Yesterday it was announced that here in Brazil, two large supermarket chains, Pуo de Aч·car (currently Brazil's largest) and Sendas, the largest in Rio de Janeiro state, where Pуo is not very well-established yet, are planning a merger. The details were fuzzy, but it looks like some kind of a share swap and joint operation will be taking place.

Pуo de Aч·car (which is the trading name of its parent, Companhia Brasileira de Distribuiчуo, a public company traded in New York [quote]) currently has 446 stores in Brazil; family-held Sendas has 79. Combined operations will give the new company 525 stores, more than twice as many as their nearest competitor (French Carrefour, which, however, has about similar turnover to Pуo at present).

Enter Wal-mart. At present, Wal-Mart has a toe in the door here, with 22 shops and R$1.75bn in turnover (Pуo R$10.8bn, Sendas R$2.52bn). But Wal-Mart is considered front-runner in acquiring No. 3 retailer Bompreчo from troubled Dutch group Ahold. CBD would like to have Bompreчo, but the market considers it too much of a debt burden on CBD for them to buy the chain outright from Ahold, who need the cash. Wal-Mart presumably doesn't have the same liquidity issues. Buying Bompreчo would give Wal-Mart 138 stores and over R$5bn in turnover.

There's a very interesting piece on BBC Brasil today about "little Pуo, little Sendas and big Wal-Mart". The author, Lucas Mendes, points out some facts about Wal-Mart in Mexico:

A gigante americana entrou no Mщxico hс doze anos. Hoje tem mais de 600 pontos de vendas e emprega 101 mil pessoas, mais do que qualquer outra empresa no paэs. Fatura mais do que toda a ind·stria de turismo.

Suas vendas representam 2% do PIB mexicano, 30% das vendas de todos os supermercados e 6% das vendas no varejo. Ela nуo sufoca sє a concorrъncia mexicana. Nos Estados Unidos, os n·meros sуo semelhantes. [English]

He then asks the key question:

Serс que o que щ bom para o Mщxico serс bom para o Brasil ou, no Rio, o pуozinho e a sendinhas vуo bater no walzуo? [English]

Lucas points out that the Mexicans and Americans are happy with Wal-Mart, but to me it rather begs the question as to exactly how good this is for Mexico. For now, it looks like Pуo/Sendas may be one move ahead of Wal-Mart. Myself, I am surprised that Wal-Mart is moving so slowly (it may be that they are just having trouble growing themselves quickly in Brazil, but that hasn't stopped Wal-Mart before).

[Full disclosure: I am a CBD shareholder]
Where credit is due: the sales / stores figures came from O Globo 8 December 2003