Wal-Mart Takeover Marks Further Lat-Am Expansion

Retail giant Wal-Mart Stores has announced that its tender offer for Chile's leading supermarket operator Distribución y Servicio (D&S) has been successful, realising its long-held ambition of entering the Chilean market at a time when the economic slowdown will increase demand for its low-cost model. Wal-Mart has so far managed to secure a 58.2% stake in the business and is likely to eventually own almost 60%, with what's left remaining in the hands of the founding family. D&S is the leading grocery retailer in the country with around a 30% share of the organised retail market and net revenue of CLP1,526bn (US$2.8bn) in the first nine months of 2008, a 3.2% increase on the same period in 2007. In line with its low-price business model, Wal-Mart will look to employ its massive regional buying power and logistical expertise to push down prices. This will be particularly important given that consumer price sensitivity will likely increase in the short-term with BMI analysts currently expecting a sharp slowdown in real GDP growth in 2009 to 1.8%.

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