After RNG's recent Chile market update, Falabella is a key winner. Much of the market share that Cencosud is losing in Department stores and Home Improvement stores in Chile, Falabella is gaining. RNG has upgraded Falabella’s forecasted growth by 0.8% pts to 8.0% CAGR 15E-18E. During that span, the retailer will add $2.7 billion in sales in Chile and take nearly 1% pts in share.
Sales per Store
While part of this additional growth will come from an upgraded store growth forecast (adding 13 more stores compared with prior forecast), Falabella is excelling at increasing sales/store. All of its banners in the country are now forecasted to accelerate their pace of store productivity growth, which is especially noteworthy given the slowing economic backdrop in Chile.
Where Falabella stands out most, in RNG’s opinion, is in its advanced digital capabilities, which have continued to become a greater emphasis for the retailer. Keys to achieving a seamless omni-channel experience for Falabella revolve around: Product, Personalization, Experience, and Logistics. The company spent last year implementing critical initiatives in these areas and is now focusing on new strategies around these pillars.
Product: Last year Falabella increased its standard online assortment by 60%. Currently, it is focusing on assortment leadership in softlines.
Personalization: After launching its mobile app and targeted email marketing in 2013, Falabella is now developing new apps, personalized product recommendations, further customer segmentation, and new content.
Experience: In 2013, Falabella introduced Click & Collect fulfillment, last mile logistics, and access to a wider assortment through in-store kiosks. This year, the company’s focus is on improvements to its website, alternative payments, and in-store tablets for placing orders.
Logistics: After implementing reverse logistics and enhancing fulfillment last year, Falabella is now working on integrating inventory into one unified platform for online and offline, order and delivery tracking, and expanding the logistics footprint outside Chile.
Rapid Ecommerce Growth
Its improvements in omni-channel retailing have caused RNG to increase its ecommerce forecast considerably. We have upped the company’s 2014E ecommerce sales to $342 million, surpassing Cencosud as the market leader, and increased its CAGR 15E-18E to 21.2%, an upgrade of 8% pts. Generating 4.5% of sales in Chile through online, RNG believes the retailer could reach a 7% ecommerce share by 2018E.
See the links below for other highlights from our Chile update: