The three divisions of FEMSA Comercio (FEMCO)—Proximity, Health and Fuel— deliver economic and social value for all our stakeholders. Our brands include OXXO proximity stores; drugstores (under the brands Cruz Verde, Farmacias YZA, Moderna, Farmacon, Fybeca, Sana Sana and Maicao beauty stores); and OXXO GAS service stations.
Through our divisions we contribute to the direct employment of more than 204,000 people across Latin America, deliver close to 33.1 million products and services and serve approximately 12.2 million consumers every day.
An important part of our business model is our commitment to sustainability. FEMCO divisions conducted a comprehensive update to their materiality assessment in 2020 to identify the environmental, social and governance (ESG) topics that are most material to our business and our stakeholders. These assessments confirmed and validated our sustainability commitments through setting new targets around climate change, circular economy, gender equality and community development. Also, our divisions made significant progress during the year in contributing to FEMSA’s corporate goals and sustainability strategy by working on initiatives and programs aligned with our material topics.
FEMSA Comercio’s Proximity Division operates the largest chain of small-format stores in Latin America and is the second largest retailer, in terms of revenues, in Mexico. Under the brand name, OXXO, our aim is to deliver convenience and simplify the lives of our customers.
Creating Social Value Across FEMSA Comercio
Creating Social Value Across FEMSA Comercio
The top priority for FEMSA Comercio (FEMCO) in 2020 was protecting our employees, customers and business operations. Business continuity was essential to be able to continue providing products and services to our consumers during the health emergency. In response to COVID-19, FEMCO maintained its leadership position in creating social value by addressing the needs of communities. We procured donations of food, medicines and healthcare supplies while supporting local initiatives to support economic recovery.
Good Health &
Creating Social Value Across FEMSA Comercio
Next, a second wave of social value creation was oriented towards global economic recovery and human rights. These efforts are in line with our broader Inclusion and Diversity (I&D) strategy, which is focused on providing job opportunities for young people, elderly and vulnerable populations, as well as adopting an open culture that celebrates the authentic contributions of everyone’s unique talents.
We promote full and productive employment and decent work for all people. In 2020, FEMSA joined the Tent Partnership for Refugees, a global non-profit coalition of more than 140 multinational companies working toward the economic integration of refugees by supporting dignified and formal employment opportunities. In partnership with Tent and the United Nations High Commissioner for Refugees (or ACNUR by its Spanish acronym) in Mexico, we hired more than 200 refugees in OXXO stores.
Since 2005, more than 1,600 OXXO stores and OXXO GAS facilities have been recognized with the Gilberto Rincón Gallardo Inclusive Company Distinction, awarded by the Ministry of Labor and Social Security in Mexico, for their good labor practices related to equal opportunities, inclusion, development and non-discrimination of vulnerable populations. These achievements reflect our ambition to become a top employer and neighbor in our communities.
For more information on the sustainability progress of the FEMSA Comercio Proximity, Health and Fuel Divisions, please visit our 2020 Sustainability Content.
Decent Work and
Proximity Division Points of Sale 2020
Historically, one-stop shopping at OXXO has meant responding to our customers’ busy lives and on-the-go needs in a fast, simple way. But in 2020, the pace of mobility slowed down around the world. Many people paused their normal commutes to work or school, significant operating restrictions were put into place by local governments and consumer preferences shifted toward in-home food consumption. Yet, with agility and resiliency, we were able to keep the large majority of stores in Mexico open during the pandemic to meet our customers’ changing needs.
To ensure continued financial liquidity, we focused on expense efficiencies and cost containment, including moderating store expansions, closing stores with marginal or subpar productivity and adjusting opening hours. We completed the year with 236 net store additions.
The Proximity Division continued to move toward FEMSA’s energy efficiency vision and corporate clean energy goal to mitigate climate change. During 2020, we took the following climate actions:
14,847 stores and 13 OXXO distribution centers powered with renewable wind energy
16,377 stores, 18 OXXO distribution centers and 26 offices equipped with smart energy systems
6,298 stores utilizing solar control films to regulate heating, ventilation and air conditioning systems
+35% reduction in store energy consumption through our Energy Efficiency Program compared to 2009 baseline
We also further expanded our circular economy objectives by:
Equipping 11,736 stores with waste separation capabilities and recycling bins
Recycling 16,657 used OXXO stores uniforms into other products
Reducing plastic bag utilization by 70% below 2015 levels through the “¡Sin Bolsa, Gracias!” (“No bag, thank you!”) campaign
Recycling 1,599 tons of office equipment and furniture that reached its end of life
To support COVID-19 relief, among many other collaborative initiatives across our Proximity Division, OXXO carried out more than 700 community development actions (focused on health, food and economic recovery). We allocated more than Ps. 100 million in products through the Mexican Food Bank Network and we invested more than Ps. 53.0 million (US$ 2.7 million) to mitigate pandemic effects. This included providing a total of 3.15 million facemasks to healthcare workers and public security personnel, 9.3 million personal health supplies to frontline workers and 34,000 pantry packages to those in need.
Redefining Food, Beverage and Self-Care Convenience
As foot traffic in stores dipped and same-store sales contracted in 2020, we adapted our value proposition to best meet customer needs. For example:
We revised our strategy for fresh, fast food products and other perishable categories to ensure safety while preserving profitability. This included reducing the operating hours of our popular freshly prepared food brand ¡O’Sabor! but expanding its offerings to offer attractive new options for in-home consumption, such as hearty stews. For coffee, we restricted the service hours and varieties and replaced traditional self-serve supplies with pre-packaged kits at check-out.
We also expanded the andatti product line and launched a new e-commerce platform to offer customers premium coffee options for at-home consumption.
We expanded our selection of alcoholic beverages, increasing sales in adjacent categories at OXXO such as the Wines & Spirits category. Following temporary government-mandated interruptions of beer production across Mexico, we saw an opportunity to serve consumers in a new way. By working closely with suppliers on packaging and flavors exclusive to OXXO, we made wider selections available for affordable new consumption occasions. As supply chain disruptions for beer eased throughout the year, we continued to offer brands produced and distributed by Heineken Mexico and increasingly, by Grupo Modelo – currently both available in more than half of our stores in Mexico.
We adjusted SKUs in our portfolio to focus on health, hygiene, groceries and self-care. In response to the new needs of our consumers and our communities, we increased the availability of essential pantry items (such as cooking oil and toilet paper) as well as personal protection (such as sanitizing gels, disinfectant wipes and face masks). We also created new displays for these items in high-visibility exhibition zones throughout the store.
Building Trust through Financial Inclusion
At OXXO, we are committed to helping our customers conveniently execute their day-to-day financial transactions in one place. As consumer habits and needs changed during the pandemic, and given a largely cash-dependent Mexican economy, we achieved strong performance in real-time service payments. Currently, customers can access more than 7,000 services in an OXXO store, including making payments for utility bills and basic household needs, such as internet, electricity and streaming entertainment.
We expanded our OXXO PAY service, through which customers can make cash payments in real time for digital goods. For example, users can now initiate or renew their subscriptions online to services like Spotify Premium and pay in cash at any OXXO store. Additionally, through a new alliance with Amazon México, users that do not have a credit or debit card can now access millions of products on amazon.com.mx and pay within 48 hours at their local OXXO store.
While in the store, customers can also make deposits into accounts at correspondent bank partners, send remittances and prepay their mobile phones. For example:
Opportunities in the telecommunications industry in Mexico this year led us to continue integrating partnerships with mobile operators and launch a new basic smartphone at an accessible price, Kaios Phone – helping our customers stay connected and supporting the digital inclusion of more people in our community.
Strengthening our Digital Strategy
Beyond supporting the digital economy in Mexico, we are also accelerating our own digital transformation. We expanded the reach of our “Mi OXXO” home delivery concept – which had previously begun as a pilot program within an enclosed region in the city of Monterrey – to cover the entire metropolitan area of greater Monterrey. Elsewhere in Mexico, we activated a new web service in association with regional distribution partners to facilitate a home delivery offering in the same way and we will continue to build this program out moving forward.
As a cornerstone of our ongoing consumer relations strategy, in 2020 we launched a new loyalty program in select regions in Mexico, following insights from earlier pilot programs. Consisting of both a physical card and an app for smart phones, the program allows us to optimize consumer communication campaigns while leveraging data and analytics to inform and personalize promotions and rewards that resonate with consumer behavior and purchasing decisions.
Expanding to New Markets
We continue to strengthen our position outside of Mexico and leverage our scalable business platform in new markets. This includes utilizing our expertise in retail store formats, technology and operational practices, which will allow us to continue to achieve sustainable growth.
In 2020, we opened our first OXXO store in Brazil, planting the seeds for the future growth of the OXXO brand in this large, key market. Our value proposition for the Brazilian consumer maintains the flagship elements of the chain that have been so successful in Mexico, while also “regionalizing” the stores to deliver the most relevant, differentiated and highly competitive solutions that cater to Brazilians’ tastes. This move follows our 2019 acquisition of 50% of Raízen Conveniências, comprised of franchised or licensed Shell Select convenience stores within the network of Raízen gas stations. In total, we opened 96 new stores in Brazil in 2020, including 86 franchised Shell Select stores and 10 company-operated stores (comprised of both OXXO and Shell Select stores). We also opened our first district office and distribution center in the city of Campinas, near São Paulo. Looking ahead, we will continue to strengthen our international presence by continuing to build the OXXO brand in Brazil and across our South American markets, as well as by increasing the number of Shell Select brand convenience stores at Raízen gas stations.
FEMSA Comercio’s Health Division responds to the healthcare needs of the communities where we have a presence. Through a growing network of drugstores and related operations, we distribute and sell patented and generic pharmaceutical drugs, beauty products, medical supplies and wellness and personal care products, among other categories. FEMSA Comercio started to build the Health Division in 2012 and as of 2020, our brands now represent the second largest pharmacy chain in Latin America in terms of units.
This year healthcare was top of mind for the world. Our pharmacies played an essential role in ensuring that people across Latin America were able to access important medicines, sanitizers and other self-care and immunity-boosting supplies. For this reason, despite restrictions on mobility, ensuring business continuity at our pharmacies was an extremely important priority.
Health Division Points of Sale 2020
*including 172 Maicao beauty stores
To maintain a healthy financial position amidst the economic uncertainties of the year, we slowed down our store expansion rate, particularly in Colombia and Ecuador. We expanded our drugstore count by 207 net new stores to reach a total of 3,368 open units across our territories as of year-end. Despite the challenging year, our overall market share increased in different countries, such as Mexico and Colombia, reflecting the adaptability and agility of the organization in response to new business risks and opportunities.
In 2020, the Health Division continued to support FEMSA’s Sustainability Strategy by accelerating climate actions, including in-store energy efficiency and renewable energy goals. 640 pharmacies are now powered by renewable energy, and in Mexico, we reduced our energy consumption by 3.6% below the prior year by implementing strategies such as expanding LED illumination systems, among other examples.
In alignment with FEMSA’s zero waste to landfill goal by 2030, we responsibly managed our different types of waste, including recycling 750 tons of waste from our distribution centers.
In addition to supporting our neighbors and communities through the portfolio of health products and services we offer, we implemented other social value initiatives throughout the year, including the donation of medicines, food and personal protection supplies. Through the “Redondeo” or “Dona tu Vuelto” (Donate your Change) programs, customer donations are directed to support institutions that work for the benefit of society. In 2020, these programs at Farmacias YZA in Mexico channeled Ps. 4.45 million to local institutions.
Finally, in collaboration with FEMSA Foundation, Nestlé and other partners, Farmacias YZA took a leadership role in addressing the issue of food insecurity in vulnerable communities in Mexico in 2020. Again, thanks to the generosity of customer donations, volunteers helped to safely distribute food and other pantry staples for children and families, as well as share tips and key messages about COVID-19 safety and preventive health measures.
Strengthening and Scaling Up the Organization
As of January 2020, we now own 100% of our health platforms in Mexico and South America, which represents another successful milestone in our long-term effort to continue gaining relevant scale and brand recognition by building a leading regional drugstore platform. This move has also been an important foundation for strengthening the synergies of our organization and continuing to consolidate a fragmented industry. As we gradually implement a more standardized business model and fine-tune it as needed across markets, we are building a solid platform for future regional growth. Full ownership status has also allowed us to strategically deploy talent in different parts of the platform and to establish a free flow of best practices across brands and countries. For example, we are establishing a consistent leadership approach that is increasing efficiencies and margins, even in a year characterized by a challenging macroeconomic environment.
Enhancing our Customer Value Proposition
In 2020, we continued to enhance our customer value proposition in several important ways:
Building community trust: We pride ourselves on being trusted by the communities we serve.
In Latin America, where healthcare costs are often out-of-pocket and doctor visits may be unaffordable, visiting the local pharmacy for over-the-counter medicines and healthcare advice can be invaluable, and we take this responsibility very seriously. 100% of our store team leaders and pharmacists across all markets and brands are fully trained on an ongoing basis to assist our customers. We also ensure a consistent standard of care across markets and brands, which allows us to efficiently staff pharmacists wherever talent is needed in the community.
Loyalty program: Our loyalty programs not only reward customers with significant product discounts that support health and wellness needs, but also inform our product sourcing and geographic distribution decisions. In Chile, as of 2020, 6.3 million customers are enrolled in our loyalty program, representing 50% of the country’s total population older than 18 years of age, and driving approximately 50% of our pharmacy sales. We digitally deliver approximately 300 personalized campaigns per month to program members, thereby increasing product demand and making it easier and more affordable for them to stay engaged with our stores and adhere to healthcare treatments as needed. On average, a program customer visits our stores more frequently and spends more than non-members by a factor of approximately four. Loyalty program insights help us offer a broader assortment of product options for our consumers. Keeping connected and engaged in 2020 helped us to effectively communicate important preventive COVID-19 guidance, as well as offer specialized products, services and information to support health and immunity, strengthening our leadership in the market.
Digital strategy: An important part of our transformation of the customer pharmacy experience is through the development of a digital ecosystem in which we can provide personalized omnichannel interactions on a technological platform that is scalable and unique in the region. Prior to the pandemic, we had begun to offer several new digital capabilities, including a “click-and-collect” service (in which customers click on the products they need via our website or app, and collect their products at a convenient location); a last mile delivery service; and full visibility into our prescription inventories. These advantages not only save our customers time, but in the context of COVID-19, have helped to increase safety and reduce levels of physical exposure in stores. We accelerated developments in these programs in 2020, including strengthening our e-commerce, digital marketing and online order management system capabilities, which increased sales growth throughout the year. Looking ahead, the development of our digital ecosystem – including the development of an app and a health marketplace for expanded offerings – will remain our top strategic priority in Chile, Mexico, Colombia and Ecuador.
FEMSA Comercio’s Fuel Division operates the OXXO GAS brand of retail service stations across 17 states in Mexico, selling quality fuels (gasoline and diesel) and lubricants. The OXXO GAS value proposition is based on always providing the customer with a superior and distinctive service, supported by the values of honesty and trust.
Mobility restrictions related to COVID-19 caused a severe contraction in vehicle usage and consequently an impact on the sales of OXXO GAS. However, being designated as an essential activity, OXXO GAS remained open during the contingency while implementing sanitization protocols in all our service stations in order to safeguard both our employees and customers.
Like we did in the Proximity and Health Divisions given economic conditions, we slowed the unit expansion rate of the Fuel Division, adding twelve net new gas stations during the year. Despite this deceleration in our sustainable growth plans, as of the end of 2020, OXXO GAS remained the largest player in the service station market in Mexico, operating a total of 558 service stations out of a total of more than 12,770 stations across the country.
As part of our commitments to climate action and water stewardship, 32 service stations are powered by clean and renewable energy; 100% of all stations have energy efficient LED illumination systems.
100% of our stations have waterless urinals in restrooms.
Our circular economy efforts are focused on organizing efficient waste sorting and promoting recycling, and 100% of our stations have specific areas where waste is collected and sorted for proper disposal.
To support FEMSA’s wider COVID-19 response strategy, OXXO GAS launched the Un Litro Con Causa (A Liter with a Cause) initiative, through which we donated more than 32,000 liters of fuel to the Mexican Red Cross to support the transfer of people with COVID-19 symptoms located in large cities across six states in Mexico, benefiting more than 600 ambulances.
In Mexico, the fuel consumer is used to receiving a full-service experience. For this reason, at OXXO GAS, we focus on differentiation by delivering the industry’s most courteous, efficient and reliable customer service, making it a fundamental aspect of our value proposition. We are able to deliver this experience thanks to our employees, who are empowered, well trained and committed to upholding our organizational culture in which the customer comes first. Moreover, we are committed to offering our consumers convenient locations, with safe and clean facilities and excellent sales promotions.
Given the macroeconomic challenges during the year, including reduced mobility overall due to the pandemic, we also took the opportunity to develop new projects focused on offering superior services and differentiating ourselves further from our competition. Among the new initiatives, we implemented a new contactless point of sale process that streamlines the operation to help improve the efficiency of the customer interaction at our service stations. New functionalities include a faster and more agile billing process carried out in real-time at the pump. We also launched a new app that allows users to locate our service stations, check prices, confirm amenities offered and access billing options, offering yet another flexible option to meet the needs of our customers.
Supporting our Employees
Our employees are trained and equipped with the tools they need to succeed, and we implement a variety of programs that support their personal and professional growth. Through targeted training and coaching programs—along with above-industry wages and compensation structures—we support employee development and reduce turnover.
In the context of the pandemic, we reinforced our communication protocols with all employees to strengthen preventive health measures both inside and outside of our OXXO GAS service stations. Employees were trained to make the stations a safe place for everyone. For example, nanotechnology was utilized to regularly sanitize service stations and each gas pump was equipped with sanitizing products to keep all high contact areas clean.
Looking ahead, our strategy is to continue growing and innovating to maintain our status as a leading brand in the fuel industry in Mexico while continuing to create value for all our stakeholders. Our philosophy and our values-based culture commit us to satisfying our consumers through excellent promotions, accessibility, proximity, safety, reliability and of course, full liters. We aim to grow our footprint and to bring our value proposition of quality service to more Mexicans at all OXXO GAS stations.