Walmart, one of the leading retailers worldwide, announced the conclusion of a deal to sell 80% of its Brazilian operation. The new controller of Walmart Brazil is the private equity fund Advent International, which paid an estimated amount of US$ 2 billion, according to the newspaper Valor Econômico. Walmart Inc. will keep a 20% share in the new arrangement.

Walmart entered the Brazilian market in 1995 and quickly became one of the main retailers in the country. In 2017, the company’s registered total sales of R$ 28.1 billion, 7.4% less than the previous year. Walmart Brazil owns 438 stores in 18 states, making it the third largest supermarket chain in the country.

Advent International will face the challenge to modernize Walmart business model in Brazil, where the hypermarket segment is quickly losing ground to mini markets and other formats. In 2017, minimarkets became the second largest segment, accounting for 35% of total sales in the sector, according to the Brazilian Micro and Small Business Support Service (Sebrae). Cash n’ carry wholesale is also a major threat to the hypermarket segment, and is very likely to be the model Advent International will apply to Walmart Brazil stores.

Online sales are also on Advent’s radar. According to the consultancy group E-bit, e-commerce sales are expected to grow 12% in 2018. Walmart’s main competitors in Brazil - Grupo Pão de Açúcar/Casino and Carrefour - have already implemented online sales for their supermarket clients while Walmart e-commerce channel still focuses exclusively in tech, furniture, and home appliances.

Source: Supermercado Moderno