BajaNomad

Oxxo

weebray - 9-24-2015 at 09:24 AM

Can anyone explain the economics of Oxxo to me? They continue to spring up here in the center of La Paz on some of the most expensive properties in the area. There is a new one being built on the corner of Revolucion y Morelos across from Mc Fishers restaurant. This is smack in the middle of a bit of a renaissance of restored old colonial buildings. How much coke and potato chips do you have to sell to amortize this investment?

SFandH - 9-24-2015 at 09:48 AM

Judging by the volume of cooler space taken, beer is the money maker with flavored sugar water running a close second. Then salty, oily, deep fried potato/corn stuff in bags, then candy, then microwave hot dogs, then cigarettes. Distilled booze and wines too. Coffee with sugar and cream in the morning.

Probably all high profit margins.

What's not to like?

Oh yeah, usually in the back corner there will be some "fresh" fruit and vegetables.

They are almost everywhere. El Rosario has a new one. I bet on the highway at the entrance to Mulege within a year or two.

Also, I've been in a "Super Oxxo". It's like a small super market with produce and meat sections and household goods.


[Edited on 9-24-2015 by SFandH]

The Market Working.................

MrBillM - 9-24-2015 at 10:02 AM

Like the Market's supposed to WORK !

Contrary to the "Liberal" view of Paradise in which people are FORCED to do what's good for them.

As determined by the Government.

AKgringo - 9-24-2015 at 10:03 AM

Even if not all the stores turn a profit, if they come close to breaking even, it makes it unlikely that a competitor can open a store in that neighborhood.

It might be a matter of being your own competition!

bajagrouper - 9-24-2015 at 10:18 AM


I borrowed this from the PV forum. It gave me a good laugh

This came from a news release on a parody website, called "El Deforma": eldeforma.com/2015/…

A quick translation into English:

One OXXO Opens Inside of Another OXXO

--Customers are confused since they operate independently--

MEXICO CITY This morning, the 2,497,108th OXXO store was inaugurated on Revolution Avenue.

This store opened inside another OXXO that was already there, in an empty space it had. Both OXXOs operate simultaneously, but independently of each other. (This means you can't buy potato chips from one of the OXXOs and pay at the register of the other).

The decision was made after the original OXXO had a great demand from office workers who go there daily for their lunch of Maruchan soup; but sometimes lose in the register line, if open, the 20 minutes they are given to go to lunch.

"Rather than have another register, it was easier for us to open a new OXXO inside the other OXXO. Of course, the new OXXO will have two employees like all the others: one who rings up the purchases, and one that tells you they will ring you up at the other register", said Archibald Andatti, CEO of FEMSA.

With this idea, the convenience store chain will save from having to pay another rent or another operating permit. But in return, it is expected that there is much confusion among customers, as there is no clear division between one OXXO and the other. The stores will have a policeman guarding that the customers don't pass products from one to the other, but apparently, the same policeman does not know which is which, and he has tried to buy a liter bottle of beer from one OXXO at the register of the other.

If the model works, OXXO will look to continue this idea of ​​saving purchasing costs or rental of premises, and begin to open OXXOs within 7-Eleven and Extra stores.

rhintransit - 9-24-2015 at 10:20 AM

I had great hopes for OXXOs everywhere...imagining a clean bathroom when needed. Unfortunately the individual stores didn't get the memo...I don't even bother to stop and hope any more that one is available, functional, or clean-ish.
I believe, but don't know for sure, that they are all franchises, with the parent company providing the building. Like Modelorama. A number of vacant ones of those around Loreto...rent guaranteed five years in advance, so no motivation for landlords to do anything about the eyesores.

Oxxo?

akshadow - 9-24-2015 at 10:47 AM

Quote: Originally posted by weebray  
Can anyone explain the economics of Oxxo to me? They continue to spring up here in the center of La Paz on some of the most expensive properties in the area. There is a new one being built on the corner of Revolucion y Morelos across from Mc Fishers restaurant. This is smack in the middle of a bit of a renaissance of restored old colonial buildings. How much coke and potato chips do you have to sell to amortize this investment?

Gee I was thinking they were money laundry locations> Why else build so many without probable profit.

SFandH - 9-24-2015 at 10:52 AM

They are quite an operation. Wikipedia states that they opened in 1978, 37 years ago, and there are now 13,000 stores. True convenience stores. Locals can even pay utility bills and buy cell phone minutes there. I know some gringos lament the demise of "Paty's Super Mini", the classic small town tienda, but OXXO does a better job. Given a choice, I'd chose OXXO.

Plus, I bet the jobs they provide are relatively secure with adequate pay and benefits. Not sure about that though.

Phil C - 9-24-2015 at 12:32 PM

OK, how do YOU say OXXO? I say O-X-O in English, I'm sure that's not right but what is?

SFandH - 9-24-2015 at 12:42 PM

aux-zo

or maybe

aux-oh

[Edited on 9-24-2015 by SFandH]

sargentodiaz - 9-24-2015 at 01:43 PM

It is wholly owned by the beverage company FEMSA (Fomento Económico Mexicano).

Eugenio Garza Lagüera was behind the beverage company and OXXO. His parents and grandparents were very influential and I image they were/are Criollos, full-blooded Spaniards born in Mexico who constitute the modern ruling class of Mexico.

I have a hunch there was a Garza among the soldiers who came to Mexico with Cortez. :cool:

weebray - 9-24-2015 at 02:01 PM

The economics still puzzle me especially when you factor in the dilution of the market. There are a number of Oxxo's here within a block of each other. Are these franchises? Do they own the land? Are they backed or financed or owned by FEMSA? I understand that Coke is the fuel of the raza here but for hundreds of years the raza was getting all the Coke they needed at the mom and pop tiendas without an Oxxo on every corner. Has the demand increased tenfold?

SFandH - 9-24-2015 at 02:48 PM

You'll need to conduct a survey I guess.

Let us know.

bajabuddha - 9-24-2015 at 03:14 PM

Funny about the 'money laundering' accusations. The way I heard the story, 7-11 was started up by the Tandy Corp. (Big Texas Oil, Radio Shack) to create a negative-money-flow corporation to help assuage their gross windfall profits they were raking in.... and unfortunately for them, John Q. Public didn't mind the incredibly over-inflated shelf prices of most goods just for convenience of not having to hit a 'big-store' and stand in line.

Point being, it's possible (just sayin') that OXXO could be in the same category. Big Business is now bigger than most average people can understand, especially when you get into ownership of thousands of stores. Plus, the emerging middle class possibly feels it more 'acceptable' to go to a bright OXXO than an old corner abarrotes.

Oh thank Heaven! For Seven Eleven. Can you say, "Slurpee" in Spanish? :light:

Bajahowodd - 9-24-2015 at 04:03 PM

It's fairly simple. A major manufacturer of soft drinks (Coca Cola) and beer (Heineken) develops a process that cuts out the middle man. More profit for them.

rts551 - 9-24-2015 at 06:11 PM

had to laugh at the adequate pay part.

SFandH - 9-24-2015 at 06:36 PM

Quote: Originally posted by rts551  
had to laugh at the adequate pay part.


Do you know how much a cashier makes?

El Jefe - 9-25-2015 at 09:22 AM

But with all the OXXO's out there you still can't get a big gulp type diet coke over crushed ice with a straw! What's up with that?

rts551 - 9-25-2015 at 09:29 AM

Quote: Originally posted by SFandH  
Quote: Originally posted by rts551  
had to laugh at the adequate pay part.


Do you know how much a cashier makes?



One lady I know in Vizcaino say she makes 100 pesos a shift. Seems like the norm for these type of jobs. I know a PEMEX gas jockey that only makes 80 pesos a shift.

SFandH - 9-25-2015 at 10:16 AM

Really! That's horrible, especially considering clerks at OXXO don't get any tips, unlike PEMEX attendants.

Slave wages.

I wonder how much the store owners/managers make.





[Edited on 9-25-2015 by SFandH]

KurtG - 9-25-2015 at 10:29 AM

Quote: Originally posted by bajabuddha  
Funny about the 'money laundering' accusations. The way I heard the story, 7-11 was started up by the Tandy Corp. (Big Texas Oil, Radio Shack) to create a negative-money-flow corporation to help assuage their gross windfall profits they were raking in.... and unfortunately for them, John Q. Public didn't mind the incredibly over-inflated shelf prices of most goods just for convenience of not having to hit a 'big-store' and stand in line.
:light:


Just read the history of 7-Eleven on Wikipedia and no mention of Tandy who was a very interesting guy in his own right.

ignatz - 9-25-2015 at 07:40 PM

Quote: Originally posted by KurtG  
Quote: Originally posted by bajabuddha  
Funny about the 'money laundering' accusations. The way I heard the story, 7-11 was started up by the Tandy Corp. (Big Texas Oil, Radio Shack) to create a negative-money-flow corporation to help assuage their gross windfall profits they were raking in.... and unfortunately for them, John Q. Public didn't mind the incredibly over-inflated shelf prices of most goods just for convenience of not having to hit a 'big-store' and stand in line.
:light:


Just read the history of 7-Eleven on Wikipedia and no mention of Tandy who was a very interesting guy in his own right.


I've actually read a full book on the history behind 7-Eleven (and how it's now owned by a Japanese company) and there is zero truth to the Tandy rumor.

bajabuddha - 9-26-2015 at 04:07 AM

Quote: Originally posted by ignatz  
Quote: Originally posted by KurtG  
Quote: Originally posted by bajabuddha  
Funny about the 'money laundering' accusations. The way I heard the story, 7-11 was started up by the Tandy Corp. (Big Texas Oil, Radio Shack) to create a negative-money-flow corporation to help assuage their gross windfall profits they were raking in.... and unfortunately for them, John Q. Public didn't mind the incredibly over-inflated shelf prices of most goods just for convenience of not having to hit a 'big-store' and stand in line.
:light:


Just read the history of 7-Eleven on Wikipedia and no mention of Tandy who was a very interesting guy in his own right.


I've actually read a full book on the history behind 7-Eleven (and how it's now owned by a Japanese company) and there is zero truth to the Tandy rumor.


I do stand corrected; as I first said, "The way I heard the story..." Ain't the rumor mill amazing? I admit, that one is 50 years old. Sorry for the misinformation.

One non-rumor however is, 7-11's pretty much ran out all the "Mom & Pop" corner grocery stores, including my family's one. Individuals couldn't compete with Corporate buying power; probably the same with OXXOs. I don't think the little Abarrotes will ever disappear, but some have to be hurting. It's the price of power of progress.

chuckie - 9-26-2015 at 05:40 AM

Progress sucks sometimes......jes sayin...

weebray - 9-26-2015 at 09:35 AM

Quote: Originally posted by bajagrouper  

I borrowed this from the PV forum. It gave me a good laugh

This came from a news release on a parody website, called "El Deforma": eldeforma.com/2015/…

A quick translation into English:

One OXXO Opens Inside of Another OXXO

--Customers are confused since they operate independently--

MEXICO CITY This morning, the 2,497,108th OXXO store was inaugurated on Revolution Avenue.

This store opened inside another OXXO that was already there, in an empty space it had. Both OXXOs operate simultaneously, but independently of each other. (This means you can't buy potato chips from one of the OXXOs and pay at the register of the other).

The decision was made after the original OXXO had a great demand from office workers who go there daily for their lunch of Maruchan soup; but sometimes lose in the register line, if open, the 20 minutes they are given to go to lunch.

"Rather than have another register, it was easier for us to open a new OXXO inside the other OXXO. Of course, the new OXXO will have two employees like all the others: one who rings up the purchases, and one that tells you they will ring you up at the other register", said Archibald Andatti, CEO of FEMSA.

With this idea.......................................

If the model works, OXXO will look to continue this idea of ​​saving purchasing costs or rental of premises, and begin to open OXXOs within 7-Eleven and Extra stores.


I love this, I wish there were a "like" button.

Marc - 9-27-2015 at 08:43 AM

I understand they lose money on every store but make it up in volume.:light::light:

[Edited on 9-27-2015 by Marc]

bajaunbob - 10-3-2015 at 06:52 PM

Quote: Originally posted by akshadow  
Quote: Originally posted by weebray  

Gee I was thinking they were money laundry locations> Why else build so many without probable profit.
Bingo! That's my theory too. And what about that Liverpool Dept store? If that's not a money laundering operation - I don't know what is! It looks like a Neiman Marcus store without the customers!