Suburbia, Wal-Mart Inc.’s Mexican department store, hopes a major expansion of its store credit-card business and efforts to streamline inventory will boost fortunes this year.
Revenues fell sharply in 2014 as a volatile Mexican retail market and the termination of a credit-card partnership with leading bank Bancomer dampened the retailer’s ability to offer credit, which is key to retaining its lower-to-middle class customer base.
The division, alongside struggling discounter Sam’s Club, dented 2014 same-store sales at Walmex, the Mexican and Central American division of Wal-Mart Inc.
“Suburbia’s customers are especially sensitive to credit and opportunities to obtain credit,” said Antonio Ocaranza, communications director for Walmex.
“We are developing new and more aggressive products for our customers that will have more mass appeal. That should help sales.”
Ocaranza said Walmex’s sale of Banco Walmart to Mexican peer Inbursa last year should help drive the effort in 2015.
The 118-strong Suburbia, which added eight stores last year, is negotiating an expansion of its store card business with Inbursa, with details to be unveiled when the transaction closes later in 2015.
Ocaranza said significant efforts to improve inventory management, cut operating costs and ramp up marketing investment will be pursued to lift income, with more details to be given in a March 18 analysts presentation.
Suburbia, which competes with peers Coppel and Liverpool, is also looking to expand its key denim and footwear assortment where Pierre Cardin, Oggi, Levi’s and Disney are top sellers, Ocaranza said.
It also stocks private labels JeansMania, Mossimo, Non Stop, Metropolis, La Mode and Weekend.
The chain is also working to grow its beauty department, where it markets a range of “expensive and cheaper brands for the young and mature,” Ocaranza said.
Bestsellers include Chanel, Hugo Boss and Dior.