Table of Contents

Introduction..........................................................................................................................2
History...................................................................................................................................3
Strategies of OXXO.............................................................................................................4
Key challenges....................................................................................................................6
Bibliography.........................................................................................................................7

1
Introduction.
Due to the great impact that retailers have on the economy, the high annual sales as
well as the supply of jobs and the economic spillover that this type of business models
bring in different parts of the world, it is very important to analyze the strategies they
develop, how they apply them, and what will be the challenges that they will have to
overcome to continue their development and that of the communities in which they
operate.

The importance of these retailers goes beyond the company's own development,
since they generate employment and demand for services from hundreds or even
thousands of product suppliers. Also, the vast supply of products they offer to their final
consumers at an affordable price and without the need to search in different places is of
great importance.

The purpose of this project is to analyze the strategy of OXXO, a Mexican retailer
company that is under a process of expansion in Latin America. First, a brief history and
description of the retailer shall be given in order to understand how this franchise came
to be. Afterwards, the implemented strategies by OXXO will be analyzed as well as the
challenges that this retailer company is facing.

2
History.

Oxxo is the largest convenience store chain in Mexico and Latin America, with
more than 30 years of experience and 15,999 1 stores located throughout the Mexican
Republic and 23 stores in Bogotá, Colombia.

It is part of Femsa, a Mexican-founded company, whose origin dates back to the

year of 1890. It is a leading company that participates in the beverage industry through
Coca-Cola Femsa, the largest independent bottler of Coca-Cola products in the world.
By world means in terms of sales volume; in the retail trade through Oxxo. In the beer
market, it is the second largest investor in Heineken, one of the leading brewers in the
world with presence in more than 70 countries.

From 1970 to 1979 The first stores opened in Monterrey city, from that moment it
became necessary to create the concept of Oxxo as a retailer by their own. The
following year, operations in Chihuahua, Hermosillo and Mexicali were already in place.

With the intention of generating a social contribution to allow people to develop a

commercial career and that their children could also do it, in 1982 the Mercantile
Commissioners model was created and the OXXO stores began to be concessioned to
a work team lead by a head of household and its members.

In 1986 OXXO started to develop one of the first events in Mexico that involve
the community as a strategy to develop marketing in the country, with the prize “OXXO
Premio a la Ecología”. Since 1986, this prize has been awarded by OXXO and the
Secretariat of Education to preschool, primary, secondary and special education
schools that carry out activities in favor of the environment, community service and
values.2

3
From 1990 to 1994, the company suffers changes in its logo, facade, image and
business model. It is during this decade and with these changes that they begin their
most aggressive growth phase in Mexico and become independent of the Cuauhtémoc
beer group, creating a segment of the FEMSA conglomerate and opening the
opportunity for more brands to enter their OXXO stores. It was in 1999 when they
developed their "own brand" project, which was basically the acquisition of a series of
licenses for mass consumer products.

In the year 2009, OXXO managed to break their position as a national retailer
and became international with the incursion of OXXO stores in Colombia. In 2013, its
goal was not only to replicate the pace of openness in Mexico, but also to roll out the
payment system for public services, tickets and means of transportation, ticket office for
entertainment events, shipping or national drafts, payment of purchases made
previously by digital means and everything related to the cancellation of some type of
invoice.3

At the end of September 2016, OXXO announced the opening of its first store in
Chile, in the “La Dehesa” sector in Santiago, while eliminating the “Big John” brand and
adapting its stores with the new brand.4

Strategies of OXXO.

There are different ways of measuring the success of this franchise. One is the creation
of strategies taking into account three different factors: logistics, rented location and no
franchises.

Logistic-wise, they are not so different from other competitors such as 7Eleven,
or Walmart Mexico; they work alongside with a third partner “FEMSA Logistica”, the
subsidiary of Femsa that has in its hands the distribution and supply of all the Oxxo
stores installed throughout the country, and that has been adapted to the different
formats of these units, in this way they save cost of transportation insurance and even
venture into energetic resources like the delivery of gas.

4
OXXO is focused on the development of key competencies among which one can find,
on one hand, the segmentation of stores according to the specific need of the
customers by location; on the other hand, it boasts of a careful selection of new
locations. On this area the best example takes place in Chile where they are taking all
the stores of a previous store, “Big john”, and using their previous locations, all in the
center of Santiago.

The company has an organizational structure as the basis for a sustained

expansion throughout Mexico. Another of its competitive advantages is focused on a
Process optimization, constantly improving the logistics structure, implementing more
sophisticated information systems, expanding marketing capacity and developing a
closer relationship with suppliers.

Also, another pillar of the competitive advantage is given by a very important

capacity of information intelligence. This way, category managers can develop new
deals, marketing, and pricing strategies in order to better serve to consumers both
at the local area level and throughout Mexico.

OXXO encourages the regional economy by promoting in a particular way

suppliers of the various entities where it operates.

The main attributes of OXXO include:

 Attention and service.
 Closeness.
 Speed and comfort.
 Schedule (some stores are 24/7).
 Variety and supply of products.
 Competitive prices.
 Support clients in additional services such as receipt payments.

Among other factors, the growth occurred given the continuous expansion, both in
the

5
 number of stores as in the traffic of customers in them. All of this, thanks to the great
variety of more profitable products and services at competitive prices that are
offered,
from the ready-to-drink coffee to the airtime recharge of cell phones, increased the
traffic of 80 customers to stores.

Key challenges

One of the strategies of OXXO since its inception has been to be a convenience store,
with a wide variety of products and services in each corner of the city, and this has
helped create a very diverse network of customers and suppliers, so much that It can
become a problem if special care is not taken over quality control in the chain of
suppliers, especially when it is outside of Mexico. This has been mitigated with constant
monitoring in the purchase experience of its Colombian and Chilean customers and
keeping a direct investment, in this way the company can act promptly or adapt the
model with the problems of a franchise.

The second challenge is to approach the communities and absorb the identity
until people see it as part of their culture and not as a threat, which simply seeks to
provide quality services and products to their customers throughout Latin America,
avoiding the problem that other international stores have encountered, such as
Walmart5, which are perceived by some communities as a threat to their lifestyle,
environment and even their economy.

In times where social networks are within reach of practically everyone, it is

vitally important to keep an eye on not only the numbers and balance sheets of the
company, but also on the way in which this company develops and even evolves within
each community.

As well, the company should make an extra effort in the advertising campaigns
about their actions in favor of the environment, academic development, and
communities at risk, mainly those carried out continuously. These bells in PRO of the

6
communities must be known by the community itself, so that a bond of trust is created
between these actors.

Integrate the use of apps in certain regions to catch the rhythm of this niches and
be easily approachable.

7
Bibliography.
1
Femsa Group. (2017). OXXO | FEMSA. Retrieved December 5, 2017, from
http://www.femsa.com/en/femsa-businesses/companies/oxxo/

2
Femsa Group. (2017). FEMSA | Premio OXXO a la Ecología. Retrieved December 9, 2017,
from http://www.femsa.com/es/acciones-con-valor/premio-oxxo-ecologia/

3
Edwin Bohórquez Aya. (2013). La estrategia de Oxxo en Colombia | ELESPECTADOR.COM.
Retrieved December 9, 2017, from
https://www.elespectador.com/noticias/economia/estrategia-de-oxxo-colombia-articulo-
454172

4
Julián Mazzucco E. (2016). EyN: Femsa abrirá primer local Oxxo en La Dehesa y eliminará
marca Big John. Retrieved December 9, 2017, from
http://www.economiaynegocios.cl/noticias/noticias.asp?id=294399

5
Ethan Wolff-Mann. (2016). Walmart Closes Stores, Leaving Small Towns with No Groceries |
Money. Retrieved December 11, 2017, from http://time.com/money/4192512/walmart-
stores-closing-small-towns/