Oxxo and its Expansion in Latin America: An Ambitious Plan
Fomento Económico Mexicano, better known as Femsa, has big plans for the next five years. The company has announced an investment of between 4,000 and 5,000 million dollars, aimed at opening new Oxxo branches and pharmacies, as well as expanding other proximity formats in Mexico and Latin America. This investment not only seeks to open stores, but also distribution centers and infrastructure that will be self-financed by the business unit.
Eugenio Garza, Femsa's Finance Director, highlighted the solidity of the company's business model, which generates a constant cash flow that allows them to finance their growth, reinvest, and provide returns to shareholders. Additionally, they do not rule out making more acquisitions in the future. With a digital business in full growth and fintech Spin in its portfolio, Femsa seeks acquisitions that generate value and substantial returns for its shareholders.
For his part, Juan Fonseca, Femsa's Investor Relations Director, noted that despite the slowdown in Oxxo store openings due to the pandemic, the company plans to open up to 1,400 stores per year in Latin America. Currently, Oxxo operates in Mexico, Colombia, Chile, Peru, and Brazil, and expects this number to continue growing, mainly outside of Mexico.
Beyond Oxxo: Retail Competition with Bara
Although Oxxo is Femsa's flagship, the company is diversifying its retail offering with new formats. A clear example is Bara, its discount store chain that competes with rivals such as 3B or Neto stores. Francisco Camacho, Femsa's Corporate Director, highlights Bara's value proposition and how they have accelerated their openings due to the brand's favorable performance. In the third quarter of 2023, Bara saw year-over-year income growth of 36.7%, driven mainly by categories such as groceries and beverages.
Camacho also emphasized the company's vision of expanding in a disciplined manner, focusing geographically on specific areas and ensuring sustained growth. Additionally, he clarified that Bara does not seek to compete directly with Oxxo, but rather to offer a different value proposition to consumers.
With information from Forbes