Department Stores in Chile

PROSPECTS

A consumption slowdown and omnichannel investment affect in-store performance

The performance of department stores in Chile has been highly influenced by both the external macroeconomic situation and increasing online demand. On the one hand, as the US-China conflict continues to intensify, US dollar appreciation is negatively impacting local consumers’ expectations towards an economic scenario that remains unstable.

Seasonal and cyber shopping events are the main sales boosters

Amid such a deteriorated commercial scenario, all department store players rest their hopes on seasonal sales and cyber events to increase customer engagement and reactivate consumption. With reduced economic expectations, Chileans are limiting their consumption to very basic needs which directly impacts department stores, lowering volume and average ticket sales, mainly in durables.

Segmentation is small retailers’ most effective commercial strategy

Main retailers have always played an important role in financial inclusion by allowing lower-income segments of consumers access to financial solutions such as badged credit cards, insurance and even loans. However, over time, these retailers have directed their efforts towards client portfolio premiumisation by targeting higher-income consumers with their vast range of products and loyalty programmes, competing directly with banks.

COMPETITIVE LANDSCAPE

Omnichannel strategies are a top priority for all retailers

Chilean consumers have quickly adopted technology and are increasing their demand through the online channel. Due to the combination of fast-paced lifestyles and higher internet penetration, the online channel has become crucial for all retailers as consumers find online shopping to be a time- and cost-efficient way to search, compare and buy products.

Private label keeps boosting apparel store sales

When analysing apparel consumption, it is clearly identifiable that Chilean consumers are mainly driven by price when shopping as they are constantly searching for sales and promotional opportunities such as cyber sales, Black Friday and seasonal events. Because of positive price elasticity, department store retailers have invested in private label ranges to increase their product mix with fashionable and accessible products.

Falabella stands out through its different commercial strategies

Falabella SACI has differentiated itself through its product mix and omnichannel presence. The Chilean company has led the retailing industry for many years and continues to innovate with commercial solutions such as acquiring Linio and maximising its click and collect service.

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