The costs of this strategy include: higher product costs due to limited ability to take

advantage of volume discounts, higher transactions costs due to frequent purchases, congestion

at distribution facilities and retail stores, and high risk of stockouts, and less control. Such

disadvantages led to the development, in the U.S., of extensive distribution facilities, which

include appreciable storage and some packaging and even processing (e.g., banana ripening

rooms and milk processor) capabilities. Mexican supermarkets are beginning to move in this

direction. For example, sellers on the Central Market in Mexico City indicate that some chains

are increasing off-market produce purchases, distributed through off-market facilities. This trend

will be quickened by competition from warehouse stores which are becoming popular and are

developing sophisticated warehouse facilities to serve the retail outlets. For example, Club

Aurrera, a joint venture between Walmart and Cifra, opened 5 stores in Mexico in 1993. The

stores are designed after the Sam's Club stores in the U.S. Due to the small number of Mexican

stores, distribution was handled out of Texas. However, by 1996, Club Aurrera intends to have

40 stores in Mexico. To prepare for this, by late 1993 they will open a distribution facility for

dry goods and, by the end of 1994, will open one for refrigerated goods.