Chile’s Falabella expands in Latin America

By

Francelia Rodriguez Ceballos

Published
Nov 23, 2015

Latin America has been badly hit by the commodities crisis, but a Chilean department store is not allowing the current macroeconomic climate to slow it down. Falabella, one of Chile’s largest retail chains, has reached seven countries and currently employs over 100,000 people worldwide.

According to The Economist, despite rising unemployment and inflation rates, the 126-year old department store has recorded a positive performance. On November 10, it posted net profits of $136 million in the third quarter, up by 16% on a year earlier. Revenues were up by 13%.

Falabella’s strength lies on its assortment business, spread across six countries. The company operates department stores, supermarkets and even shopping centers, focused on the Chilean, Peruvian and Colombian market. These market-friendly countries account for 52%, 24% and 14% of sales, respectively.

Falabella’s expansion comes against a backdrop of changes in the South American retail market. Another Chilean department store, Ripley, announced last week it is currently exploring business opportunities with Mexico’s Liverpool chain. The report that Liverpool would be looking to buy 50% of Ripley’s business sent the company’s shares up around 15%. An M&A deal between the two retailers could maximize Ripley’s footprint in region and allow Liverpool to enter the South American market.  

Falabella’s biggest challenge may be the growing sophistication of the region’s shoppers, said The Economist. The retail company is planning to invest $1 billion in computer systems and logistics by 2018 to boost its e-commerce operations and provide a more seamless experience to an audience that is just getting used to shopping online.