Walmart thinks small in Argentina

A new supermarket concept debuted in Buenos Aires last week. Its significance to the global community? This wasn’t just any grocery store launch but Walmart’s latest development in the world of small-box retailing, following on from similar bite-sized launches across the US, UK, China and India.

Like all of the retailer’s small formats, Walmart Supermercado follows the basic principles of:

•    EDLP - prices are comparable to Supercenters
•    Emphasis on fresh to ensure frequency
•    Edited assortment supported by international private label - Great Value and Equate in this case

Walmart Supermercado is going after higher-income consumers

Walmart Supermercado is going after higher-income consumers

What is interesting about this concept however is that, unlike in other markets where Walmart has recently launched mini stores, in Argentina Walmart already operates a small-box format - Changomas Express (introduced a couple of years ago). However, this is where the similarities end. Changomas Express, like many of Walmart’s bodega formats in Latin America, target lower-income consumers whereas the Supermercado format will be going after a more affluent group – the first store is located in Caballito which, according to my Argentine colleague Florencia Schiavon, is an up-and-coming middle class neighbourhood in Buenos Aires. Meanwhile, the store’s mahogany shelves and soft lighting has more than a faint whiff of Neighborhood Market about it.

Changomas Express is far more discount-oriented

Changomas Express is far more discount-oriented

It’s all about getting closer to the consumer, something Walmart has recognized is no longer always achievable with its Supercenter format. In Argentina in particular, Walmart has been late to embrace smaller formats, falling behind key rivals such as Carrefour and Cencosud with their respective Market/Express and Disco concepts. Walmart Supermercado is roughly 7,000 square feet, similar to an Asda Supermarket and about half the size of a Walmart Express. Overall, we’re optimistic about this concept here at Planet Retail. It is a great way to backfill markets with a more appropriate format for the consumer base and, if it proves a success, I could certainly see it being exported to a number of Walmart markets around the world. The key concern however is around cost, particularly if this format will be used to penetrate higher-income, urban areas where real estate costs will inevitably be greater.

For a full analysis from our Latin American analyst Carlos Hernandez, click here (client only).

1 Comment on “Walmart thinks small in Argentina”

  1. #1 Jorge Quiroga
    on Nov 4th, 2011 at 3:19 pm

    A litlle bit of history on this small formats for a high income level customers. When Jeronimo Arango (Aurrera founder that made the join venture with Walmart USA and become Walmart Mexico) had 36 Aurrera stores and his wife told him that she didnt like to walk all the ailes of the store to buy the weekly needs, also she needed to look into the produce and perishable exhibitions to get the best food for their table so…. Superama was born (Until know they are the retail boutique in Mexico) the difference betwen formats was better ailes, selection, ligth and 30 to 35% mark up above the Aurrera formats.

    If you look to the geographic display on this stores you will find two things, all of them are located in high income level areas, all of them are around 7 to 10 miles away from eachother (at least in Mexico city).

    Regards.