KMART EYEING SUPERCENTER PROGRESS

JOANNA RAMEY

MEXICO CITY (FNS) -- Kmart Corp. officials are watching the progress of two Super Kmart Centers it recently opened near here before pushing ahead with additional units.

Joseph Antonini, chairman, president and chief executive officer of Troy, Mich.-based Kmart, attended an opening party at the Super Kmart in San Mateo, a suburb of the capital city, in late May. Antonini said it's too early to confirm whether Kmart will follow through with earlier plans to open 10 stores each year for the next five years in Mexico. "We haven't finalized those plans yet," Antonini said. "We haven't yet determined how many supercenters we're going to open in Mexico. We'll see how the first two stores do and we'll proceed from there."

The two Super Kmart units are expected to each generate between $37 million and $40 million in sales their first year, with a 20% increase the following year, according to store officials. Kmart's joint-venture partner in Mexico is El Puerto de Liverpool, which operates 18 high-end department stores.

About 50% of the floor space at the Super Kmarts here is allotted to food. The two new stores -- about 180,000 square feet each -- cost $30 million to build and stock, said Juan Suberville, director general and CEO of Kmart Mexico.

Although the Mexican mass market has become more competitive over the last decade, with stores constantly repositioning themselves to distinguish their product mix and service, sales growth of between 15% and 20% is expected to continue for some time, according to a recent Smith Barney industry report.

"By implementing low pricing policies, chains have managed to become accessible to a greater percentage of the population," the report said. "While at present only approximately 40% of the population can afford to shop in supermarkets and general merchandise chains, we expect that as household incomes grow this segment of the retail industry will be the first to benefit." Wal-Mart also has launched its supercenter format into the Mexican retail market. With its joint-venture partner, Cifra, Wal-Mart operates two supercenter units near here.