Mexican retailer plans CE chain; Groupo Gigante & Radio Shack in joint venture - consumer electronics stores

Discount Store News, July 20, 1992

Grupo Gigante & Radio Shack in Joint Venture

FORT WORTH, Texas - Radio Shack has joined the move of U.S. retailers into Mexico through joint venture. In the process, Mexico's Grupo Gigante enters into its fourth store-base-building deal in 1992, adding fuel to the fire of the hot Mexican retail scene.

Tandy International, a wholly owned subsidiary of Tandy Corp., based here, has formed a partnership with Grupo Gigante, S.A., to open Radio Shack Technology Stores throughout Mexico, at a rate of 50 locations per year. The chain will be operated by Radio Shack de Mexico, S.A., the newly formed joint venture company, headed by 10-year Radio Shack veteran, Guido Pentsy who will be director general.

Angel Losada Moreno, executive vice president of Grupo Gigante, will act as chairman of the new company, which is a 50%-50% venture.

Tandy is also eyeing opportunities for expansion further south into Latin America, accordingly to Philip Bradtmiller, director of investor relations.

Earlier this year, the 111-unit Gigante had also entered into a joint venture with supermarket distributor, Fleming Cos. to develop a new retailing concept for the Mexican market: upscale "price-impact" supermarkets.

The Mexican hypermarket retailer also acquired eight stores from the El Sardinero supermarket chain in February, with plans to convert these units to Gigante stores And on April 30, Grupo Gigante agreed to acquire a 93.58% interest in Blanes, S.A., the holding company which operated 89 Blanco discount stores in 40 Mexican cities.

Gigante stores have distributed Tandy products in Mexico's Radio Shack stores since 1986 under a licensing agreement. Losada explained that the venture would enable the retailer "to deliver even more Radio Shack products to the people of Mexico."

Bernard Appel, senior vice president of Tandy Corp., and director of the joint venture company, noted that the agreement would "allow Radio Shack to expand quickly in this explosive market."

Twenty-four Radio Shack stores are already operated by the Gigante subsidiary of Grupo Gigante as part of Tandy's international dealer program, but will now become part of Radio Shack de Mexico. "It was decided that a joint venture would allow us to provide the capital resources necessary for expansion," Bradtmiller noted.

Radio Shack de Mexico will also operate a service center in Mexico City to handle products sold in that country.

Gigante had 1991 sales in excess of $1.6 billion. Tandy had revenues of $4.6 billion in 1991 through its manufacturing and retailing divisions.

Wal-Mart and Price Co. were the U.S. pioneers in forming joint ventures with Mexican retailers, having formed partnership to open warehouse clubs with CIFRA and Commercial Mexicana, respectively, last year.