Mexican Retailers Join Forces Against Walmex

MONTERREY, Mexico — Three Mexican retail chains said on Tuesday they would set up a joint supply and purchasing company to formalize an alliance against retail powerhouse Wal-Mart de Mexico (Walmex), according to a Reuters release.

Grupo Gigante , Soriana and Controladora Comercial Mexicana said in a joint statement the company, Sinergia de Autoservicios, would buy and distribute materials for the three chains, which would have equal ownership.

"The union of the three self-service retail operators will be exclusively in the area of purchases and distribution, generating economies of scale, more operating efficiencies, better technologies and better logistics," the companies said.

Walmex, majority owned by Wal-Mart Stores of Bentonville, Arkansas, said last week that earnings before interest, taxes, depreciation and amortization rose 11% year over year to 2.094 billion pesos, boosted by operating efficiencies and fewer costly store openings.

Aggressive expansion and advertising combined with its price cuts and "everyday low prices" campaign have fueled sales and helped Walmex bite deeper into the market despite weak consumer demand.

Gigante, Soriana and Comercial Mexicana, which have seen their sales pressured over the last two years, are hoping the alliance will help them forge agreements with suppliers that translate into lower prices for consumers and give them the leverage they need to fight back against Walmex.