The new boss of Walmart Mexico is planning an ambitious ecommerce push to try to double its sales in less than a decade as competitors nip at the heels of one of the biggest retail businesses in Latin America.
Ignacio Caride, who spent more than a decade at online retailer Mercado Libre — the region’s answer to Amazon or Alibaba — said his April appointment as chief executive of Walmart de México y Centroamérica was a “statement” of where the company wanted to go.
Known as Walmex, the company is the largest foreign business of US retail giant Walmart and Mexico’s largest supermarket chain with 230,000 employees and more than 3,000 shops.
“Walmex is changing, it’s not a retailer any more . . . [or] it’s not only that,” the Argentine told the Financial Times in an interview. “Around that core business, which is very important, we are building a whole ecosystem.”
He plans to transform the company into a seamless experience between physical stores and online shopping as well boost its ability to cross-sell other services such as healthcare and financial services. The goal is to double annual revenue to about 1.8tn pesos (approximately $93bn) by 2033.
The ecommerce opportunity is huge. Mexico, a middle-income country with a young population of almost 130mn, has one of the fastest growing ecommerce sectors in the world.
It grew 25 per cent in 2023 to some 658bn pesos ($34bn) with penetration of just 13 per cent — half that of Brazil — according to BBVA.
But Amazon and Mercado Libre hold a 39 per cent and 18 per cent market share in Mexican ecommerce, respectively, ahead of Walmart’s 11 per cent, according to Statista data from 2021.
Caribe must turn a decades-old retailer with outdated IT into something that can compete with these nimbler, digital-native companies.
“Our big outstanding debt in the digital world is the technology,” he said. “We’re such a big company with so many systems, we call them legacy systems because they were built for a retail-based mentality and today we need to modernise that.”
“We know as an industry where the future is going,” he said, referring to the trend of linking up brick and mortar stores and online shopping.
The battle between Mexico’s retailers echoes those happening around the world, including in the US as Walmart tries to integrate its website with its network of traditional stores and compete with the likes of Amazon.
Projects such as automating distribution centres or electronic shelf labels were starting to make more economic sense, Caride said.
“All over the world, especially in Mexico, the cost of doing business is rising,” he said referring to sharp wage increases in the Latin American country. “The only way we as an industry, as a company, can offset that is working differently.”
Walmart’s venture into Mexico in the early 1990s was its first outside the US. The group acquired local businesses to become the market leader and is listed on the local stock exchange.
The business is still growing, with revenue up 8 per cent last year — but it also faces the prospect of increasing competition.
Rival retailer Chedraui will open 100 small-format stores this year. Walmex’s discount business Aurrera is competing with Femsa’s expanding Tiendas Bara and others such as Tiendas 3B, a hard-discount chain that listed on the New York Stock Exchange earlier this year.
Caride said he thought Walmex was less vulnerable than peers were in Europe to hard discounting new entrants such as Aldi and Lidl, who took market share from what he called a comfortable, inward-looking retail sector with high margins.
“We try to save every cent to translate it to the price . . . culturally we are set differently,” he said, adding that all the big retailers had room to grow by winning market share from Mexico’s small-store, informal retail sector.
The process has not been entirely smooth, with the company now walking back a revamp it made of its Express smaller-format stores to reincorporate some of the higher-end products it had removed.
“Clearly we didn’t do things how we would have liked . . . so were redoing some of the changes to the offering.”
Walmex now offers everything from healthcare clinics to a vast in-store advertising business and financial services.
However, to cross-sell successfully it needs better data on who its customers are. More than half of them pay in cash and unlike some of its competitors it only offers credit cards through third parties.
Last month it began a push to ask customers for their mobile phone numbers at the checkout to encourage them to join a rewards system.
“Once we can identify them, we can start to measure how often they buy online, how often they buy in the shop,” he said. “The numbers aren’t public, but I can tell you we’re doing much better than we expected.”
Its mobile phone service is now the country’s fourth largest in a sector overwhelmingly dominated by billionaire Carlos Slim’s América Móvil. The group is selling plans that rely on a government wholesale mobile network, but Caride said the business did not need to be super profitable because it was “mutually reinforcing” with its other areas.
“Your margin is my opportunity,” Caride said, quoting Amazon founder Jeff Bezos.
Caride is closely watching how some importers, particularly Chinese companies, circumvent paying import tax or VAT, an issue that has upset some of Mexico’s business leaders.
“What worries us as a country and as a company that does things properly is that the rules of the game aren’t the same for everyone,” he said.
The landslide win by Mexico’s president-elect Claudia Sheinbaum in June unnerved investors amid concerns over her party’s plans to completely remake the judiciary, eliminate autonomous regulators and maintain state-dominance in the energy sector.
However, Caride dismissed political concerns as short termist. He and other Walmart officials were among the first executives to meet Sheinbaum and they have offered to help with talks concerning the USMCA trade agreement between Mexico, Canada and the Unites States, which is due to be reviewed in 2026.
“We respect what the country decides . . . then as companies, we adapt to reality,” he said. “You don’t decide to stay, go or enter a country because of the president in turn to the one coming next, you do it for the long term.”
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