Central America’s burgeoning population is proving an attractive target for Walmart, which announced its plans to invest $1.3 billion in Guatemala and Costa Rica in the next five years.
Cristina Ronski, who heads up the giant retailer’s Central American division, told Reuters the company plans to invest $700 million in Guatemala alone, just days after Walmart announced a $600 investment in Costa Rica.
The plans call for new stores and increased logistics capabilities, including a distribution center for perishables in Costa Rica.
Walmart plans to add more in-store services, including facilities for sending and receiving remittances – a major component of many Central American economies.
“It's clear these countries are primed for growth right now,” Finn Wheatley, financial expert and risk analyst at The Small Business Blog,” told The Food Institute.
“When economies pick up steam, more people end up with jobs and extra cash to spend. And that means potential for stores to sell more goods and services.”
Guatemala is Central America’s most populous country, at 18.3 million, and has the highest fertility rate in all of Latin America. Costa Rica’s population is 5.2 million.
“Guatemala showed nearly 3.4% growth last year. Costa Rica surged even higher at 4.9%,” Wheatley noted. “Nearby markets also showed solid gains around 3.3-3.4%. To me, those numbers signal a real chance for companies to succeed by joining in on the spending uptick in hands-on ways like opening new locations.”
Both Guatemala and Costa Rica enjoy a political stability lacking in some other countries in the region, making them attractive foreign investment targets.
“Walmart may concentrate on establishing a firm presence by first making significant, calculated investments with relatively reduced risk in Guatemala and Costa Rica,” said Andhi Ermawan, a tech expert, professional product tester and founder of MyProsAndCons.com.
“Then, a future route might become available to meet comparable retail needs over the whole area. It's a methodical, phased strategy that weighs the pros and cons.”
Walmart has been moving into Mexico and Central America for years and by last year had 896 stores. In fiscal 2024, Walmart International reported $49.7 billion in sales in the region, Statista reported.