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About two months after it began rebranding the c-stores it acquired last year from Delek US Holdings, Fomento Económico Mexicano S.A.B. de C.V. (FEMSA) has now converted 15 locations to its Oxxo banner. And signs point to the Latin American retail giant ramping up those conversions — and updating the in-store offerings — at greater speed in the coming months.
During FEMSA’s first-quarter earnings call on Monday, José Antonio Fernandez Garza, CEO of FEMSA’s retail division, which it calls internally as proximity and health, said consumer reactions to these conversions — all of which have been in the Odessa and Midland markets of Texas — have been positive.
“The increasing sales and traffic have been significant… even in the double digits for the first store,” Garza told analysts on Monday.
However, the executive emphasized that “it’s too soon to tell” what kind of sales expectations FEMSA will have for its U.S. Oxxo rollout. He admitted that the early success is likely a “honeymoon phase” that will eventually stabilize, and that FEMSA still has “a lot of work” to do to build Oxxo’s value proposition in the U.S.
Garza compared the type of sustainable growth FEMSA wants for Oxxo to that of a few regional players who’ve built loyal followings through consistent organic growth and quality in-store offerings.
"The players that are winning share are the 'super regionals' — the Wawa’s, the Casey’s, the QuikTrip’s,” Garza said. “They’re not obsessed with big M&A. They're obsessed with getting the value proposition right and expanding organically. That's what we want to do."
Focus on foodservice
When FEMSA began its rebrands back in February, company leaders said it intended to bring capabilities from its operations in Latin America, where it has over 20,000 convenience stores, to the U.S.
This process has begun, with the Oxxo Mexico team sharing its pricing, assortment and segmentation skillsets with the U.S. team, Garza said on Monday.
Garza added that part of this process has been building Oxxo’s foodservice offerings in the U.S. FEMSA is bringing its proprietary Andatti coffee program — which features beans grown in Veracruz, Chiapas and Oaxaca, Mexico — to its U.S. stores, and is introducing some locations to its Doña Tota QSR, which specializes in gorditas.
"The players that are winning share are the 'super regionals' — the Wawa’s, the Casey’s, the QuikTrip’s. They’re not obsessed with big M&A. They're obsessed with getting the value proposition right and expanding organically. That's what we want to do."