Retail Giant Forms
Wal-Mart Centroamérica
By Katherine Stanley
Tico Times Staff
kstanley@ticotimes.net

Wal-Mart Stores, Inc., which bought a one-third share in Central America's leading retail alliance last year, announced yesterday that it had increased its investment in the company, making it the majority shareholder. The move makes Costa Rica, Nicaragua, El Salvador, Honduras and Nicaragua home to Wal-Mart Centroamérica, and adds them to the list of countries in the Americas, Asia and Europe where Wal-Mart has opened international operations.

Wal-Mart's additional investment in the Central American Holding Company (CARHCO), brings its total shares from the 33.33% it bought last year to (TT, Sept. 30, 2005) 51%, and gives the company control over 375 supermarkets and other stores in Central America. CARHCO is represented in Costa Rica by the Corporación de Supermercados Unidos (CSU), which owns Costa Rican fixtures Máx x Menos, Hiper Más, Palí, La Unión and Maxibodega.

The successful and controversial company will make no drastic changes now that it's at the helm, representatives said. The first steps will involve conducting a feasibility study to determine ways to strengthen and unify the three-part alliance – Wal-Mart, CSU and Guatemala-based La Fragua – as well as introducing an increasing number of Wal-Mart's retail products into Costa Rican stores. The company will also conduct market studies to determine whether new Wal-Mart stores would be successful in Costa Rica, according to Aquileo Sánchez, Corporate Affairs Director for CSU.

Though both Sánchez and Amy Wyatt of Wal-Mart's International Corporate Affairs division characterized the purchase as an important opportunity for Central America that is expected to create thousands of jobs, the CSU official admitted the leadership of the alliance is concerned about the possibility of negative publicity. In the United States and other countries where Wal-Mart operates, the cost-cutting giant has been criticized for putting small companies out of business and pressuring suppliers to provide the cheapest goods possible; it has also been accused of violating the rights of its workers, whom it calls “associates.”

“We're very worried that the entrance of Wal-Mart will be misinterpreted,” Sánchez told The Tico Times yesterday, adding that rumors about layoffs or other drastic changes for CSU employees are untrue. “No one will suffer.”

One might argue that Wal-Mart Centroamérica's competition might do just that. Representatives from various sectors maintain they are optimistic, though the consensus seems to be that vendors of generic toys, clothes and plastic goods are likely to be the hardest-hit by the enormous company, which offers low prices by pressuring providers to cut costs and by buying products in huge quantities.

“There's room for everybody in the market,” said Carlos Federico Monge, president of Grupo M, which operates Importadora Monge and El Gallo Más Gallo appliance stores in Costa Rica, Nicaragua and Honduras.

Last year, Wal-Mart, founded in 1962 in the U.S. state of Arkansas by Sam Walton, had $312.4 billion in sales (roughly eight times Costa Rica 's GDP in the same period). According to Wal-Mart's Web site, www.walmart.com, Wal-Mart employs 1.6 million workers at 6,200 retail stores worldwide.