Wal-Mart makes strategic move in Brazil

US-based Wal-Mart, announced a US$649 million investment in Brazil. The chief executive of Wal-Mart Brazil, Vicente Trius, unit announced that the money will go towards 36 new outlets and a new distribution centre.

"Wal-Mart's buying moves have also been smart ones in Brazil," said Trius. Brazil is now Wal-Mart's fourth most important market in terms of strategic growth, behind Mexico, Canada and the UK. With US$6 billion in volume last year, Wal-Mart now commands more than a 10% market share in Brazil.

The growing consumer culture there includes 71% low-income people, he noted, and they have responded with enthusiasm as the cost-cutting operator has continued to deliver better values. Wal-Mart supercenters, for example have improved from a -2% price differential vs. competitors in 2005 to a -8.5% differential today, as the overall chain surpasses 300 stores.

Trius indicated that Wal-Mart intends for Brazil to become a key driver of long-term growth by With all three of the biggest global retailers sharing the opinion that Brazil offers some of the best untapped opportunities among developing countries, the battle to become the leading grocery retailer in the country will most likely intensify further.

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