Super Selectos: Winning the War Against Multinational Retail Chains
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Super Selectos
INTRODUCTION
This case thoroughly examines how Super Selectos, a local food retail chain from
El Salvador, became successful in competing against Walmart, the largest food retailer in
the world. After an overview of Central America region and the retail industry, the
strategies of global retailers are described. Further, the case describes the food retailers in
Central America and the Calleja Group. The case then delves into the competitive
environment by reviewing the history of Walmart and how it entered Central America.
The strategies used by Super Selectos are examined throughout the case in addition to
forming SUCAP, Supermercados de Central America y Panamá, a strategic alliance
established by owners/founders/CEOs of the leading domestic supermarket chains in
Central America.
The objective of this case study is to develop an understanding of Super Selectos’
competitive landscape in order to address compelling strategic issues. By conducting a
competitor analysis that focuses on significant environmental factors, competitive data,
industry leaders, and business strategies, strong recommendations can be proposed to
guide Super Selectos as it continuously competes with the world’s number one retailer,
Walmart.
This case is ideal for demonstrating the importance of the external environment,
competitive analysis, and SWOT analysis. The following points are to guide a review and
discussion of these important concepts.
• Describe the general environment that Super Selectos faces. What are the
segments in the general environment that relate to Super Selectos’ situation?
• Conduct a competitor analysis and assess the levels of market commonality and
resource similarity that Super Selectos has with Walmart. How will they influence
competitive behavior and the intensity of rivalry?
• Considering Super Selectos’ external and internal environmental conditions, does
a SWOT analysis reveal any insights to enhance the company’s efforts to compete
or improve performance?
• Examine Super Selectos’ strategies. How can the company remain as a market
leader in El Salvador? Based on your analysis, make recommendations in order
for Super Selectos to compete with Walmart.
ANALYSIS
• Describe the general environment that Super Selectos faces. What are the
segments in the general environment that relate to Super Selectos’ situation?
Segments in the general environment that impact Super Selectos are primarily
demographic, economic, political/legal, and global segments. Central America has a
Super Selectos: Winning the War Against Multinational Retail Chains
growing economy as a region, and El Salvador is the fourth largest economy in the
Central America region.
Super Selectos is the largest local food retailer in El Salvador. El Salvador has
several important and unique segments in the general environment. The primary
segments in the general environment that Super Selectos faces are:
General Environment
Demographic Segment
40.2% poverty rate in many municipalities (100
municipalities with extreme poverty rates of 40.2% and
household incomes averaging US $201; 146 municipalities
with extreme poverty rates of 19.4% and household incomes
averaging US $308; 16 municipalities with extreme poverty
rates of 7.6% and household income averaging US$534
Economic Segment
One of the largest growing economies in the region
Fourth largest economy in the Central America region (In
2010, its GDP reached US$21.2 billion, approximately
US$3400 per person)
One of the main sources of income was family remittances
from the US according to the Central Bank
Inflation rate one of the lowest rates in the region (2.1%
compared to 6.5% in the Central America region in 2010)
Large increase in the price of food and transportation (7.9%
increase in the price of food and 3.4% increase in the cost of
transportation)
Political/legal Segment
Improvements in the country’s economic and social
areas were backed by an anti-crisis plan:
– Creation of 100,000 jobs by 2011
– Increase public employee lowest salaries and
pensions 45% and 44% and the rest 6% and 8%
– Enforced warranties for purchased products
– The right to be reimbursed in cash when a product
was defective
Global Segment
Increase in the size of the commercial establishments
(allowed businesses to offer a greater variety of products in
larger volumes)
Adoption of information technology in logistics and
operations management (allow retailers to lower their costs
and become more efficient)
Super Selectos: Winning the War Against Multinational Retail Chains
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Super Selectos
• Conduct a competitor analysis and assess the levels of market commonality and
resource similarity that Super Selectos has with Walmart. How will they
influence competitive behavior and the intensity of rivalry?
A competitor analysis is the first step Super Selectos can take in order to be able
to predict the extent and nature of its rivalry with each competitor. There are two
important dimensions in a competitor analysis: market commonality and resource
similarity. The number of markets in which firms compete against each other is called
market commonality while the similarity in their resources is called resource similarity.
Year
Net sales (million US$) Growth from Last Year
2006
403 NA
2007 440 9.18%
2008 446 1.36%
2009 514 15.25%
2010 551 7.20%
Super Selectos: Winning the War Against Multinational Retail Chains
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Super Selectos
As both tables above indicate, Walmart has a much higher degree of financial
resource than Super Selectos does. Thus, although the degree of market commonality is
high, the degree of financial resource similarity is low. In terms of other resources,
Walmart and Super Selectos also have a low degree of resource similarity. Super Selectos
has the following resources:
On the other hand, Walmart has the following resources:
» Strong global brand recognition
» Customers’ perception of low price
» Strong central leadership with aggressive growth strategy
» High bargaining power as a buyer
» Real time information on inventory and supply
» Experience in international strategy
• Considering Super Selectos’ external and internal environmental conditions,
does a SWOT analysis reveal any insights to enhance the company’s efforts to
compete or improve performance?
Year Mexico Central America Consolidated
2009 21380.7 3414.8 21380.7
2010 23458.3 3648.9 26548.5
Net sales of Walmart Mexico and Central America (millions of US$)
Super Selectos: Winning the War Against Multinational Retail Chains
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Super Selectos
Strengths
Strong leadership
Leading supermarket chain
Existing brand image and recognition
Quick response to strong competitors
Management experience
Hi-Low pricing strategy
Many stores in remote areas away from
large cities
Differentiated markets served: Super
Selectos and Selectos Market
Flexible and locally focused
Many promotions
Quick day-to-day sales strategy
Considered number one supermarket in the
country
Strong revenue growth
Sell many Salvadorian products
Weaknesses
Does not have high bargaining power as
Walmart
No global exposure
Does not have the same level of resource as
Walmart
Opportunities
Targets customers that live away from
large cities
Can potentially expand to other countries
in the Central America region
Provides 100% Salvadorian products to
attract local customers
Threats
Other large global food retailer, such as
Walmart
Fierce competition on the rise
Competitors able to undercut price and
create value
Rival companies with means to expand
aggressively
Visibility of the market
Based on the SWOT analysis, Super Selectos is still in a very good position in the
market. Although there are some weaknesses and threats, the strengths and opportunities
seem to outweigh them. However, the weaknesses and threats will need to be addressed
in order for Super Selectos to remain successful in the market.
STRATEGY
• Examine Super Selectos’ strategies. How can the company remain as a market
leader in El Salvador? Based on your analysis, make recommendations in order
for Super Selectos to compete with Walmart.
Super Selectos: Winning the War Against Multinational Retail Chains
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Super Selectos
development of recommendations for handling Super Selectos’ most pressing strategic
challenges.
Alliance with Other Food Retailers in Central America
Super Selectos already joined SUCAP, which was formed by
1. Sharing information and ideas
2. Sharing best practices
3. Utilizing a joint purchase strategy
Members can use SUCAP to learn from one another and the most important thing
is, to gain higher bargaining power with suppliers when the members join purchases
together. This is a great strategy for smaller food retailers when they need to compete
with large global retailers such as Walmart. Another recommendation can be made
Super Selectos’ Leadership and Strategy
Super Selectos has the following important strengths:
» Strong leadership
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Super Selectos