Under the slogan of opening 1,400 stores annually in the next five years, the Mexican chain has established itself as the main convenience store in the region. However, in Chile, it faces significant losses, while in Peru and Colombia, other formats dispute its preference among consumers.
To get out of trouble or take advantage of promotions, convenience stores have positioned themselves as the most common alternative in Latin America. Each country has native actors who have gained ground, such as Éxito (Colombia) or Tambo (Peru). However, as the years go by, rivals arrive from other latitudes and generate an atmosphere of competition. One of the chains with the greatest ambitions for regional expansion is Oxxo.
Since its origins as a grocery store in 1977, the flagship store of the Mexican group Femsa set ambitious expansion goals, which included the opening of new stores, as well as the acquisition of stores from other chains. Subsequently, the company established the motto of offering customers all the basics they needed in one place, 24 hours a day. In this way, the product portfolio expanded first to food and beverages in general and then to areas as diverse as personal care products and financial services.
By 2018, according to data from the Latinometrics portal , Oxxo was opening 0.8 stores a day in Mexico, although by then its reach was international: that same year, the chain landed in Peru. It was a bet that was added to the expansion to Colombia (2009), Chile (2016) and then Brazil (2020). By May 2023, in the latter country, Oxxo was opening one store per day and already had 325 branches.
On the other hand, although five years have passed since its arrival, in Peru, Oxxo's growth has been more moderate. In October, Oxxo opened its 100th location and already has more than 830 workers. In the Andean country, the Mexican chain must face major rivals such as Listo! and Tambo, owned by Lindcorp, which has more than 400 stores in Lima and other regions of Peru. However, according to Daniel Chicoma, professor of Marketing programs at ESAN University (Peru), Oxxo sells a model that differentiates it from its competitors and that could be additional value.
“At Oxxo, the distribution of its stores is more similar to a minimarket, unlike the classic convenience store format that Tambo accustomed us to. In some stores they include fruits, vegetables, eggs and products that are usually in short supply, we can find them there,” says Chicoma.
Given the possibility that Tambo is a lovemark that slows Oxxo's expansion, Chicoma is skeptical. “I don't think that's the case, because Tambo let a strong competitor like Oxxo enter. In that case, what is left for both of them is to continue with their promotions, vary the products they offer and even work with little-known brands to be able to better work on profit margins without falling to a loss in a price war," he recommends. .
OXXO CHILE FACES LOSSES AND NEW RIVALS
Meanwhile, in Chile, where Oxxo has been on the market for seven years, there is a contradiction. Its numbers in the red have only increased: in 2022, it recorded losses of more than US$11.4 million. While in the first quarter of 2023, it generated almost US$8.02 million, despite the fact that its expansion is still underway: it opened 64 stores this year and completed 322 stores in the southern country. In statements to La Tercera , Oxxo Chile admitted that they were aware of the general contraction in consumption that the retail sector faces since 2022. To face this panorama, the company committed to covering consumer needs under the slogan of mixing promotions that encourage to savings and the acquisition of products at a better price.
Likewise, although Oxxo Chile managed to absorb old rivals such as Big John and Ok Market, the truth is that it still must face competition from new players such as the Peruvian case. For example, last month, the American gas station Gulf announced its arrival in the country along with the imminent opening of its line of convenience stores.
According to Christian Diez, a researcher at the Center for Retail Studies (CERET) of Industrial Engineering at the University of Chile , Gulf can expand, although not to the level of eclipsing Oxxo. “Gas station convenience stores are one part of the market. Its greatest growth has been in stores located in places not associated with the sale of fuel. So it is unlikely that Gulf will be an actor that displaces Oxxo: there are already several gasoline chains with stronger brands and presence, such as Pronto from Copec or Upa from Shell,” says the expert.
In a similar vein, the Cencosud group, known for its supermarket chains in the region, has also ventured into convenience stores with the opening of the SPID brand. However, Diez does not believe that it will become a major player like the Jumbo or Metro supermarkets. “It is unlikely unless the group acquires chains that are already involved in the industry.”
RIVALRY WITH DISCOUNT SUPERMARKETS IN COLOMBIA
On the other hand, it is in Colombia where Oxxo shows a more sustained expansion. Between January and April, the company opened 35 stores that added to the 266 already existing in key cities such as Bogotá and Bucaramanga. The chain's last big move was its arrival in Cali, the third largest city in the country, where it generated 43 direct jobs with the opening of the first store. In turn, the operation resulted from an investment of more than US$ 92 million in Colombian territory.
However, in terms of reach, Oxxo still faces competition from hard discount supermarkets . These consist of chains that promote themselves as stores that offer quality products at low prices and efficient service. Although their premises are discreet and their product references are limited, the truth is that they operate under a proximity format: each branch is close to the other, a factor that usually builds customer loyalty.
In this area, we can mention the Ara, D1 and Ísimo Stores, which by October 2023, had 3,288 stores nationwide in the coffee-growing country. Additionally, because they operate during more conventional business hours, their prices are usually lower than those offered by a convenience store. In this way, Oxxo maintains a certain rivalry with this format that compensates for its lack of variety with lower prices, a determining factor in recent years marked by the economic slowdown in Colombia.
As is predictable, if we enter the scope of projections, Oxxo aspires to sweep in terms of growth. Thus, Femsa has drawn up a plan to open a total of 1,400 stores annually over the next five years. In the process, the company will also build distribution centers that will be self-financed by the corresponding business unit. However, in the future, there is also an actor that is left out of the discussion: family wineries: these businesses used to be the main agents that helped consumers in their casual purchases and when the convenience store boom arrived , there was no shortage of voices. who predicted its inevitable extinction. But how true is this statement?
For Daniel Chicoma, while convenience stores offer a mix between a liquor store and a minimarket that emphasizes the sale of snacks , sweets, and carbonated and alcoholic beverages, in the warehouses, home consumption products such as canned goods, dairy products, and cleaning products prevail. and hygiene, among others. “I don't think they will disappear for this reason and apart from that, the payment method is no longer a problem. Now the wineries accept digital wallets and have less management of stocks ,” Chicoma clarifies.
For his part, Christian Diez considers that although the relative importance of warehouses will decrease over time, “these businesses cover areas of the cities that may be less attractive to convenience store chains and have a more personalized connection with their customers. and neighbors,” says Diez. In this way, just as television did not put an end to cinema, everything indicates that wineries and convenience stores like Oxxo will continue to coexist in the long term, in the same way that Femsa's million-dollar investment will never be able to completely subject preferences. of the consumer, sometimes determined by traditions, but above all, by current income.
