Walmex ramps up charge against rivals to lift sales

MEXICO CITY Nov 4 (Reuters) - Top Mexican retailer Wal-Mart de Mexico is trying everything from extra low-priced fruits and vegetables to credit for toys in a new drive to boost sales and market share ahead of the Christmas season.

Amid a weaker Mexican economy and the global financial crisis, Walmex, a unit of U.S. giant Wal-Mart Stores Inc (WMT.N), is sparing no efforts to boost traffic and sales across all its store formats.

Spearheading the lead are Wal-Mart Supercenters, where low prices on food staples are taking center stage.

"They have launched a new price rollback and other strategies as they anticipated a weak (October) month. They had to throw all the meat to the grill," said analyst Marisol Huerta with Actinver.

The company's Vips restaurants are offering full meals for under $5 and clothing store Suburbia has relaunched a credit card with more attractive downpayment options.

Walmex's Superama stores, aimed at consumers with bigger spending power, are prominently displaying banners promoting the company's cheap drug brand MediMart along with gourmet products in an effort to decouple from peers.

Walmex same-store sales -- a key gauge to measure retailers' performance -- fell 0.7 percent in September as consumer confidence slipped again as Mexicans felt less optimistic about the economy with a U.S. recession looming.

Analysts so far like what they see at Walmex.

"While it is not immune to (weakening) consumption, Walmex could post solid numbers thanks to its ability to execute and take advantage of the problems affecting its peers," Banamex said in a recent report.

Three analysts consulted by Reuters expect, on average, that Walmex same-store sales rose 2.8 percent in October.

Walmex, which last month posted its weakest quarterly net profit result in five years as a world financial crisis dented remittances to Mexico amid soaring food and energy prices, is taking advantage of trouble dogging its two closest rivals to cement its lead in the Mexican market.

With No. 2 retailer Soriana (SORIANAB.MX) still digesting a big 2007 store acquisition and dealing with concerns over its financial health, its smaller rival Comercial Mexicana (COMEUBC.MX) is swamped in serious debt issues that could push it into bankruptcy. So Walmex stands in a better spot.

It has even borrowed a marketing concept largely used by Soriana and Comerci to encourage fruit and vegetable sales on an specific day of the week.

Soriana has reacted and started offering double points for every purchase made that clients can later exchange for prizes or more products at the stores.

But Comerci, which has yet to obtain protection from creditors, will devote efforts to keep paying suppliers and running stores, meaning it won't likely put a fight for more clients. (Reporting by Cyntia Barrera Diaz, editing by Richard Chang)