BOLIVIA: Supermarket consolidation driven by Ketal
The Ketal supermarket chain in Santa Cruz has invested more than US$500,000 in the initial phase of a consolidation plan which will create the largest supermarket chain in Bolivia. Consolidation will be achieved by means of a strategic alliance involving the Extra supermarket chain of Santa Cruz, Ketal supermarkets of Santa Cruz, and Ketal Hypermarkets of La Paz. The driving force behind the consolidation is Ketal, which will ultimately invest approximately US$4m in the process. The resulting food retail group will be well positioned for the inevitable arrival of multinational food retailers which now compete strongly in most of Latin America's largest cities.The first stage in the consolidation plan, which is scheduled to be completed in October, will create a supermarket group with total sales in the range of US$20-25m. The initial investment will focus on infrastructure improvement in existing Santa Cruz retail outlets. Equipment to be acquired includes bread ovens, coolers, and fermentation chambers. These will enable the supermarkets to stock a wider range of domestic and imported processed foods.One of the leading motives behind the merger is strengthening the group's negotiating position with suppliers. By lowering acquisition costs, Ketal hopes to expand its consumer base by passing on savings to Bolivian households, most of which have very limited food budgets. Management is working together to standardise operating procedures by the end of October. Employees will be rehired under the new corporate entity.
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