning 55% of market share in Mexico's supermarket sector, Comerci was left with an option to come in collaboration with two other supermarket chains i.e. Soriana and Gigante to have a strong negotiation power with suppliers.

PROBLEM DEFINITION: The problems Comerci faced were:

* How to compete with Wal-Mart stores on prices?

* The decision they had to make i.e. should they come in collaboration with the other two partners which would be known as "Sinergia"

* If yes then what would be the future steps to ensure a sufficient growth for all the partners to sustain in the retail industry?

ANALYSIS: The decision of forming Sinergia could be properly worked out for Comerci but it is necessary that Wal-Mart's success should be analyzed and studied upon so that proper steps can be taken in order to avoid a failure of "Sinergia".

Wal-Mart was seen as a major threat to its competitors after the emergence of NAFTA in 1994. The reduction of import tariff helped Wal-Mart to compete with other providers. But some of the distinguished things about Wal-Mart were:-

* "Every Day Low Price" scheme which attracted many customers.

* They used to purchase in bulk thus having a strong bargaining power with the suppliers.

* They allowed their suppliers to keep a track of their inventory level through information system hence they were never out of stock.

* They had different stores across the region such as Discount stores, Supercenters, Grocery stores, Apparel stores and restaurants. Thus a person who wants to but a particular product can visit the desired store.

* After the emergence of NAFTA, instead of increasing their profit margin, they reduced their prices and gave heavy discounts in almost every item.

With all the above factors Wal-Mart was branded as an outlet which believes in saving consumers money. Wal-Mart now owns 55% of the market share in Mexico's Supermarket industry. Comerci on the other end has seen its market share drop to 15%.

Now with the emergence of "Sinergia", Comerci can collaborate with the other two giants of the retail industry i.e. Soriana and Gigante, who have also seen a downfall due to Wal-Mart.

Comerci should have an agreement with the other