Wednesday, May 29, 2024

Walmart to acquire food delivery service Cornershop

Retail giant Walmart will acquire Latin American food delivery service Cornershop for US $225 million, the company said this week, in a move aimed at increasing its online grocery business in Mexico and Chile.

Shares of the company’s Mexican subsidiary known as Walmex spiked more than 3% on the news to close at their highest level since late July.

The acquisition of Cornershop, whose mobile application allows shoppers to select grocery items from several participating supermarkets, is part of Walmart’s broader global strategy to invest in online delivery services as it aims to compete with Amazon, the world’s largest online retailer.

Analysts say the purchase will help the United States-based retailer to quicken deliveries in Mexico from its Walmart, Superama and Sam’s Club stores.

“We believe the transaction is positive and will result in greater efficiencies and higher growth in online sales,” financial analysis company Signum Research said in a report.

According to market research firm Euromonitor International, just 3% of all retail sales in Mexico are online but traditional retailers are investing in logistics and technology to meet the growing demand for e-commerce.

Amazon México last month expanded its inventory to include food and beverages, including snacks, sweets, coffees and teas and wine and liquor, increasing the options for online shopping in Mexico.

Walmart said that it anticipates closing the Cornershop deal by the end of this year, adding that the application will continue to be an “open platform” that allows supermarkets owned by other companies to partner with it.

Mexican grocery chains Chedraui and La Comer as well as U.S.-based retailer Costco all offer deliveries via the app but declined to comment on Walmart’s acquisition.

Walmart International CEO Judith McKenna said the Cornershop deal would provide a learning experience for the company’s other markets.

Walmart México opened 79 new stores last year under a range of its brands and last month announced that it is moving into the automotive retail fuel market in four Mexican states.

Source: Reuters (en)

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