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The Retailing Landscape in Chile

The Retailing Landscape in Chile

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The Retailing Landscape in Chile

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  1. The Retailing Landscape in Chile Country Spotlight: Republic of Chile Pictured: Santiago By: Nici Thomas

  2. Geographical Influences: • Located in South America. • Chile is the longest & thinnest country in the world. • Chile is nearly twice the size of California. • It has almost every type of climate & landscape that the world contains due to its shape. (Volcanoes, deserts, glaciers, snow, mountains, valleys, forests, etc.) • About 80% of Chile is mountainous or forested. • The valley’s that surround Santiago have the best vineyards on the American continent. Chilean red & white wines are exported around the world.

  3. Republic of Chile: • Currency: Chilean Peso • Major Religions: Christian 80%, other 20% • Population: 17.1 million • Official Language: Spanish (English is spoken by the majority of the business communities.) • Ethnic groups: Spanish-Native American, European, & Native American. • Main Exports: Copper, fish, fruit, paper & pulp, chemicals & wine. • Iron, ore, gold, silver, coal, and other minerals are mined in Chile. • 1 of the world’s largest producers of copper. Copper accounts for over half of the countries export earnings. • 1 of South America’s most stable & affluent nations. • Mining, wood products & agriculture are important to their diverse economy. Copper Mining Chilean Wine

  4. History of the Retail Industry in Chile: • The retail industry has gone through a rapid growth process, especially department stores, grocery retailers and home improvement stores. • Companies are utilizing modern technology and have provided credit cards for their customers. • 1970’s: Sears opened in Chile at the largest mall & after a couple of years withdrew from the country due to the competitive marketplace. • J.C. Penny had a similar experience in 1995. • Home Depot & other major retailers have had problems & withdrew or were bought out by Chilean companies. • 1997: Due to the possible entry of international competitors such as Wal-Mart & Carrefour, both Cencosud & D&S created investment strategies to defend their businesses against foreign competitors. • The biggest retailers in Chile are family owned businesses that are well established and favored among Chileans. • Chile is known as the “Asian Tiger” of Latin America. • They are an aggressive exporter. Chile is the leading free-trader in the region. (The country has trade agreements with over 60 countries.)

  5. Cultural Influences: • There are over 1 million Native American Indians in Chile • Personal relationships are key to success. Chileans seek a relationship & not just a business deal or transaction. • The cueca is Chile's national dance. The cueca represents the rooster stalking the hen. (The courting of a couple.) • The Chamanto is a decorative traditional Chilean garment.

  6. Political Influences: • Government: Multi-party democracy • Current President: Sebastian Pinera (Elected in January 2010). • Divided into 15 numbered regions. • National Congress has 2 houses: The Senate & the Chamber of Deputies. • Voting Age: 18 years of age • Gained its independence in 1818. • Since the end of a military dictatorship (1973-1990), Chile has a more stable political life. • Considered 1 of the least corrupted countries in the world. • Has not legalized divorce. (Law permits marital separation but not divorce.) National Congress building in Chile

  7. Economic Outlook: • Free trade policies & an excellent point of entry to Latin America because of its fast growing economy. • Chile's retail sector is projected to grow 10 % in 2011. • The President is concentrating on enriching the business landscape and raising the yearly economic growth to 6%. • Chile was ranked #24 in Forbe’s ‘Best Countries for Business ranking’ this year. • Latin America is being viewed by the world as a growth area for all consumer goods markets. • Stable and consistent in economic performance and market growth.

  8. Consumer Demographics & Buying Habits: • Many Chilean women follow the fashion trends of Europe & the U.S. • Value for their Money takes priority over fashion & quality & durability is very important. • Average Chilean buys 4 pairs of shoes a year. (Chile has 1 of the highest consumption rates for shoes in Latin America.) • Most people live in central Chile around Santiago or the main port of Valparaiso. • Consumers in Chile are becoming more interested in online shopping. • Children usually live with their parents until they are married. • Now most households have only 1 child. • Chileans put more importance on shoes then clothing & are more brand-oriented in buying shoes than apparel.

  9. Key Cities in Retail: Santiago • Capital City: Santiago (Has several major malls.) • Antofagasta • Valparaiso • Concepcion: 2nd largest city in Chile. • Puerto Montt • Punta Arenas: route used by ships to avoid stormy Cape Horn. The port there is full of fishing & Antarctic research vessels. It is also a base for oil exploration. Valparaiso Punta Arenas

  10. Key Shopping Venues: • Department stores: Lead in apparel sales & main place Chileans buy apparel, furnishings, & electronics. • Major Department Stores: Falabella, Almacenes Paris, & Ripley. (“The Kings of retail in their home country.”) • Few specialty retailers or discount stores. • Malls: Very popular & usually have department stores. Most malls carry national brands & imported goods & brands. • Hypermarkets are also popular. (Customers feel they offer a better variety & quality in food and clothing items.) • Major Hypermarkets: Jumbo & Ekono

  11. The Role Of Customer Service: • Customer service is extremely important in the retail industry for the retail companies in Chile as well as highly valued by the consumers. • Consumer spending is boosted by the leading retailers providing credit through their own financial institutions, which enables consumers with low incomes to purchase more expensive items which in turn increases brand loyalty. • Chile’s malls cater to consumers preference for paying on credit or on “time” where many stores offer payment plans where customers make a 1/3 payment when the items are purchased and leave 2 postdated checks. (At 1 month intervals, to cover the other 2/3’s.)

  12. Ethics & Social Responsibility in Retail: • No offer incentives or inducements because of the countries low corruption level. • Corporate gifts are becoming more popular as a way to create brand awareness & brand loyalty. • Personal visits are welcomed and helpful in establishing long-lasting & profitable business relationships. • Do NOT be on time unless its in a business setting. (Dinner at someone’s house, not expected to be on time. Can be considered rude.) • Ask about their family: Business deals are usually closed after you meet their family.

  13. Advertising & Promotion: • TV & print advertising are strong influences on consumer purchases. • Most Chilean consumers research a product before they buy it. • In hair care promotion they usually use the two-for-one offer with similar products and branded items. • Foreign magazines play an important role for international brands to advertise in towards the Chilean consumer. • Hard-sell techniques are not appropriate because they have conservative and honest values. • Chile’s laws ban all advertising for cigarette’s in the country. (From February 2008.)

  14. Key Brands & Products: • International brands such as Adidas, Columbia, Hush Puppies, Nike, Nine West, & Puma are well-known in Chile & well-liked. • Chileans have a “Buy Chilean” attitude towards their personal hygiene products. • In the skincare market for Chile, international brands are highly successful. (L’Oreal & Nivea, are 2 brands Chilean women favor.) • Sodimac: the leading home improvement Do-It-Yourself chain. (Part of the Chile-based retail giant Falabella group.) • Cencosud owns Easy, another major home improvement retailer that is Chilean owned. • D&S is the biggest grocery chain in the country. Operates 3 different types, all with a different brand: (1) Discount Hpermarket LIDER, (2) Discount Supermarket EKONO & (3) Supermarket ALMAC. • CODELCO is the world's largest copper-producing company & is in Chile.

  15. Foreign & Domestic Competition: • Retail marketplace is very competitive because of their capitalist economic system & their openness to international trade. • Free-trade agreements with many countries including: Europe, the U.S., Canada, Mexico, South Korea, Japan & China. • Most major retail brands are available and the prices on goods are very competitive. • Because of the competitive situation and open Chilean market, international brands of makeup products are difficult to import to Chile.

  16. Foreign Expansion Arrangements: • Gap opened its 1st store in Santiago at the Parque Arauco shopping mall in October 2011. • At the end of January 2009 Wal-Mart controlled about 60% share in the retailer D&S, with the remaining part controlled by the founding family. • Mexico’s Group Casa Saba (GCS): Will acquire control of Chile’s FASA in a US $637 million deal. (Owns and operates a chain of 160 drugstores under the Farmacias ABC brand.) • FASA is the largest drugstore operator in Latin America.

  17. Manufacturing: • Shoes: Total of around 68 million pairs of shoes demanded & only 10 million pairs were manufactured in Chile. (90% were imported from China.) • 90% of makeup used by Chilean women is locally produced. • Manufacturing (12% of 2009 GDP): Types of manufacturing: mineral refining, metal manufacturing, food processing, fish processing, paper and wood products, finished textiles. • Trade: Exports (2010)-$69.6 billion: copper, fruits and nuts, fish and seafood, and wood products, cellulose and other manufactured products.

  18. Works Cited: Chile. (2000). http://www.geographic.org/maps/new2/chile_maps.html Chile. (2009). In Geography of the World. Retrieved from http://www.credoreference.com.aii.libproxy.edmc.edu/entry/dkgw/chile Kohler, K. (1996). Chile: This latin tiger is friendly. Chain Store Age, (10870601), 13-13. Retrieved from http://search.proquest.com/docview/222094609?accountid=130772 Bucalo, A.J. (1999). Chile: Another strong emerging market. Global Cosmetic Industry, 165 (1) 28-28-32. Retrieved from http://search.proquest.com/docview/196443956?accountid+130772 Chile industry: New retail giant. (2003). United States, New York: The Economist Intelligence Unit. Retrieved from http://search.proquest.com/docview/466337537?accountid=130772 Bianchi, C. & Mena J. (2004). Defending the local market against foreign competitors: The example of Chilean retailers. International Journal of Retail distribution Management, 32 (10), 495-495-504. Retrieved from http://search.proquest.com/docview/210933851?accountid=130772 “Chile”. Culture Grams Online Edition. Proquest. (2011). Retrieved from http://online.culturegrams.com.ai.libproxy.edmc.edu/world/world_country. php?contid=7&wmn=South_America&cid=33&cn=Chile (2011). BBC Monitoring. Retrieved from http://BBC News – Chile country profile news.bbc.co.wk/2/hi/americas/country_profiles/12222764.stm Jones, Brent. (2007). USA Today. U.S. millionaire buys large swaths of Argentina, Chile to protect environment. Retrieved from http://www.usatoday.com/money/world/2007-06-10-buying-chile-argentina_N.htm

  19. Works Cited – Continued Chile. (2009). Geography of the World. London: Dorling Kindersley Publishing, Inc. Credo Reference. Retrieved from http://www.credoreference.com.aii.libproxy.edmc.edu/entry/dkgw/chile Best Countries for Business #24 chile. Retrieved from http://www.forbes.com/lists/2011/6/best-countries-11_Chile_CHI020.html Olguin, Juan Francisco Veloso. (2011). Gap clothing store expands to Chile, Latin America. The Santiago Times. Retrieved from http://www.santiagotimes.cl/business/retail (2011). National Congress building, Chile. Retrieved from http://www.lonelyplanet.com/chile/images/national-congress-building-chile$18871-21 (2006). Real Estate in Chile. Chilean Cultural Considerations. Retrieved from http://www.realestateinchile.com/chilean-culture.html (2008). Sodimac, In-Store. Q4. Retrieved from http://www.sensormatic.com/instore/2008_Q4/sodimac_q42008.htm (2011). Wayfaring Travel Guide. Valparaiso, Chile. Retrieved from http://www.wayfaring.info/2011/01/09/valparaiso-chile/ (2011). Retail Global Expansion: A Portfolio of Opportunities. The 2011 A.T. Kearney Global Retail Development Index.Retrieved from http://www.atkearney.com/index.php/Publications/retail-global-expansion-a-portfolio-of-opportunities2011-global-retail-development-index.html Chile regulations: New anit-tobacco law to take effect in august. (2006). United States, New York: The Economist Intelligence Unit. Retrieved from http://search.proquest.com/docview/466609316?accountid=130772 (2011). Bureau of Western Hemisphere Affairs. Background Note: Chile.Retrieved from http://www.state.gov/r/pa/ei/bgn/1981.htm

  20. Questions??? The Pumalin Park in the south of Chile. (Owned by U.S. millionaire: Douglas Tompkins)