Canned white asparagus. Spanish serrano ham. Sushi rice. It's the fancy imports, says Claudia Gonzalez, that bring her to Comercial Mexicana, the nation's No. 3 retailer.
But this day, she also picked up an industrial-sized bag of diapers.
"The diapers are probably cheaper at Wal-Mart, but you can't get any of this other stuff there," says Ms. Gonzalez, unloading an overflowing cart in the parking lot of one of Wal-Mart's top competitors in Mexico. Then her voice drops. "The people at Wal-Mart just aren't like me," she whispers.
Ms. Gonzalez spends $100 a week on groceries, four times what a minimum-wage worker earns in that time. And while not exactly politically correct, her attitude could be the key to survival for Comercial and a half-dozen "big box" chains that are urgently testing new strategies after nearly a decade of trying to keep up with Wal-Mart.
Having learned that they can't go mano-a-mano with the world's retail champ, hundreds of stores here are busily upscaling - adding cozy cafes and stocking fine cheeses, gourmet dog food, and seasonal specialty items - an alternative strategy based on hard-won experience. "Nobody can beat Walmex. It is and will continue to be the dominant competitor here," says Joaquin Ley, an analyst at Santander Investments. "Instead, everyone else is racing to differentiate themselves."
Indeed, since a consolidation in 1997, Wal-Mart de Mexico SA, or Walmex, the Mexican extension of its Arkansas-based parent, has steadily gobbled up everything in its path, posting soaring numbers - sales increased 10.5 percent last year - and pouring piles of cash into growth with trademark intensity. Today, Walmex runs 411 retailers and 285 restaurants, is Mexico's largest private employer, and has the second-highest market capitalization of any company on Mexico's stock exchange.
Its most recent victim is Carrefour, the world's No. 2 retailer after Wal-Mart. The French company announced late last Thursday that it would sell all its 29 Mexican stores, plus two under construction, to Chedraui, the country's sixth-largest chain, for a rumored $545 million. The retreat comes only two years after Auchan, the world's 23rd-largest retailer, also gave up on Mexico.
Eager to avoid such a fate, Soriana, Mexico's second-largest chain, says it will invest more than $300 million this year, and will fill its stores with what director of strategic planning Pedro Mejia calls "perks and improvements." It also plans an enormous emphasis on customer service. "Until 2003, we only had one format: trying to get all clients," he says. "Now our new stores are oriented to a higher socioeconomic level."
On top of working to maintain a somewhat fancier atmosphere, with more expensive stores in wealthier neighborhoods, both Soriana and Comercial Mexicana have begun developing their own lines of higher-end products, a strategy analysts say was inspired by US chains like Target.
It's a bold move, especially in a country where 70 percent of the population lives below the poverty line. But it could simply be a pragmatic approach to a marketplace where many people are already convinced that Wal-Mart's famous "Everyday Low Prices" are unbeatable.
"I shop at Wal-Mart because it's cheaper. Across the board, everything costs less here," says Maria Eugenia Zubiria, holding aloft a box of Special K cereal that actually costs nearly 5 pesos less at the Comercial Mexicana three blocks away. The perception that Wal-Mart is unbeatable on price is the store's best ally here. But in reality, thanks to a year-old buying alliance between Comercial Mexicana, Soriana, and the chain Gigante, prices for common groceries are essentially identical at Wal-Mart's competitors.
In contrast to chains like Soriana, there are other retailers who don't yet want to give up on the Mexican masses. Among them is Gigante, Mexico's fourth-largest big-box chain, which has most closely mirrored Walmex's strategy, peppering the airwaves with commercials touting falling prices.
Like Walmex, the majority of Gigante's stores are in the dense central areas of Mexico, particularly Mexico City. Also like Walmex, which also runs Sam's Club and the chain Bodega Aurrera, Gigante has tried to appeal to blue-collar consumers.
On top of 127 flagship Gigante stores, it has 34 Super G and 28 Bodega Gigante big boxes, which look and feel nearly identical to Bodega Aurrera, with its smaller selection and emphasis on food staples.
Despite the stiff competition from Walmex, Gigante says it will invest $90 million this year, while others, like Soriana and Chedraui, will break into the key Mexico City market this year.
It's a bold move in a country where millions of shoppers are like Virginia Soto, a retiree who never sets foot in a big-box store. "I'm just not used to them," says Ms. Soto, who buys all her food in a weekly street market near her house. "I'm not about to go anywhere else."
Yet Soto is the type of person that the chains are increasingly targeting. The big retailers point out that fully one half of the retail market belongs to "irregular" commerce like public street markets. And in this Coca Cola-crazy country, only 30 percent of soft-drink sales are in big box stores, according to Mr. Ley.
"There's a lot of room for growth, because this society is changing," says Carlos Ruiz, professor at the Pan-American Institute of Business Administration. "We're seeing a change in ages and in habits of consumption. More and more, Mexico is going to become oriented to [big box] stores."
And many are destined to be Wal-Marts. Walmex captured about a quarter of the retail market last year. This year it will invest $750 million, more than all its competitors combined, opening 70 new stores, according to Walmex spokesman Raul Arguelles. "Expect many, many more square meters of Wal-Mart sales floor in Mexico in the future," he says.