The digital transformation of retail
Seeking to focus on its core business, Walmart made a series of divestments in Mexico in the last . In 2014, it sold its 362 Vips units to Alsea for 8.2 billion pesos, which included the El Portón, Ragazzi and La Finca brands.
Three years later, in 2017, it closed the sale of Suburbia to Liverpool for 19,000 million pesos, including the intellectual property rights of the Suburbia name and its own brands. The transaction also included 119 stores, 78 building and/or land leases with third parties and 34 land and/or building leases with Walmart. However, these operations were not without problems.
The company had to pay the Tax Administration Service (SAT) 8,079 million pesos for “substantial tax matters” after the tax authorities claimed a tax credit for 10,559 million pesos for taxes, fines and surcharges for the sale of Vips. Despite this, the divestments have allowed Walmart to focus on its core supermarket business in Mexico, where it competes with other chains such as Chedraui, Soriana and La Comer.
One of the biggest challenges the company faced in the country were allegations of alleged bribery payments to Mexican officials to obtain construction permits. However, the company closed this chapter after paying $282 million to the United States Securities and Exchange Commission (SEC) in 2019.
digital transformation
Walmart has opted for the omnichannel strategy in Mexico since March 2018, when it opened its first omnichannel store in the country. The new model included Wi-Fi on the sales floor, digital catalogs located in kiosks, and the pick-up service, which allowed the company to fully enter e-commerce during the pandemic.
Since then, the company has invested in strengthening omnichannel in its different formats to take advantage of the evolution of electronic commerce and open space for new businesses with a view to digitization. Walmart has created an ecosystem that builds customer loyalty, giving them free airtime or reimbursing a percentage of their purchases in their electronic wallet when paying with Cashi. In this way, the company seeks to attract buyers who are looking for credit to buy in its different stores.
“Users can receive remittances through their mobile application and use them to buy products such as washing machines, which they can also purchase on credit,” exemplifies Marisol Huerta.
Regarding new digital businesses, Bait has consolidated in Mexico with 7.8 million users, of which 5.6 million have their mobile line active, while Cashi closed with 5.4 million customers. “This strategy is essential in this new stage of retail, although I don’t think it will be the dominant channel, it will be necessary to complement the range of offers and consumption opportunities offered to customers. Without omnichannel, the success of only physical locations will be less”, explains Carlos Hermosillo, an independent stock market analyst.
Walmart expects to double its sales in the next 10 years, leverage its operating expenses to reinvest in the business and become a 100% regenerative company in 2040. In 2020, the retailer reported an 11% increase in revenue to 736,044 million pesos , and its operating flow rose 7.6% to 81,214 million pesos.
The analysts consulted by Expansion agree that with the recent acquisition of a fintech, Walmart is consolidating a digital ecosystem that will allow consumers to access financial services from their mobile device while boosting store sales.