EconomyFinancialHow Chedraui will gain ground on Soriana and Walmart

How Chedraui will gain ground on Soriana and Walmart

Grupo Chedraui is getting ready to end the year with positive financial results. The self-service chain fully entered the race for low prices that characterizes the Mexican market and that led it to outsell Walmart , at least during the second quarter of the year, in the midst of a context of high inflation, which borders on buyers to be cautious when making their purchases.

The Veracruz chain managed to position itself as the chain with the highest growth in same-store sales , that is, counting establishments with at least one year of operation, with an advance of 16.2% in the operation of self-services in Mexico. In the same period, Walmart grew 10.8%; La Comer , with 9%, and Soriana , with 6.4%. The growth of the chains affiliated with the National Association of Self-Service and Department Stores (ANTAD) was 10.5%.

The company deployed a differentiated pricing scheme in its stores, depending on their location, which gave a boost to its quarterly results. Arturo Vasconcelos , deputy director of Grupo Comercial Chedraui, explains in an interview with Expansión that the basis of this strategy is to analyze the markets in which they compete to adapt their low price strategy according to categories and thus obtain greater competitiveness.

“We have stores located in different areas of the country and we recognize that in each of the places where we are there are relevant competitors for us, which sometimes are not the same, and each one has its own particular strategy. So, we carefully observe the market with which we compete and seek to adapt our promise of ‘It costs less’ to each one of the locations and in each one of the stores”, he says.

It has not been the only movement of Grupo Chedraui. During the second quarter of the year, it joined the summer offers for the first time with its “It’s for you” campaign, which the manager projects will boost sales in July and August. To enter this dynamic, which has been combined with the context of high inflation, the company met with its suppliers and directly established lower prices, discount percentages, 3-for-2 offers and bonuses in its electronic wallet.

“We believe that with this participation that we had with the ‘It’s for you’ campaign, our customers saw value in our stores and found something that they liked and, therefore, they favored us both for visits and for their purchases “, Add.

Some Chedraui buyers, such as Patricia Martínez, who makes her purchases at a store of this chain because of its proximity, comments that in recent months she has seen a greater offer of products in addition to the offers, which are combined with the promotions that she finds in her stores. online stores.

“I was going to the nearest store. Although I always compare prices, now I don’t notice much difference with other chains, like Walmart. Now I find more products, more offers and I have even noticed more people in the stores”, shares the consumer.

For Vasconcelos, greater traffic on their sales floor has been notorious, so they are getting ready to maintain the pace of growth towards the end of the year by advancing inventories to have products on the most relevant sales dates, such as the World Cup of Soccer , the Hot Sale and the end of the year festivities.

The manager projects a year-end with positive results, with a boost that will also come from the increase in the sales floor compared to last year, as a result of greater mobility after the months of confinement last year.

Marcela Muñoz, deputy director of fundamental analysis at Vector, considers that the company faces a high basis of comparison in its sales last year; however, it projects results above the sector towards the second half of 2022.

“Everything indicates that the tendency to exceed the ANTAD average in self-service would remain sustained by the value proposition, which not only competes in prices, but also in product variety , and also in an increase in market share” , he points out.

Chedraui strengthens in the United States

Grupo Chedraui maintains momentum for the purchase of the Smart & Final price club in mid-2021 in the United States. The integration of this business boosted the company’s earnings 78.9% during the second quarter, while operating cash flow grew 90.8%.

In the period, the company’s consolidated revenues increased 78.5% and closed at 63,817 million pesos. Of this figure, 60.4% is from self-services in the United States , 39.2% from units in Mexico, and the remaining 0.4% corresponds to the real estate business.

For the manager, this boost in the company’s financial results will be visible in the future, although to a lesser extent, due to the basis of comparison, although it will not put a brake on growth. At the same time, they see opportunities to grow the format in the United States, while evaluating whether to deploy it strongly in Mexico, where there are three stores in Baja California.

“They are business models that with great responsibility, we are going to test to see how much our client values them; however, there is a lot of information that leads us to think that they do respond to a need that our customers may have, and, therefore, we will be testing some alternatives little by little to explore how much they like the concept”, he concluded.

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