Oxxo, a well-known Mexican convenience store chain, is set to expand its reach into the United States, with a particular focus on the state of Texas.
This move marks a significant milestone for Fomento Económico Mexicano (FEMSA), the parent company of Oxxo, as it makes its first major foray into the U.S. convenience store market.
FEMSA Acquires 249 Texas-Based DK Stores to Expand Oxxo in US
According to News6, FEMSA has announced the acquisition of 249 DK convenience stores, primarily located in Texas, for $385 million. The majority of these stores are situated within gas stations under the DK and Alon fuel brands.
While most of the stores are in Texas, some are in New Mexico and Arkansas. FEMSA plans to rebrand these locations under the Oxxo name, a brand widely recognized in Mexico for its extensive network of over 20,000 stores.
"Entering the U.S. convenience and mobility industry has always been a goal for FEMSA," said José Antonio Fernández Garza-Lagüera, CEO of FEMSA's retail operations.
FEMSA's entry into the U.S. market is seen as a strategic move to capitalize on the growing demand for convenience stores in the country. The acquisition is expected to strengthen FEMSA's position in the retail sector, particularly in Texas, where Oxxo's brand recognition could provide a competitive edge.
The Mexican company has already established a strong presence in South America and Europe, with over 30,000 stores worldwide.
Avigal Soreq, CEO of Delek U.S. Holdings, Inc., expressed enthusiasm about the partnership with FEMSA. "We are delighted with this transaction and anticipate taking further actions to maximize value for our stakeholders," Soreq said. "This enables us to secure a strong ally for our continued and expanded retail fuel sales. We are excited to continue developing our collaboration with FEMSA, both in the near future and for years to come."
The acquisition deal, however, is still subject to regulatory approvals. Both companies expect the transaction to be finalized in the latter half of 2024.
Oxxo's expansion into the U.S. market is expected to intensify competition among convenience store chains, particularly in Texas. Although Oxxo stores are similar to traditional gas station convenience stores like Stripes and 7-Eleven, the brand's strong presence in Mexico, where it has become an integral part of the culture, could give it a unique appeal.
History of Mexican Convenience Store Oxxo
Founded in 1977 in Monterrey, Mexico, Oxxo has grown significantly over the decades. Originally focused on providing customers with a wide range of snacks, drinks, and everyday items, the company expanded its services in the 1990s and introduced in-store bill payment options in 2012. Now, Oxxo serves over 13 million customers daily and has been a leader in contactless payment options in Mexico, according to CHRON.
Oxxo's influence in Mexico is not limited to retail. The brand has become a cultural icon, with recent examples including a temporary Oxxo pop-up store in Los Angeles and a couple who chose to marry at an Oxxo location. This cultural significance may play a role in how the brand is received in the U.S., particularly among the Hispanic community.
As Oxxo prepares to enter the U.S. market, questions arise about how it will compete with established American convenience store chains. While it is uncertain whether Oxxo will become a direct rival to Texas-based Buc-ee's, known for its barbecue sandwiches and popular snacks, there is no doubt that Oxxo's expansion will bring a new dynamic to the convenience store landscape in Texas and beyond.
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