EconomyFinancialBodega Aurrerá 'gets into the ring' of electronic commerce

Bodega Aurrerá 'gets into the ring' of electronic commerce

Walmart is about to close the clamp on its omnichannel strategy. The supermarket chain directed by Guilherme Loureirova in Mexico and Central America has chosen to strengthen the development of its digital channels five years ago. Now it will focus on Bodega Aurrera, one of the formats that had had less momentum within the digitization strategy promoted by the company.

The US retailer wants to double sales in its low-price format, therefore, it will intensify the digitization of stores and strengthen the e-commerce channel.

“Stores that have financial solutions, such as credit in e-commerce kiosks, grew twice as much compared to those that do not have this service,” Cristian Barrientos, Walmart’s director of operations, told a conference. “By providing internet and financial solutions, we make it easier for customers to access the benefits of the digital economy,” he added.

Walmart began in 2018 to deploy strategies to consolidate itself as an omnichannel company, and this allowed it to take advantage of the growth of e-commerce during the pandemic. The investment that the company directed in 2018, among other items, to remodel stores, logistics and technological deployment was 17,933 million pesos, 3% higher than the previous year.

In 2021, it reconverted the Superama stores to the new Walmart Express format with self-checkout boxes, which allow customers to make their purchases in an agile manner, as well as modules for the collection service of merchandise that is purchased online from the comfort of the car. It also introduced Walmart Pass, a monthly or yearly paid subscription program that will allow shoppers to place orders at no cost.

The US retailer also implemented the self-checkout system in 286 self-service stores, completed the deployment of Scan And Go in 165 Sam’s Clubs and enabled the first self-checkout station in Mi Bodega Cholula. Currently, they have this collection system in more than 370 stores, in which it represents 30% of the transactions.

Now the company will focus on digitizing Bodega Aurrerá. “Why do we believe that there is room to accelerate the discount even more? One of the reasons is the macroeconomic context, because according to the Inegi, the pandemic has affected six million middle-class people, which opens an opportunity to win market share and help our customers receive more value for their money, turning them into potential Bodega customers,” said Barrientos.

The challenges to digitize Bodega Aurrerá

Bodega Aurrerá –whose advertising is led by ‘Mamá Lucha’– is a channel that Walmart has positioned with discounts and lower prices, but there was an opportunity to serve a group of the population that has not been considered by digital commerce.

“By putting a greater focus on the lower-income segment, Walmart will enhance its strengths, not only in price leadership but also in offering omnichannel solutions for an underserved population,” says Marcela Muñoz, deputy director of fundamental analysis at Vector Casa de Bolsa.

Among the challenges that analysts now envision to bring A Bodega Aurrerá into the ring of electronic commerce is the low banking penetration of the population. “Hence efforts like Cashi (its digital payment application), which are a complement that I understand will also support the online purchasing process,” says Carlos Hermosillo, an independent stock market analyst.

Marcela Muñoz, from Vector, adds that another of the challenges that the retailer will have to overcome to digitize Mama Lucha is the digital gap that is widening in the segment of the population that Bodega Aurrerá serves. 11% of 11% of the population remains with 2G services on their phones, a technology that only allows calling and sending messages, according to the study ‘The Mobile Economy in Latin America 2021’, prepared by the global organization GSMA.

This year the company estimates investments of 27,600 million pesos, of which 40% will be for remodeling, 28% for the expansion of new branches, 17% for logistics and 15% for technology. In addition, by 2026 the company intends to start operations of a Distribution Center (Cedis) located in the Bajío, which will allow it to consolidate logistics operations, respond to the growth of electronic commerce, and strengthen omnichannel.

“The investment in Cedis will give it a competitive advantage to continue growing the entire logistics and distribution network, which, in turn, will allow it to meet the goals of reducing delivery times, expanding the product offering, and With all this, keep the client satisfied, and you will also obtain more efficiencies that will eventually be seen in the income statement and, consequently, in the delivery of value to the investor”, concludes Marcela Muñoz.

In 2021, e-commerce sales represented 1.7% of the 214,571 million pesos generated by Walmart in Mexico and Central America.

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