The Success Story of Wal-Mart in Mexico

Wal-Mart was founded by Samuel Moore Walton (Sam Walton) in 1962. Before starting his own discount stores, Sam Walton had worked at JC Penney Corporation, Inc. for a brief period and had later run Ben Franklin franchises . His experience in retailing led Sam Walton to believe that buyer behavior in the US was changing rapidly and discount stores would be in great demand in the future especially in the smaller towns. When he was operating the Ben Franklin franchises, he proposed to the owners that the business could grow rapidly by passing on more margins to customers and making profits on volume, rather than bargaining with wholesalers in order to make profits...

Nearly 70% of the population in Mexico lived below the poverty line and they depended largely on informal street shops for cheap food and clothing. Under such a scenario, Walmex's low-price strategy raised enormous interest among Mexican customers. The low-price strategy suited the socio-economic conditions of Mexicans, which led to the company's immediate acceptance and quick growth. Through its low-price strategy, Walmex was able to strategically penetrate into markets which otherwise depended on unorganized vendors...