Tuesday, April 14, 2009

Wal-Mart's Next Conquest: Latin America

Last May, Michael Bergdahl, former director of human resources at Wal-Mart, told the First Global Forum on Customer Service in Santiago, Chile, “Our strategy of low prices has become a competitive advantage for us. So long as our competition focuses on how much they can get for their products, we focus on how little we can get for ours.” According to Bergdahl, this strategy generated revenues of about US$13 billion in 2007, and in 2008, “we open a new store each day, and each week, 176 million customers buy from our stores.”

This year, disruptions from the global financial crisis have forced retailers to discard their earnings forecasts and alter their plans for investment and expansion. Nevertheless, Wal-Mart has emerged unscathed, and has even continued to grow. In February, the company announced its results for 2008, during which it registered US$13.4 billion in income -- an increase of 5.2% from 2007. That’s quite an achievement in times like these.

Taking advantage of its strong performance in Brazil and Mexico, Wal-Mart has now undertaken the massive task of conquering the rest of Latin America. The company announced that this year, it will open stores in Argentina, Brazil, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Chile and Puerto Rico.

For Claudio Aqueveque, a professor at the business school of Adolfo Ibáñez University in Chile, the current recession represents an opportunity for Wal-Mart. “The problems our region is facing this year will lead to major changes in the behavior of consumers, associated with a greater sensitivity to price; and this means tuning in to [Wal-Mart’s] low-price strategy.”

Read the full story originally published Mar 25, 2009 at Wharton.

Guatemalans Make an Alfombra in Virginia

It is a tradition in Guatemala to decorate the streets where Semana Santa processions are to pass with "alfombras". Alfombra translates as "carpet". The pavement is decorated with elaborate drawings and patterns made from brightly colored sawdust. When the procession passes, the pretty designs are destroyed. The most spectacular examples of Semana Santa alfombras can be seen in Antigua, Guatemala.

This year, Guatemalans from Chiquirichapa Concepción, Quetzaltenango, now residents in the State of Virginia, USA. UU., produced a rug in a street near the church of San Antonio de Padua in Falls Church, VA.

Dany Lopez and Ubaldo Sanchez explained that this is a tradition that began five years ago and it is a way of keeping the Guatemalan culture and traditions alive.

Sanchez explained that with the help of other artists, molds were made. The carpet took about eight hours to make.

See original story and photo here.

Pollo Campero Opens Restaurant in Chelsea, Massachusetts

The Guatemalan restaurant chain Pollo Campero has recently opened a new branch in the city of Chelsea, in the state of Massachusetts.

As in all the restaurants that opened in United States, the taste of the brand has caused sensation among the guests who make long lines at the entrance to the restaurant to taste the taste of the traditional fried chicken.

The success of the restaurant, according to the newspaper quoted Boston Globe, is because it is a great opportunity for Central American migrants to plunge into the tastes, sounds and smells of home far away.

The chain has five restaurants in the state running, and opened others in New York and Miami, among others. Its operations extend to Spain, China, Central America and South America.

Macroeconomic Indicators Deteriorating

The impact of the global financial problems became apparent in the first quarter of this year in Guatemala. A decline in business led to a decline in inflation, slower growth in exports, falling imports, and falling remittances sent to Guatemala from overseas.

Imports in March of this year fell 29 percent, exports grew just 4.1 percent, remittances fell 7.1 percent, and tourism increased by 2 percent.

However, it's interesting to note that despite the declines the inflow of dollars entering the economy is greater than the outflow of dollars. Banguat's balance as of March 26 was plus $656.3 million.

While the macroeconomic indicators have deteriorated, Guatemalan monetary authorities are not declaring a recession. A recession is defined as a drop in GDP (Gross Domestic Product) for two consecutive quarters, and that has not occurred.

Banguat has revised the projected economic growth figures. Back in December, growth was projected at 3 to 3.5 percent. On March 25th, the projection was scaled back to 1 to 2 percent. Experts agree that these figures may still be optimistic because the full impact of the global crisis is unknown.

Paulo De Leon, a researcher at Central American Business Intelligence, noted that growth this year could be between 0 and 1 percent.

Forecasts based on past crises are not adequate since the factors that have driving the current crisis are new. And there is political manipulation from not wanting to admit the seriousness of the crisis.

Eric Daniels, professor of economics at Clemson University USA, found that there is a delay in the impact of the crisis in a country and the length of the slowdown could be several years.