Two Guys Try To Fight Back Against OXXO

Teaching the Mom & Pop stores to compete
BY: JOE ALBERTSON

As the number of OXXO outlets grows, the number of tienditas, or abarrotes  decline. That’s a fact. The little mom and pop stores on the corner simply can not compete with the value the Oxxos provide. Well, they could if they woke up and copied the successful chain of convenience stores, but they won’t/don’t. They seem incapable of copying the merchandise mix that makes the Oxxos so popular. It seems simple enough to us: If it’s unhealthy, it belongs on the shelves of Oxxo and will fly off those shelves.

oxxosub.jpgTwo guys in Tijuana are now helping mom and pop compete. Patrick Lepere, a hard charging Gringo, and Jorge García, A Mexican who knows abarrotes, founded Mindesa in 2012 as a consultancy to assist the mom and pop stores in some key areas, such as marketing and information technology. During the following year they decided to focus on developing a new concept — an abarrotes franchise.

The first store opened last November in Tijuana. Mindesa now plans to expand with 100 to 200 stores in the city by taking existing abarrotes, renovating them and giving them back to the original owner as a franchise.

Lepere points out in a video that the abarrotes stores are small, family-run businesses that provide a livelihood for millions of Mexican families. They’re an important part of every neighborhood and they add to social stability.

“You can buy one aspirin. Or one diaper. Or one razor. And the store owner is often the eyes and ears and heart of the neighborhood.

“Want fresh tortillas? The little store has it. Looking for a house to rent in the neighborhood? The guy behind the counter at the little store will know.  Need someone to mend your jacket? The guy at the little store will know, or his wife, or his daughters will do it for you.

But now these vital members of the community are under threat from the convenience store chains such as Oxxo and 7/Eleven. When an Oxxo store opens, the neighborhood abarrotes close, says Lepere.

To combat that trend, Mindesa renovates an existing store, introduces modern business principles into its operations, offers training, and then franchises the store back to the owner. The franchiser, Mindesa, provides the stock and manages the accounting. The improved buying power of the store results in a higher level of profitability.

“Not only are we having a great impact on the lives of these Mexican families, the businesses are very profitable at the same time,” says Lepere.

To finance its operations, Mindesa is offering three year convertible bonds for  $25,000 at an interest rate of 20%, and an option to purchase equity as well.

Yes, 20% interest. It seems if Oxxo doesn’t finish Mom and Pop off, the financing of their business improvement plan will.