Retail Sector Opportunities

An Expert's View about Retail Sales in Chile

Last updated: 21 Mar 2011

Chile has a sophisticated retail sector. The trend over recent years has been towards consolidation and local companies dominate the market.

Sector briefing Retail Sector Opportunities in Chile Why Chile? Chile has a sophisticated retail sector. The trend over recent years has been towards consolidation and local companies dominate the market. Key players include D&S [now part of Wal-Mart group], Cencosud and Ripley. The Chilean retail sector caters to all levels of society: having a small luxury goods market for Chile?s upper class; a wealth of shopping malls and department stores catering for Chile?s growing middle class; and traditional street markets appealing to the tighter budget of the lower classes. Find general information on the Chilean ?Chile?s free trade network market conditions on UKTI?s website. The provides access to almost 1.2 Doing Business Guide for Chile gives an billion consumers world-wide overview of Chile?s economy, business culture, and has made Chile an potential opportunities and an introduction to attractive export platform. It is other relevant issue. increasingly being used as a platform to the region and is an attractive base for services operations, manufacturing and assembly.? UK Trade & Investment Sector briefing: Retail opportunities in Chile services imported from the UK. Chile?s free Opportunities trade network provides access to almost 1.2 billion consumers world-wide and has made The Chilean retail sector is consolidated Chile an attractive export platform. It is offering advantages to suppliers, in particular increasingly being used as a platform to the the ability to target a large market through few region and is an attractive base for services business partners. operations, manufacturing and assembly. Chilean supermarkets and department stores Supermarkets are attractive clients for suppliers of expertise and innovation ? for example in the areas of The supermarket industry in Chile is a consultancy, R&D or other business solutions. sophisticated one. Over recent years the trend has been towards consolidation with the top Consumer confidence has increased in 2010, three players make up around 65% of the following a drop in sales in 2009 as a result of market. the global financial crisis. Retail sales in the first eight months of 2010 were up 15.8% on 43.8% of supermarket sales in 2009 were the same period in 2009. The National concentrated in the Metropolitan Region of Chamber of Commerce (CNC) has predicted an Chile ? reflecting the fact that 6 million of the increase of 13% over the whole of 2010. This 16.9 million Chileans inhabit the Region. increase reflects the growth in the Chilean economy as a whole (GDP growth is likely to be There were a total of 1047 establishments in around 5.5% in 2010) and inflation (predicted Chile at the end of 2009 ? an increase of 93 on to be around 3.5%) but can also be attributed 2008. Sales in the sector grew by 8.5% in to the base of comparison (2009 was a 2009 when compared with 2008; this can be particular bad year, even though sales compared with Chile?s GDP for 2009 which improved in the second half) and to the showed a contraction of 1.5% and inflation ?extraordinary? sales triggered by the which was -2.3%. earthquake in February 2010 (replacing damaged goods) and the World Cup (increase The two main players in the Chilean market are in sales of flat-screen televisions). DyS and Cencosud. DyS are the market leaders with approximated 34% of food sales in Whilst the minimum wage in Chile is $172,000 2010. They were acquired by Wal-Mart at the pesos (approx. USD 360) per month net, Chile beginning of 2009 and will be changing their has a growing middle class. In the trading name from Lider to Wal-Mart at the end Metropolitan Region (Santiago), around 10% of 2010. The company operates 252 stores in are ABC1. These individuals have an average Chile, including supermarkets, hypermarkets, family income of $2,866,000 pesos per month discount stores and shopping malls. (approx. USD 5,900). In addition, the Metropolitan Region has 18.7% (circa Cencosud is one of the main retail players in 1,100,280 people) in the C2 category. The South America, operating a multi-format average family wage in this group is business, with department stores, home $1,073,000 (USD 2,200) per month. improvement stores and supermarkets. Cencosud is the second largest supermarket INCOME DISTRIBUTION IN CHILE operator in both Chile and Argentina (with its BY SOCIO-ECONOMIC SECTORS Jumbo chain), the largest operator in Peru and has an important presence in the North East of 40 Brazil. 30 20 Department Stores 10 0 Chileans favour the ?one-stop shop? concept. A B C1 C2 C3 D E Department stores offer a wide range of products including clothing, electronics, furnishing etc. and can be a good way to enter Chile has signed a wealth of bilateral the Chilean market. agreements, including an economic association agreement with the European Union. The EAA has resulted in zero tariffs for most goods and UK Trade & Investment Sector briefing: Retail opportunities in Chile All the major department stores are locally You can be alerted to business opportunities on owned and again the sector is consolidated. a regular basis by registering on the UKTI website. Find out more on UKTI?s business Department stores play an important role in opportunities service on the UKTI website . financing their customers? purchases. 70% of all credit cards are issued through department . stores. Whilst the percentage of the total amount spent on credit cards is less ? 55% of value attribute to nonbank credit cards (store cards have lower limits and are issued to people who do not have access to bank credit cards ? so lower income). These cards appeal to the middle class as they offer discounts in stores as well as the ability to pay in instalments. These multiple smaller purchases are reflected in the fact that 73% of individual transactions on credit cards were made by nonbank credit cards. The main players are Falabella, Almacenes Paris (part of the Cencosud group), Ripley and La Polar. All are locally owned and all bar the latter have an important Regional presence. Shopping malls Shopping malls have becoming increasingly popular in Chile. The convenience of having everything under one roof, ease of parking, a high concentration of brand names and protection from the elements (particularly in the South of Chile) have led to strong growth. Growth has been aggressive and there are now around 45 major shopping malls in Chile, with a number of new malls are under construction. The most emblematic of these projects is the Costanera Center project in Providencia, Santiago. This mall, once completed, will be the largest mall in South America. The construction of the mall was put on hold in January 2009 due to the economic crisis, as the developers were concerned that they would not be able to find tenants if the project was completed on time, however construction resumed in 2010 and it is predicted to open in November 2011. If you have any questions on the opportunities above, contact the UKTI contacts named in this report. Business opportunities aimed specifically at UK companies are added daily to UKTI?s website. These leads are sourced by our staff overseas in British Embassies, High Commissions and Consulates, across all sectors and in over 100 markets. UK Trade & Investment Sector briefing: Retail opportunities in Chile Major events and activities UKTI contacts Expo Retail 2011 Tom Warwick Contact: Claire Rason Trade & Investment Manager Email: claire.rason@fco.gov.uk British Embassy Santiago Time: November 2011 Tel: (0056 2) 370 4174 Email: tom.warwick@fco.gov.uk www.ukti.gov.uk Find full details of all events in this country and sector on the UKTI website. Claire Rason New export events are added daily to the site Senior Commercial Assistant and you can register to be alerted to them on a British Embassy Santiago daily, weekly or monthly basis Tel: (0056 2) 370 4177 Email: claire.rason@fco.gov.uk UKTI?s Tradeshow Access Programme (TAP) www.ukti.gov.uk provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events. UK Trade & Investment Sector briefing: Retail opportunities in Chile Next steps - How UKTI can help ? Arranging appointments British companies wishing to develop their ? Organise seminars or other events for business in the Chilean market are advised to you to meet contacts and promote your undertake as much market research and company in the Chilean market planning as possible in the UK. UKTI?s team in Chile, with its wide local knowledge and This work is available via our Overseas Market experience, can provide a range of services to Introduction Service (OMIS) a chargeable British-based companies wishing to grow their service which assists British-based companies business in global markets. wishing to enter or expand their business in overseas markets. This can include: ? Provision of market information To find out more about commissioning this ? Validated lists of agents/distributors work, or accessing other UKTI services and ? Key market players or potential specialist advice, please visit the UKTI website customers in the Chilean market to find contact details for your local UKTI ? Establishment of interest of such office. contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2010 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: Retail opportunities in Chile
Posted: 21 March 2011, last updated 21 March 2011

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