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Wal-Mart Mexico Unit Plans Big Expansion

From Reuters

Wal-Mart de Mexico will aggressively push to expand its lead over rival retailers and is considering new markets in 200 cities and towns, the new chief executive said Wednesday.

Eduardo Solorzano took the helm in February at Walmex, the Mexican unit of U.S. powerhouse Wal-Mart Stores Inc., as it announced plans to spend more than $700 million this year on new stores and remodeling.

His priority is to “continue profitable growth” with an emphasis on expansion, on promoting efficiency by streamlining operations and on tailoring individual stores to local consumers, Solorzano said.

Walmex, the nation’s largest private employer with nearly 700 stores and restaurants, has identified 200 cities and towns as potential new markets.

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Solorzano was previously director of operations and took over when Eduardo Castro left the top job at Walmex to become chief operating officer of the parent company’s store division in the United States.

Solorzano said there would be no change to Wal-Mart’s core business approach in Mexico.

“We are a very institutional, very disciplined company,” he said. “The values of the company are not going to change.”

Walmex has transformed a largely inefficient retail structure in Mexico in the last decade, luring customers from more established supermarket chains with its low prices.

In 2004, Walmex had record sales of $12.5 billion, more than three times the total sales of its nearest rival.

Its sales and earnings grew while competitors struggled amid an economic slump in Mexico, and it has plowed profits back into expansion, making it one of the top-performing Wal-Mart units worldwide.

Technology -- often imported from its parent company -- such as a state-of-the-art cold-storage distribution center, as well as good deals with suppliers and its sheer size, help Walmex cut costs.

As Wal-Mart sweeps Mexico, opposition to the big-box stores has grown.

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Critics say it brings cheap foreign imports that hurt local business and kills traditional mom-and-pop stores that underpin communities.

Solorzano said Walmex was focused on developing home-grown suppliers among small and medium-size Mexican companies, and that thousands of specialty businesses such as shoe repair shops and coffeehouses have set up around its stores.


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