FEMSA reported that 51% of the total sales of the OXXO store chain in Mexico consist of products that suppliers deliver directly to stores.
Other products with longer useful lives are distributed to stores through the Mexican distribution system of FEMSA’s Proximity Division, which includes 21 regional warehouses located in Guadalajara, Mexicali, Mérida, León, Obregón, Puebla, Querétaro, Chihuahua, Reynosa, Saltillo , Tampico, Tijuana, Toluca, Veracruz, Villahermosa, Culiacán, two in Mexico City and two in Monterrey.
For its part, FEMSA’s logistics services subsidiary operates a fleet of approximately 852 trucks in Mexico that deliver from distribution centers to each store approximately twice a week.
In sum, FEMSA management believes that the scale of operations of the OXXO store chain provides the Proximity Division with a competitive advantage in its ability to make strategic alliances with suppliers.
General category offerings are determined at the national level, although purchasing decisions are implemented at the local, regional or national level, depending on the nature of the product category.
In Mexico, given the fragmented nature of the retail industry in general, Mexican producers of beer, soft drinks, bread, dairy products, snacks, and other high-frequency products have established their own distribution systems with extensive direct distribution routes.
The Proximity Division has placed considerable emphasis on improving operational performance.
As part of these efforts, FEMSA indicated, the Proximity Division continues to invest in comprehensive information management systems to improve inventory management.
The Proximity Division increased the number of OXXO stores at a compound annual growth rate of 6.5% from 2016 to 2020.
With this, the growth in the number of OXXO stores has driven growth in total revenues and results of operations in the Proximity Division during the same period.
The Proximity Division operated a chain of small-format stores with 19,566 locations as of December 31, 2020, under the trade name OXXO.
In particular, OXXO stores sell high-frequency items such as beverages, snacks, and cigarettes at competitive prices.