Tuesday, December 23, 2008

Chile Deal Spices Up Wal-Mart

In today's print edition of the Journal the offer by Wal-Mart to buy D&S (Distribución y Servicio) is advertised.

Buying D&S will give Wal-Mart an instant hold on 33% of Chile's grocery market, which can be linked to Wal-Mart's existing distribution chain running from Argentina to Mexico.

Instantly, it'll have a third of the market. More, Wal-Mart will use its existing distribution chain, which should reduce per unit costs.

D&S operates through a variety of store sizes, including smaller locations to compete with local shops in underdeveloped regions. Wal-Mart has experience with a similar model in Mexico, where it operates through 68% subsidiary Wal-Mart de México, known as Walmex. As it did with Walmex, Wal-Mart is only buying a majority stake in D&S. The family that now controls the retailer will keep a minority stake, which means Wal-Mart has an experienced local connection in the company.

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