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Walmart Owns Most of the Supermarkets in Mexico

The U.S. and Mexico have influenced each other in many ways over the course of their history, through both the exchange of culture and the cross-border trade of goods and services. One lesser-known area of overlap between the two nations? Supermarket ownership.

This graphic from Latinometrics ranks supermarket popularity in Mexico by tallying the number of locations per chain, and showing who owns those brands.

Mexico’s Relationship with Walmart

When it comes to supermarkets in Mexico, no single company comes close to matching the reach of Walmart. Also the world’s largest company by revenue, Walmart has over 2,700 stores in the country, including chains it owns such as Sam’s Club and Bodega Aurrera. The latter is both the largest supermarket within the Walmart category, and also the most popular in Mexico.

Bodega Aurrera was first established in the 1970s, two decades before Walmart entered Mexico’s market directly in 1991. The discount store now has some 2,000 locations across the country.

In fact, it’s almost safe to say that Mexico is Walmart’s second home. After the U.S., which has just over 5,000 stores, the greatest number of Walmart stores reside in Mexico. But on a per capita basis, there are more Walmart-owned stores in Mexico. Specifically, there is about one Walmart-owned store per 47,000 Mexicans, compared to 62,000 for Americans.

Source: Walmart.com, Statista (International figures, January 2022), *Japan/UK figures from January 2021

The company’s presence in Mexico is so strong that Walmart’s Mexico division trades separately on the Bolsa Mexicana de Valores (BMV) under the name Walmex. In March of 2022, Walmex had a market cap above 1.3 trillion pesos, or $64 billion.

Supermarkets in Mexico by Revenue Market Share

Overall, with the thousands of stores that they operate, Walmart’s revenue in Mexico gives it a 68% market share within the country’s supermarket industry.

Other American grocery retailers to make the list include H-E-B, a San Antonio-based chain with stores in northeast Mexico, and Costco, which opened its first Mexican location in 1992 as Price Club (before the companies merged).

Sorianna, the next biggest supermarket operator, holds about 15% of the industry’s market share. It is joined by Chedraui, Casa Ley, La Comer, and Alsuper as Mexico’s biggest domestic grocery chains, with some of them also extending their reach into the Southwest United States.

American Companies That Failed in China

For decades, China has been a top priority for American companies looking to expand.

This is because the country’s middle class is simply enormous, growing from 3.1% to 50.8% of the country’s total population between the years 2000 and 2018. According to Brookings, there are now at least 700 million people in China’s middle class, and this group has never had more disposable income to spend on consumer goods and services.

Despite the size and potential of the market, China is not an easy place for foreign businesses to enter. As this infographic shows, many of America’s biggest names eventually admitted defeat.

Companies by Tenure

The following table lists the tenures of every company included in the graphic.

It’s worth noting that Google’s parent company, Alphabet, still maintains a physical presence in China. Google’s services were banned by the Chinese government in 2010.

Dates were gathered from various media reports and sources. There may be small deviations from when a company actually entered or exited.

The reasons for why these companies withdrew are surprisingly similar, and can be broken down into two broad categories.

Retailers Fail to Adapt

Failing to adapt to the cultural differences of Chinese consumers is a common mistake. Here’s how two American retailers learned this lesson the hard way.

Best Buy

Best Buy struggled because Chinese consumers were not willing to pay a premium for brand-name electronics. Local retailers could often source similar (or counterfeit) goods for much cheaper, and undercut Best Buy’s prices.

“Why buy a Sony DVD player or Nokia phone at Best Buy when you can pay less for the exact same product at a local store?”
– Shaun Rein, China Market Research Group

Best Buy also made the mistake of bringing over its large flagship stores, which were out of reach for most consumers. Due to severe traffic congestion, locals preferred smaller shops that were closer to home.

Home Depot

The Home Depot expanded into China around the same time as Best Buy, but unfortunately it was another cultural mismatch.

Home Depot failed to acknowledge that “do it yourself” repairs are not a strong cultural match for China. Labor costs are relatively low, so rather than do the work themselves, many homeowners prefer to rather hire someone else to do it. On the other side of the equation, the American brand failed to win over contractors doing the repairs and renovations.

The Home Depot’s product offerings were also left unchanged from America, making them a poor match for local tastes. As a point of comparison, IKEA has had a presence in China since 1998, and continues to open new stores to this day.

Tech Firms Clash with Regulators

Uber’s experiences in China make a good case study on how American tech firms struggle to succeed in Asia’s biggest economy.

For starters, breaking into the Chinese market was incredibly expensive. Uber spent billions on subsidies to attract customers and drivers, and losses were quickly piling up. To make matters worse, domestic rivals like DiDi were also handing out subsidies.

On the operational side, Uber ran into several hurdles. To avoid issues with China’s data localization laws, the company needed servers on Chinese soil. Its navigation provider, Google Maps, also had limited accuracy in the country. This left Uber with no choice but to partner with Baidu, a Chinese tech company.

The final straw, however, was likely a set of impending regulations which targeted the ride-hailing industry. Under these rules, Uber risked losing control of its data, and would need both provincial and national regulatory approvals for its activities. Even further, subsidies would also no longer be allowed.

Uber realized that doing business in China was unsustainable, but its exit wasn’t exactly a failure. In 2016, Uber sold its assets to rival DiDi and took an 18.8% stake in the company. Ironically, DiDi is now embroiled in a conflict with Chinese regulators over its listing on the NYSE.

The Tech Fallout Continues

Since Uber’s departure, the Chinese government has increased their grip over the tech industry. This has driven more American firms out of the country, including Yahoo and LinkedIn, which is now owned by Microsoft.

Both firms announced their withdrawals in 2021 and were rather clear about why they made the decision. Yahoo cited its commitment to a “free and open” internet, while LinkedIn says its decision was due to a “considerably more difficult operating environment and higher regulatory requirements”.

Given the geopolitical tensions between the U.S. and China, companies that generate data (often seen as a national security concern) are likely to continue facing regulatory hurdles.

Outside of tech, China is still a massive opportunity for American businesses. By 2027, the country’s middle class is expected to reach 1.2 billion people, or one quarter of the global total.