Crime, permitting and inflation are three main factors that have motivated the convenience store chain's decision.
Oxxo, the Mexican firm controlled by Femsa, has at least 300 stores in Chile.
These are clearly recognizable: being “convenience” stores, they are on the go, located in strategic places such as busy intersections; and they aim to offer a variety of products (mainly food for immediate consumption, including non-perishable items).
Although Oxxo quickly established itself in the southern country, Diario Financiero revealed that the company has no plans to leave, but has opted - for the moment - to put a stop to its expansion.
The above is due to three reasons: crime, permitting and inflation.
José Antonio Fernández Garza-Lagüera, general manager of Femsa's Proximity and Health Division, confirmed that they are reducing the priority of expansion in order to focus on boosting profitability.
“Chile is much further behind on the curve towards profitability (due to economic tensions). Therefore, we are reducing the speed of growth in that market. This includes possible adjustments in general expenses to reduce cash consumption,” said the executive.
Inflation and lower consumption influenced the company's decisions. But the aforementioned media mentioned something else: that these days "it is not unusual to see Oxxo stores closed in various areas of the capital."
It was therefore mentioned that in addition to local macroeconomic factors, there were also the effects generated by crime, as well as permitting, which extends the periods for obtaining permits and patents.
Oxxo told Diario Financiero that it is committed to “gradual, controlled and orderly growth.”
This, therefore, “implies constantly evaluating the profitability” of store locations and making decisions “on relocation and openings according to market needs.”
Finally, the company stressed that it will continue working to strengthen its position in Chile, but that for the moment it has chosen to slow down the speed of growth in this market.
