Case Study: A Successful Distribution Alliance Grupo Elektra and Western Union

In 1996, Grupo Elektra and Western Union signed a 10-year agreement under which the company became a paying agent for electronic money transfers to Mexico.  Today, Grupo Elektra is among Western Union’s most important paying agents worldwide.  For all brands, in 2005 Grupo Elektra totaled 7.6 million transactions worth US$2 billion in principal, and in the last 12 years the company has made over 36 million payments totaling more than US$9 billion.

Grupo Elektra is Latin America’s leading specialty retailer, consumer finance and banking and financial services company.  The company sells retail goods and services through its Elektra, Salinas y Rocha, Bodega de Remates and Elektricity stores.  Grupo Elektra operates more than 1,000 stores in Mexico, Guatemala, Honduras, Peru and Panama, and offers consumer finance, banking and financial services through approximately 1,400 Banco Azteca branches within its stores, on a stand-alone basis or through other formats.  The company serves the mass market largely by providing consumer credit for its retail sales.

A model partner
Grupo Elektra is a leading player in a very competitive sector.  The participants in the money payments industry include banks, retailers, and telegraph offices, among others, with more than 10,000 points of payment in Mexico.  Grupo Elektra is uniquely positioned to effectively serve the market, with its extensive distribution network of stores and bank branches, a solid infrastructure in systems and communications, and with cutting-edge technology.  More importantly, Grupo Elektra brands have been trusted by millions of Mexicans through more than 100 years of operations.

Implementation
The electronic money transfer business has been consistent with the company’s strategy to offer new added-value products and services to the market.  With the business, Grupo Elektra has further leveraged its store network with relatively small capital expenditures and operating costs.
The success of the electronic money transfer business reflects the company’s far-reaching distribution network, consumer’s confidence in the security and speed of the transactions, as well as having a seven-day access in the week, from 9:00 a.m. to 9:00 p.m. 

Results
Since its launch, the electronic money transfer service has been among the company’s most dynamic and successful businesses. It has also allowed Grupo Elektra to gain store customers and to generate substantial US Dollar revenue. 
The company’s ongoing advertising and promotional campaigns and the more competitive fees charged to consumers, have continuously strengthened the positive trends of the company’s US-Mexico electronic money transfer business.

Competition
The government’s telegraph company dominated the market as the main paying agent, until Grupo Elektra became a partner of Western Union.  With the volume of remittances from the U.S. to Mexico growing dynamically, an increased number of players entered into the industry, and the number of paying agencies grew market share at the expense of the telegraph company. 
Currently many organizations participate in the market, such as financial institutions, development banks, retail stores, currency exchange offices, credit unions and drugstore chains, among others.

An evolving alliance
In January 2006, Grupo Elektra renewed its electronic money transfer agreement with Western Union.  As part of the agreement, Grupo Elektra will be able to become a paying agent for Vigo Remittance Corp.—a leading international money transfers company—in Mexico, expanding on a relationship that started in 2004, when Grupo Elektra began operations as a paying agent for Vigo Remittance Corp. for money transfers to Guatemala and Honduras.