Caso 6_Falabella2018

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Falabella in 2018: Challenges of a Latin American Giant* 
 
I. Introduction 
 
By the beginning of 2018, Falabella was the Latin American retailer with the largest 
market capitalization (more than USD 24 billion)1 and one of the regions’ main retailers in 
in terms of annual revenues (USD 15 billion) and EBITDA (USD 2 billion)2 – a summary 
of Falabella financials is shown in Exhibit 1. The company, headquartered in Santiago, 
Chile, had more than 110.000 employees and operated department stores, supermarkets, 
home-improvement, shopping malls and a credit business in 7 countries, including Brazil 
and Mexico. 
 
The recent announcement of the arrival of Amazon to Chile and the continuous growth in 
the penetration of Alibaba and other e-commerce vendors in Latin America posit 
significant challenges for Falabella’s senior executives, who are deciding how to adapt 
the company’s operations and allocate investments. While its main businesses remained 
to be driven by sales in physical stores, Falabella initiated a more aggressive expansion 
into e-commerce, whose sales explained almost 8% of total revenues in last quarter of 
2017.3 Carlo Solari, chairman of Falabella’s board noted: “The emergence of new 
technologies such as e-commerce, widespread cell phone adoption, communications and 
logistics innovations, and big data processing, among others, have all changed the entire 
retail map. This has required companies to strongly innovate, react more promptly, and 
clearly stand out from the competition. We have had to reinvent our companies to serve 
our customers 24 hours a day through various channels, within an increasingly 
demanding environment”.4 
 
Even though Falabella’s senior management team thought that there were still important 
growth opportunities in the brick and mortar business in many Latin American countries, 
including the recently opened operations in Brazil and Mexico, they knew the challenges 
posited by the e-commerce business model, where Falabella had the stated goal of 
becoming the largest on-online retailer of Latin America. The question about how to 
approach this dual retail world kept the minds of Falabella’s executives busy and made 
them wonder whether the historical strength of Falabella, fueled by horizontal, vertical 
and international expansion, would be still a source of value for the coming future, or 
whether they should focus their forces on the online business. 
 
II. Falabella’s business units and Internationalization 
 
Falabella was a Chilean-based corporation offering a wide range of products and services 
in five business divisions: department stores, home improvement, supermarkets, real 
estate and financial services. The integrated retail format sought to achieve synergies 
with regards to purchasing volumes and consumer information. All business segments 
 
* This case was written by Professor Jorge Tarzijan with the excellent collaboration of Renata Loew, solely 
to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective 
handling of a managerial situation. This case was developed from published sources. 
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operated in Latin American countries (see its current presence in Exhibit 2). Through 
time, Falabella has used different mechanisms to expand into different businesses and 
countries (see timeline in Exhibit 3). 
Department Stores 
 
Falabella was founded in 1889 when Salvatore Falabella, an Italian immigrant, opened 
the first large tailor shop in the north of Chile. In 1958, it evolved into a department store 
through the introduction of a wide array of home products. Fueled by organic growth and 
acquisitions, by January 2018, Falabella operated 111 department stores (730.000 
square meters) in four countries with almost USD 4.5 billion in annual revenues.5 
Falabella’s business strategy in department stores was characterized by offering a wide 
variety of products and by establishing strong relationships with its suppliers, both 
domestically and abroad. The company had also developed and introduced an increasing 
selection of its own brand name products. 
 
Although the department store business sought to consider local needs and consumer 
trends it generally maintained uniform store planning and general marketing and 
commercial policies standards. Though the company operated standalone stores and 
stores in third-party shopping centers, Falabella’s department stores sales were positively 
impacted as its shopping mall business expanded. 
 
The internationalization of the department store business of Falabella began in 1993, 
when the company opened a store in Argentina. Two years later, Falabella entered Peru 
by acquiring 70 percent of the local department store chain Saga. Next international 
expansion took place in 2006, in Colombia, where Falabella opened three stores within 
two years, whereas in 2008 it acquired Casa Estrella, a traditional Colombian department 
store chain, with 5 stores.6 Department stores’ growth has continued in all four countries, 
keeping consistent market leadership (see Chile department stores market shares in 
Exhibit 4). 
 
Shopping Malls 
 
In 1990 the company entered the shopping mall business with a 50 percent stake in the 
Mall Plaza group. It launched Mall Plaza Vespucio, the first of several shopping centers 
opened in Chile targeted mainly at middle-income consumers. At that time, there was only 
one mall in Chile, Parque Arauco, launched in 1982 by an independent mall developer.7 
 
Since then, the shopping mall industry had been growing in Latin America. One of the 
main reasons behind this growth was consumers increasing preference to purchase 
different goods and services in the same place, so called “one stop shopping” (annual 
visits to Falabella’s shopping malls is presented in Exhibit 5). To be successful, shopping 
malls should have a good variety and mix of offerings and important anchor stores — 
mainly department stores, home improvements and, to a lesser extent, supermarkets. By 
the beginning of 2018, Falabella’s shopping malls had more than 3 million GLA.8 The 
business model of the shopping malls in Latin America developed differently from the US 
(United States of America), where most of them are isolated from the cities. 
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Home Improvement 
 
The entry of Falabella in the home improvement market was in 1998, when the company 
announced a joint venture with Home Depot, the largest home improvement chain in the 
United States, which was about to start its operations in Chile.9 Home Depot held a 
controlling interest in the partnership by owning two thirds of the shares. It brought to 
Chile the Do-It-Yourself (DIY) concept. DIY customers were generally people who 
repaired and renovated their own homes. However, the difference in the level of 
development of the DIY concept between the US and Chile was reflected in a lower level 
of consumer involvement in DIY activities and lower sales. Consumers gave more 
importance to the attractiveness of the store, service quality, assortment of merchandise 
and decoration products, rather than to DIY or low prices.10 Despite the opening of five 
stores, after three years of operations and with mounting financial losses, in December 
of 2001 Home Depot sold its shares to Falabella, which changed the name to Home Store. 
 
As Home Store, Falabella was able to quickly improve financial results. Despite Home 
Store’s success, in 2003 it had only a small share of the USD 4 billion-a-year home 
improvement market dominated by a competitor named Sodimac, with 51 stores in Chile 
and 6 in Colombia. Sodimac had introduced a new style of store, combining home 
products (like furniture and appliances), home improvement and construction goods.11 
After extended negotiations, Falabella acquired Sodimac. 
 
Falabella increased its internationalization with the opening of its first stores in Peru in 
2004 and in Argentina in 2008.12in 2014, it acquired its main Peruvian competitor13 and 
together they made up about 20% market share in a highly fragmented market. In 2013, 
Falabella acquired a home improvement chain named Dicico, with strong presence in the 
state of São Paulo, Brazil (56 stores)14. Carlo Solari, Falabella’s Chairman, explains that 
Falabella’s short-term focus in Brazil was on home improvement and mainly in the state 
of São Paulo, “which is already like entering a country” (see market sizes at Exhibit 6).15 
The Home Improvement market in Brazil was very fragmented, with the top 5 players 
accounting for less than 10% of the market.16 In 2015, new Sodimac Homecenter stores 
were launched in São Paulo and Uruguay.17 
 
Next expansion was in the home improvement market of Mexico. Valued at USD 30 billion 
annually, it is the second largest market in Latin America, after Brazil.18 In October 2017, 
Falabella announced a partnership with the second largest supermarket chain in Mexico, 
Organización Soriana (see Exhibit 7). It aimed to jointly develop home improvement and 
financial services in Mexico.19 The investment plan envisaged opening 20 Sodimac stores 
in Mexico within five years,20 many of them adjacent to Soriana’s supermarkets.21 
 
Regarding Sodimac’s strategy in the home improvement market, Carlo Solari pointed that 
“We realized that the increase in per capita income in the Latin American region, which 
translates into higher spending by households, was not being well addressed because 
there were few competitors in the home improvement category. So, we took advantage 
of that opportunity and entered Brazil, Uruguay, and Mexico. We are strengthening our 
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presence in "traditional" countries where we have opened stores, and we are betting 
heavily on home improvement in Brazil and Mexico” (see Falabella’s home improvement 
expansion in Exhibit 8).22 
 
In May 2018, Falabella reported an agreement with the Swedish furniture and decoration 
giant IKEA, confirming its arrival in South America. The agreement included the opening 
of at least nine stores in the next nine years in Chile, Colombia and Peru, with their 
respective websites. The estimated total investment ascends to USD 600 million.23 The 
CEO of Ikea Group, Torbjörn Lööf, said, "we are very happy to bring Ikea to South 
America with Falabella given their experience and leadership in the region. Together we 
will work to make Ikea a brand that is dear and meaningful to people.”24 
 
Supermarkets 
 
Falabella entered the supermarket business in 2002, when it launched a supermarket 
chain in Peru named Tottus. After opening several more stores in Peru, it entered the 
Chilean market by acquiring an 88% share of the San Francisco, a supermarket chain 
with 4% of market share. In 2005, Falabella opened the first Tottus in Chile and by 2009 
unified all supermarkets under Totus brand and management.25 Despite customers’ 
average purchase per visit to a supermarket being lower than to a department or home 
improvement store, customers visit supermarkets more regularly. 
 
In May 2007, Falabella announced the intention to merge with D&S, the largest 
supermarket chain in Chile.26 At the end of 2006, the market share of D&S in the 
supermarket industry was 33.5% and the share of San Francisco/Tottus about 5%. Their 
closest competitor would be Cencosud, which had a 31.3% of market share. Though 
D&S’s main line of business was by far the supermarket industry, D&S also had a 
relatively important participation in the credit card industry and a stake in a shopping mall 
business. However, Chile’s antitrust commission blocked the merge. They stated, 
“Carrying out this merger would lead to enormous change in the structure of the market, 
creating an enterprise that would be the dominant player in integrated retailing as well as 
in practically all of its individual segments (department stores, home improvement, 
supermarkets, real estate and associated financial businesses)”. In 2009, Walmart 
purchased a majority stake of D&S and started operating 250 stores in Chile, holding a 
market share of more than 35% in 2016. 27 
 
By the beginning of 2018, Falabella counted with 63 stores in Chile and 61 in Peru in 
435.000 square meters (see its expansion in Exhibit 8). Regarding the strategy, Carlo 
Solari pointed, “In Chile, supermarkets penetration is quite high versus other countries. 
Today we are smaller than other competitors, so we have worked not to be the largest 
supermarket chain, but to contribute with the corporation and with something different to 
consumers. We are growing with a strong own brands strategy, a strong strategy to have 
differentiated products, to offer something different to consumers. In Peru, supermarkets 
penetration is so low that we have a fairly aggressive growth. We believe that we have 
the opportunity to be supermarket leaders in Peru and grow at much faster rates”.28 
 
 5 
Financial Business 
 
From its beginnings, Falabella extended credit to its customers. In 1980, the company 
entered the credit business and became the first store to introduce its own credit card, 
CRM, which was suitable to make purchases only in Falabella stores. To start a 
relationship with a client without a financial history, Falabella offered clients a credit card 
with a “small” credit line, which was dynamically modified according to consumers’ 
behavior. As a result, Falabella acquired valuable information from its customers and 
increase its client base. In 2010, CMR Falabella established alliances with Visa and 
MasterCard, which allowed the credit card to be used in third party stores.29 
 
Wherever a new Falabella business was opened (department store, home improvement, 
supermarket and others), CMR was introduced and offered to customers. As of 2017, 
percentage of sales with CRM card was relevant in all Falabella’s business units, 
representing in department stores more than 45% of sales (see percentages of sales with 
CMR card in Exhibit 9).30 CRM had been the largest credit card issuer in Chile31, with a 
strategy of offering a large set of products and maybe the best loyalty program in the 
country.32 
 
Falabella’s expansion into new business sectors included the launching of Banco 
Falabella in 1998. Carlo Solari explained: “The financial area has always been very 
relevant within the group. We realized that to maintain a relationship with customers, we 
had to go from being a credit card company to being a bank for people (personal 
banking)”.33 Insurance services, travel agency and virtual mobile operator also integrated 
the financial services business unit of Falabella, which self-declared to focus on 
“combining the stability of a traditional financial business with the proximity to customers 
that characterizes a retail company”.34 In 2018, Falabella announced the full integration 
of its credit card business (CMR) with Banco Falabella. The corporate general manager 
of Fabella financiero, Juan Manuel Matheu, mentioned that “the integration points to give 
an additional boost to the growth of CMR and Banco Falabella, improving their future 
perspectives”.35 
 
CRM expanded to Peru in 1998, and then to Colombia and Argentina in 2006. By the end 
of 2017, CRM active accounts were almost 5 million and Banco Flabella had 264 
branches along Chile, Peru, Colombia and Argentina.36 In that same year, Falabella 
concluded purchasing 50% of the shares of the Mexican company, Soriban (Servicios 
Financieros Soriana S.A.P.I de C.V.) from Citi-Banamex, for approximately USD 35 
million. Future expansion to Mexico projected 40 new CRM branches in one year, as well 
as an integrated offer of services and credit products within Soriana’s more than 800 
stores.37 
 
E-commerce 
 
In 1999, Falabella’s first e-commerce platform was launched for its departments stores in 
Chile, expanding to Argentina in 2005 and to Colombia in 2010. Later, in 2012, it updated 
its ecommerce platform and launched click & collect (purchaseonline and pick-up at the 
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store), as part of an omnichannel and digitalization strategy.38 Subsequently, in 2013, 
sales of Falabella Chile online channel grew 47%.39 In 2014, Falabella started rolling out 
ecommerce enabled tablets to its salespeople in stores, specifically for the departments 
of footwear, furniture and appliances. With these tablets, the salespeople were able to 
show and offer a wider range of products than what is physically available on the sales 
floor.40 Later, Falabella has made important investments to improve its mobile 
responsiveness, purchase journey41 and product assortment42.43 
 
Sodimac and Tottus profited from Falabella’s department store online developments on 
slower steps and with variations. Sodimac’s e-commerce was launched on 2001 in Chile 
and started to expand to other countries in 2010. Click & collect was implemented in Chile 
in 2015, then in Colombia, Argentina and Peru.44 Totus Chile e-comerce was launched in 
2010 and then expanded to Peru in 2014. 
 
Explaining the company’s view regarding e-commerce, Carlo Solari explained that “we 
are convinced of the online commerce opportunity, but not as a replacement of the brick-
and-mortar business. We may have fewer stores than previously would have been 
expected without internet, but they are complemented and enhanced by internet.” He also 
argued that “nowadays, it is more efficient to sell many products and categories through 
the web than to do it through our stores. It means that we are going in the right direction, 
and we will not only be the leaders of traditional commerce, but also of e-commerce in 
the region.” To complement, he added “we are making much more relevant investments 
than we did in the past to be as flexible and scalable as possible. In 2017, for example, 
we are investing around USD 100 million in a new distribution center for Falabella Chile, 
which will be the most modern distribution center in South America.”45 The new 
distribution center was designed to handle the logistics of home delivery of e-commerce 
sales, as well as restocking stores on a per unit basis, by size and color in Chile, as part 
of a USD 1.2 billion investment plan on logistics and technology46 (see Falabella’s 
investment plans in Exhibit 10). The rapid penetration of high-speed internet has 
facilitated the growth of online commerce (see smartphone penetration in Exhibit 11). 
 
In the fourth quarter of 2017, Falabella’s online channels posted 37.1% growth in revenue 
when compared to the same period in the former year, reaching USD 769 million for the 
year. “If we exclude internet sales, department stores sales would have probably 
decreased”, mentioned a Morgan Stanley stock markets analyst.47 
 
III. General Institutional Information 
 
Market maturity and size differs among the countries where Falabella operated. Chile and 
Mexico were the most mature ones, with densities like those of developed economies. 
“Consolidation and e-commerce are key retail themes in Mexico today”, states the 
consultancy company ATKearney (see market maturity stages in Exhibit 12).48 
 
Chile had opened its economy to international trade and deregulated its markets. On 
January 1, 2004, Chile and the U.S. became free trade partners. It had also signed a free 
trade pact with the European Union in 2002 and with China (2005), As a result, exports 
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and imports had strongly increased. Other Latin American countries followed this path of 
openness to international trade, although with different velocities. The openness to 
international trade had been paired with a growing per-capita income. Carlo Solari pointed 
that “We have benefited from the growth of the middle classes that has occurred in the 
Latin American region, and as the countries continue to grow, this trend will continue”.49 
 
Historically, bankarization in Latin America had been lower than in the US and many 
European countries. However, its levels had been steadily increasing in the last two 
decades, mainly because of the higher income levels, improving technology, better 
scoring systems and the growing interest of banks by market share. Alongside with the 
higher levels of bankarization, there was an increase in the total number of active credit 
cards issued by banks. 
 
In terms of e-commerce, by 2019, 151.1 million people in Latin America are expected to 
buy goods and services online, compared to USD 121.1 million in 2016.50 The Latin 
America e-commerce market is still small, in comparison with the Asia Pacific or North 
American regions. Retail e-commerce in Latin America are expected to grow from USD 
57.02 billion in 2016 to USD 84.75 billion by 2019. Brazil is the leader with over USD 
16.58 billion in e-commerce sales in 2016, followed by Mexico (USD 7.19 billion) and 
Argentina (USD 5.1 billion) sale revenues per year. The average number of annual online 
transactions per-capita in Latin America in 2016 was the lowest worldwide (9.2). Latin 
America is also part of the mobile shopping movement51 
 
In March 2016, 27% of internet users in Latin America used their mobile device to acquire 
a product and the percentage of e-commerce sales to total retail sales in the whole Latin 
American Region was 1.9%. Exhibit 13 shows selected information of the retail e-
commerce market in Latin America, Exhibit 14 and Exhibit 15 show Worldwide and US 
trends in e-commerce and Exhibit 16 shows e-commerce penetration for the most sold 
product categories. 
 
IV. Main Competitors 
 
Falabella faced competition domestically and internationally from large companies at the 
integrated retail level (i.e., retailers that managed a set of businesses) as well as from 
focused competitors within each of its business units and-commerce players. The largest 
competitor at the integrated level in South America is Cencosud (leadership, revenues 
and EBITDA are compared in Exhibit 17), whereas the main competitor at the focused 
business level in Chile and Mexico is Walmart. In e-commerce, the main competitors are 
Mercado Libre, Amazon and Alibaba. 
 
Cencosud is a Chilean-based retailer that in 2012 ended a period of major acquisitions 
that involved the spending of more than USD 2.2 billion and reached sales of over USD 
19 billion.52 Only on that year Cencosud acquired a supermarket chain in Brazil, Carrefour 
operations in Colombia and opened the biggest shopping mall in Chile in the tallest 
building of Latin America,53 accomplishing significant operations in all the countries where 
it had presence - Chile, Argentina, Peru, Brazil and Colombia.54 In the credit card 
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business, Cencosud developed joint ventures with local banks in Chile (Scotiabank), 
Brazil (Bradesco) and in Colombia (Colpatria).55 Cencosud had most of its EBITDA 
concentrated on the supermarket sector (43%), followed by home improvement (23%), 
department stores (15%), financial services (12%) and real state (7%).56 Around 2012, 
Cencosud shares began to underperform the Chilean general index share price (IGPA), 
while Falabella significantly outperformed Cencosud and the IGPA (Exhibit 18). 
 
In 2016, Cencosud launched its omnichannel strategy and innovated on delivery 
possibilities. Costumers could buy online, by telephone or at store. Delivery could happen 
at the destination (with a 90 minutes option in 12 cities), by click and collect57 or at a 
specific parking lot outside the store, where costumers used an intercom to announce 
themselves and received their order priory purchased.58 The company stated: “Our 
businesses reflect the growing trend of using online platforms. The percentage of overall 
customers using our online services increases every year, as well as the percentage of 
online sales over total revenue”.59 Cencosud announced that in 2018 intends to launch 
its online marketplace60 and a dark store61 in 2019.62 
 
In Peru, Falabella’s main competitor was Supermercados Peruanos, which held grocery 
store sector leadership with supermarkets, hypermarketsand discount stores. Other 
relevant competitors were Cencosud and Makro (a wholesaler chain). Department stores 
competitors in Peru included Ripley, Cencosud and Oeschle (Grupo Intercorp). In the 
home improvement sector, Cencosud and Falabella shared the leadership, followed by 
Promart (Grupo Intercorp).63 
 
In Colombia, the most relevant competitors were Cencosud, Almacenes Éxito (which was 
a leading Colombian food retailer with presence also in Brazil and Argentina64, partly 
owned by the French retailer Casino) and Drogarias Olímpicas – a Colombian 
supermarket and drugstore retailer with wide geographical cover in the country and with 
presence in Central America65. Additionally, Koba Colombia SA’s discounter chain had 
attracted even traditional consumers of hypermarkets and supermarkets, opening more 
than 160 stores between the first quarter 2016 and the same period of 2017.66 
 
In Argentina, the leading player in grocery retail was Carrefour (5% value share in 2016), 
which competes with Cencosud, Wal-Mart and Casino, among others.67 Retail was a 
highly fragmented channel in Argentina, featuring numerous independent players.68 In 
the Brazilian home improvement sector, the main competitors were Leroy Merlin and 
C&C,69 whereas the biggest retailers in the country were the supermarkets Carrefour and 
Pão de Açucar (owned by Casino) 70. 
 
Mexico had a fragmented competitive environment due to the relevance of traditional 
formats and small independent retailers across all channels. Wal-Mart de México led 
retailing in 2017, holding a strong position considering that its market share was more 
than twice as high as that of the second biggest player, FEMSA Comercio (which owned 
OXXO, the largest convenience store chain in Latin America).71 At the end of 2016, Wal-
Mart de México launched a pilot test to boost internet sales through its retailing discounter 
store Bodega Aurrera. It targeted bottom to middle-income consumers that were often 
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unfamiliar with the process of buying online and lack a credit card to pay for online 
purchases.72 Another major retailer in Mexico was Puerto de Liverpool, which counted 
with three main integrated business: Retail Department Stores & Boutiques; Consumer 
Finance and Shopping Centers. With 131 stores in the country, it was the first retailer in 
Mexico to implement Omni-channel. More than 45% of the total commercial sales were 
through own credit cards.73 In 2016, its total revenues were approximately 5.4 billion USD. 
 
Home Depot México was the leader in the Mexican home and garden specialist market.74 
Other important competitors were the US based SSLJ.com, Lowe's Companies, Bed Bath 
& Beyond and the décor superstore At Home Group.75 
 
Online Competitors 
 
The emergence of new technologies such as e-commerce, communications, logistic 
innovations and big data processing, among others, changed the entire retail map.76 By 
2017, the e-commerce industry had an estimated value of USD 432.4 billion, growing 
13.4% per year between 2012 and 2017. The increased usage of mobile devices 
complemented the e-commerce trend, as retailers were increasingly tailoring their digital 
content for mobile viewers (see most popular e-commerce platforms in Latin Americain 
Exhibit 19). 
 
Mercado Libre 
With over 50.5 million unique visitors in 2016, Mercado Libre is the e-commerce platform 
with the largest number of visitors in Latin America. Mercado Libre is a C2C e-commerce 
platform similar to eBay.com, and it is present in Argentina, Brazil, Chile, Colombia, Costa 
Rica, Dominican Republic, Mexico, Ecuador, Peru, Panama, Portugal, Uruguay and 
Venezuela. 
 
Through its marketplace and related services, Mercado Libre provided buyers and sellers 
a robust ecommerce environment that fosters the development of a growing ecommerce 
community. One of its business with greater growing potential was an integrated online 
payments solution, Mercado Pago, which offered world-class payments solutions and is 
reshaping the financial industry in the region. With more than 10 million sellers and almost 
34 million buyers, in 2017 the company’s revenue was USD 839 million from marketplace 
activities and USD 559 million non-marketplace. Launched in 1999, it was among the top-
10 online retail sites in the world and was one Latin America’s “unicorn” - companies with 
a valuation of over a billion dollars.77,78 
 
Amazon 
With almost USD 178 billion revenues in 2017 (USD 54 billion outside North America)79, 
Amazon is the largest online retailer in the US, with 44% of the e-commerce sales and 
4% of all retail in the country.80 Amazon focuses mainly on the retail, logistics, cloud 
computing, consumer technology, and media and entertainment industries. Its growth is 
powered by three programs: Marketplace (its third party seller business), Amazon Prime 
(subscription shipping plan) and Amazon Web Services (AWS, its cloud services 
business). Since Amazon went public in 1998, the message of its founder and Chief 
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Executive Officer Jeff Bezos has been to “build culture, take risk and focus on the long 
term”, with the stated objective of being the largest retailer worldwide81 
 
In the third-party marketplace, Amazon offered services such as warehousing, shipping, 
customer service, payment processing and return services. Additionally, in 2015 Amazon 
launched Amazon Business, a marketplace tailored to business customers. Amazon 
charged third parties a percentage of the sale and additional fees for warehousing, 
shipment and logistics, originating in 2017 revenues of almost USD 32 billion, doubling 
2015’s revenues (USD 16 billion).82 More than 2 million third parties sold through Amazon 
marketplace, accounting for more than 50% of the total items sold by the company83. 
According to some sources, Amazon’s profits margins on third-party sales were higher 
than on its own sales84. 
 
Amazon Prime offers quick unlimited delivery for members that pay an annual 
subscription fee. The program was launched in 2005, with a two-day delivery service for 
1 million eligible products for an annual fee of USD 79, with a one-day delivery upgrade 
for USD 3.99. In 2016, it launched a monthly fee option. By the end of 2017, Prime 
members exceeded 100 million worldwide, and they acquire 5 billion items during the 
year85. Amazon Web Services (AWS), on the other hand, provides on-demand cloud 
computing platforms to individuals, companies and governments, on a paid subscription 
basis. In 2017, AWS comprised a variety of services including storage, computing, 
database, networking, application services, developer tools, Internet of things and 
analytics. 
 
Amazon had been building warehouses closer to major consumption centers to offer 
same day delivery in some product categories and two-day deliver in others. Amazon had 
been also investing heavily in fulfillment facilities in Europe, Asia and the Americas 
(including handling, warehousing, logistic and shipment).86 Recently, Amazon has been 
entering into the offline business with the opening of selected stores in the US. As a 
confirmation of its interest, in 2017 Amazon bought the organic supermarket chain 
WholeFoods (more than 450 brick-and-mortar stores) in a deal valued at USD 13.7 billion. 
In January 2017, Amazon arrived to Chile with Amazon Web Services (AWS), the 
business line that groups the computing and technology businesses of the firm. Amazon 
rented locations and hired executives to increase its presence in Chile and Latin America, 
announcing also the implementation of its service “Prime Now”87 and the analysis of 
further expansions into e-commerce in the Latin American region.88 Proof of the interest 
of Amazon in the region was the visit of AWS’s Vice President Teresa Carlson to the 
Chilean President Sebastian Piñera in May 2018 to express the company’s intention to 
increase its business activity in Chile.89 
 
Alibaba 
Alibaba group was a Chinese multinational worldwide marketplace, internetand 
technology conglomerate founded in 1999, with no distribution or inventory holding90. It 
provided consumer to consumer (C2C), business to consumer (B2C) and business to 
business (B2B) sales services in web portals. It also offered electronic payment services, 
cloud computing services and search engines to shop. 
 11 
 
Alibaba business had grown in Latin America, where it had operations in Argentina, Brazil, 
Colombia, Chile, Mexico, and Peru, and used a multi-language portal to reach clients from 
different countries91. Alibaba first experience in Latin America was its entry to Brazil in 
2010 and since then has set up cross-border business-to-business and business-to-
consumer e-commerce platforms that developed well in that country92. Jack Ma, founder 
and executive president of Alibaba, expressed his interests in further developing Alibaba’s 
businesses in Latin America93 Its Head of International Marketing and Business 
Development recognized that they had made a number of studies and work with extensive 
databases to identify the countries in which they wanted to be, and Chile was one of them, 
mainly because it had an stable political situation, good growth prospects and large 
internet penetrations.94 Aside from the company’s core business, Alibaba had been 
developing in China an alliance with the supermarket Auchan Retail S.A. and the 
wholesaler Ruentex, intended to bring online and offline shopping together in the food 
sector.95 
 
Regarding competition from e-commerce vendors, Carlo Solari mentioned that: “The 
Internet lowers entry barriers and makes these great foreign actors compete through the 
Internet in Chile, Peru or Colombia. It is not a question about whether they will arrive, we 
are already competing with them. In this game, our competitors will be all the actors in 
the world”.96 
 
V. Looking ahead 
 
The senior management team has to outline key priorities for the growth expectation of 
Falabella’s executives and investors. How to allocate future investments and how to 
approach growth were among the key priorities. Carlo Solari pointed that “In order to have 
the scale that allows us to make investments in technology, in logistics, to attract the best 
talent, to be able to buy from all parts of the world at the best price, we need to grow”97. 
For instance, an interesting debate was whether Falabella should prioritize its online 
business or the international expansion (as investment plans presented in Exhibit 10). 
 
In the online business, some executives wonder whether it will be a good idea to explore 
an alliance with companies such as Amazon and Alibaba and/or whether Falabella should 
invest heavily in the marketplace business. A follow-up question is whether Falabella 
should allow its existing suppliers to sell in the marketplace or whether it should focus on 
the suppliers not currently sourcing Falabella. 
 
Another discussion was about whether the company should reinforce its international 
brick and mortar expansion or freeze it. In the case of continuing expansion, should the 
company acquire “big” players, grow organically, acquire “small” players (like Dicico in 
Brazil) or enter into partnerships with local players (such as with Soriana in Mexico)? After 
all these relevant questions, the most intriguing one in the agenda was still: How should 
the company take advantage of its strengths to compete in this dual retail world? 
 
 12 
Exhibit 1 - Falabella’s Financials (in millions USD) 
 2013 2014 2015 2016 2017 
Income Statement 
Sales/Revenue 12,720 12,480 11,819 12,847 14,608 
Gross Income 4,376 4,512 4,119 4,275 4,920 
Gross Margin 34% 36% 35% 33% 34% 
EBITDA 1,720 1,674 1,568 1,720 1,975 
EBITDA Margin 14% 13% 13% 13% 14% 
Net Income 846 766 732 910 829 
Net Margin 7% 6% 6% 7% 6% 
 
Balance Sheet 
Current assets 9,662 9,075 8,766 9,718 10,770 
Non-current assets 9,201 9,624 8,986 11,082 12,606 
Total assets 18,862 18,699 17,752 20,800 23,376 
Current Liabilities 3,804 3,738 3,457 4,450 4,746 
Non-current liabilities 9,050 9,283 9,046 10,106 11,474 
Total liabilities 12,854 13,021 12,503 14,556 16,220 
Stockholders' equity 6,008 5,678 5,250 6,244 7,156 
Total liabilities and stockholders' equity 18,862 18,699 17,752 20,800 23,376 
Total Liabilities / Total Assets 61% 64% 65% 64% 63% 
Current Ratio 2.41 2.33 2.43 2.10 2.20 
Quick Ratio 1.97 1.89 1.97 1.71 1.79 
 
Note: Fiscal year January-December. USD conversion according to Falabella's annual reports (as of 31 
December). 
Source: “SACI Falabella”, Morningstar, avaible at: http://financials.morningstar.com/income-
statement/is.html?t=FALABELLA&region=chl , accessed June, 2018. 
 13 
Exhibit 2 - Falabella’s Presence in 2017 
 
 Country Department Stores 
Home 
Improvement Supermarkets 
Financial 
Services Real State 
Total USD 4 billion 
revenues 
USD 5,8 billion 
revenues 
USD 2,2 billion 
revenues 
USD 7,0 billion 
loan book 
2,1 million m2 
of GLA 
 4.4 million 
active CRM 
cards 
41 shopping/ 
power center 
Chile 45 stores 87 stores 63 stores 2,383,000 
active 
 
 318,000 m2 730,000 m2 210,000 m2 CRM cards 
Peru 29 stores 56 stores 61 stores 966,000 active 
 177,000 m2 372,000 m2 225,000 m2 CRM cards 
Colombia 26 stores 38 stores 1,040,000 
active 
 
 175,000 m2 367,000 m2 CRM cards 
Argentina 11 stores 8 stores 300,000 active 
 58,000 m2 86,000 m2 CRM cards 
Brazil 56 stores 
 158,000 m2 
Uruguay 3 stores 
 25,000 m2 
Mexico Coming soon Falabella-
Soriana credit 
card recently 
lanched 
 
 
Notes: Does not include an 982,000 m2 of additional GLA in free standing stores in the region also owned 
by S.A.C.I. Falabella. Revenues as of September 2017 LTM. Number of stores and sales area as of 
September 2017. Number of CMR accounts with balance. FX rate as of October 2rd 2017 (637,93 
CLP/USD ). Home Improvement includes Sodimac Colombia, which the company does not consolidate. 
Does not include Uruguay revenue, which the company does consolidate. 
Source: S.A.C.I. Falabella January 2018 Corporate Presentation. 
 14 
 
Exhibit 3a - Falabella’s Business Units Timeline per Country 
Chile 
Year Growth Department Store 
Home 
Improvement Supermarket Real State Financial 
1889 Organic 
First 
Falabella 
shop 
 
1980 Organic CMR launch (credit card) 
1990 Organic Mall Plaza inauguration 
1997 Alliance 
Home Depot 
joint venture 
(30%) 
 
1998 Organic 
Banco 
Falabella 
launch 
2001 M&A 
Home Depot 
acquisition 
(100%) 
 
2003 M&A 
Sodimac 
acquisition 
(100%) 
 
2004 M&A 
San 
Francisco 
acquisition 
(88%) 
 
2005 Organic Tottus launch 
 
Source: Falabella’s Annual Reports. 
 
 15 
Exhibit 3b - Falabella’s Business Units Timeline per Country 
 
Argentina 
 
Year Growth Department Store 
Home 
Improvement Supermarket Real State Financial 
1993 Organic Falabella launch 
2006 Organic CRM launch 
2008 Organic 
Sodimac 
Homecenter 
launch 
 
 
 
Colombia 
 
Year Growth Department Store 
Home 
Improvement Supermarket Real State Financial 
1993 Organic Falabella launch 
1994 Organic Sodimac launch* 
2006 Organic CRM launch 
2012 First mall inauguration 
2013 M&A 
Casa 
Estrella acquisition 
(100%) 
 
 
* In 2003, Falabella bought Sodimac and continued its operation in Colombia. 
 
Source: Falabella’s Annual Reports.
 16 
Exhibit 3c - Falabella’s Business Units Timeline per Country 
 
Peru 
 
Year Growth Department Store 
Home 
Improvement Supermarket Real State Financial 
1995 M&A 
Saga 
acquisition 
(98%) 
 
1998 Organic CMR launch 
2002 Organic Tottus first stores launch 
2004 Organic Sodimac launch 
2007 Organic Mallplaza first internacionalization 
2014 
M&A 
Maestro 
acquisition 
(100%) 
 
Organic 
Hiperbodega 
Precio Uno 
launch 
 
 
Brazil, Uruguay and Mexico 
 
Year Country Growth Home ImprovementFinancial 
2013 Brazil M&A Dicico acquisition (60%) 
2015 Brazil Organic Sodimac Homecenter Launch 
2015 Uruguay Organic Sodimac Homecenter Launch 
2016 Mexico Alliance Joint Venture with Soriana Joint Venture with Soriana 
 
Source: Falabella’s Annual Reports 
 
 
 17 
Exhibit 4 - Department Stores Market Share in Chile 
Per year, in percental points 
 
Competitors 2014 2015 2016 
12MM 
Jun17 
Falabella 34 34 35 35 
Paris (Cencosud) 25 25 25 25 
Ripley 20 19 18 18 
Abcdin 8 9 9 9 
La Polar (Cencosud) 9 8 8 7 
Hites 5 5 5 5 
Total 100 100 100 100 
 
Source: Ricardo Bennet, “Department Stores”, Censcosud Day 2017 presentation, website: 
http://s2.q4cdn.com/740885614/files/doc_presentations/2017/10/Cencosud-Day-TxD-(DS)-ENG.pdf, 
accessed April, 2018. 
 18 
Exhibit 5 - Annual Visits to Falabella’s Shopping Malls (in millions) 
 
 
 
 
Source: Falabella’s Annual Reports (per respective year) 
 
 
70 75
91
106 114
128
147
164
185
199 206
246
266
280
385 387
0
50
100
150
200
250
300
350
400
450
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
 19 
Exhibit 6 - Market Sizes 
 
Selected Latin American Countries 
 
Countries Population (mm) 
GDP 
(USD bn) 
GDP per capta 
(USD 000's) 
Argentina 44 545 12,453 
Brazil 208 1,796 8,647 
Chile 18 247 13,800 
Colombia 49 282 5,800 
Mexico 127 1,047 8,211 
Peru 32 192 6,044 
Uruguay 3 52 15,417 
Latin America & 
Caribbean 638 5,320 8,341 
 
Source: World Bank Data 2016 
 
 
Brazil 
 
Region / Satte Population (MM) 
GDP 
(USD bn) 
GDP per capta 
(USD 000's) 
North Region 18 97 5,430 
Northeast Region 57 257 4,495 
Southeast Region* 87 981 11,294 
 Minas Gerais State 21 157 7,458 
 Espírito Santo State 4 36 9,119 
 Rio de Janeiro State 17 199 11,966 
 São Paulo State 45 588 13,093 
South Region 30 305 10,320 
Central-West Region 16 176 11,119 
Total 205 1,817 8,558 
 
* Minas Gerais, Espírito Santos, Rios de Janeiro and São Paulo states compound the Brazilian 
Southeast Region 
 
Source: Wikipidia data for 2014 
 
 
 20 
Exhibit 7 – Organización Soriana 
In 2017, Organización Soriana revenues were USD 8.4 billion. Soriana was Mexico's 
second-largest retailer based on sales (behind Wal-Mart Mexico). It had 824 stores, which 
comprised 270 hypermarkets (huge stores that sell both food and general merchandise), 
129 supermarkets, 142 grocery stores, 103 mini-marts, 34 membership clubs (Sam’s 
Club competitor) and 76 other formats stores along more than 160 Mexican cities. It also 
operated about 14 distribution centers. 
 
 
 
 
 
Sources: 
 
D&B Hoovers, website: http://www.hoovers.com/company-information/cs/revenue-
financial.organizaci%C3%B3n_soriana_sab_de_cv.0b105a879a6746d5.html, accessed April, 2018. 
 
“Falabella firma acuerdo con Soriana y finalmente ingresa al mercado Mexicano”, 
https://www.df.cl/noticias/empresas/actualidad/falabella-firma-acuerdo-con-soriana-y-finalmente-ingresa-
al-mercado/2016-04-15/160654.html, accessed April, 2018. 
 
Soriana reports fourth quarter and full year 2017 financial results, 
http://recursos.soriana.com/recursos/resources/infoFin/2017/Eng-
2018_02_23_Press_Release_4QFY2017.pdf , accessed April, 2018. 
 
 21 
Exhibit 8 - Falabella’s Stores Expansion 2008-2017 
Number of Stores per Year 
 
 2008 2009 2010 2011 2012 2013 2014 2016 2017 
Department Store 73 68 75 75 82 89 99 109 111 
Argentina 9 10 11 11 11 11 11 11 11 
Chile 40 35 36 36 38 40 45 44 45 
Colombia 9 9 11 11 14 15 18 25 26 
Peru 15 14 17 17 19 23 25 29 29 
Home Improvement 100 101 109 116 134 201 240 246 248 
Argentina 4 4 6 6 7 7 8 8 8 
Brazil 0 0 0 0 0 56 58 56 56 
Chile 66 65 67 70 80 82 84 85 87 
Colombia 17 19 20 23 29 32 34 38 38 
Peru 13 13 16 17 18 24 56 56 56 
Uruguay 0 0 0 0 0 0 0 3 3 
Supermarket 40 43 55 64 76 88 101 121 124 
Chile 23 26 31 37 43 48 52 61 63 
Peru 17 17 24 27 33 40 49 60 61 
Grand Total 213 212 239 255 292 378 440 476 483 
 
Source: Falabella’s Annual Reports. 
 
 
 22 
Exhibit 9 - Percentage of Sales with CMR Card 
 
 
Business Units 2017 
Chile – Falabella 46.10% 
Chile – Sodimac 27.60% 
Chile – Tottus 20.10% 
Peru - Saga, Sodimac & Tottus 37.60% 
Colombia - Falabella & Sodimac 23.10% 
Argentina - Falabella & Sodimac 25.30% 
 
Percentage of Sales with CMR Card: The amount of sales revenue, as a percentage of total sales for that 
retail format, that corresponds to transactions made with a CMR credit card. As of 2Q16, the calculation 
“Percentage of Sales with CMR card” only takes into account the portion of the transaction that the client 
paid using the CMR card (on occasion, a client will use more than one method of payment in a transaction). 
In prior reports, the entire amount of the transaction was considered in this calculation. 
 
Source: S.A.C.I. Falabella EARNINGS REPORT 4rd Quarter 2017 
 
 23 
Exhibit 10 – Falabella’s Investment plan 2018-2021: USD 3.9 billions 
 
 
 
 
* 108 stores; 8 shopping centers. 
 
Source: Falabella Investor Relations, website: 
https://www.falabella.com/static/staticContent/content/minisitios/Inversionistas/images/contenidoDescarga
ble/otrasComunicaciones/2018/180107_Plandeinversiones2018-2021ENG.pdf, accessed April, 2018. 
 
 
 
984
996
975
989
960
970
980
990
1000
2018 2019 2020 2021
Per Year, in million USD
Remodeling and 
expansion of 
existing stores & 
shopping centers
31%
IT, logistics & 
others
32%
New stores and 
shopping centers
37%
Per Investment Priority
 24 
Exhibit 11 - Smartphone Penetration (2017) 
 
Countries Penetration Smartphone users (000') 
Argentina 48% 21,329 
Brazil 38% 79,578 
Chile 56% 10,254 
Colombia 35% 17,361 
Mexico 41% 52,993 
Peru 36% 11,585 
United States 69% 226,289 
 
These numbers are based on a model which takes into account a country’s economic progression, 
demography, online population, and inequality. 
Source: “Top 50 Countries by Smartphone Users and Penetration”, Newzoo, 2017, website: 
https://newzoo.com/insights/rankings/top-50-countries-by-smartphone-penetration-and-users/. Accesed, 
June, 2018. 
 
 
 25 
Exhibit 12 - Retail Latin American Markets Maturity Stages 
 
 Opening Peaking Maturing Declining 
Retail 
Markets 
Chile (1998) 
Peru (2002) 
Mexico (2003) 
Brazil (2006) 
Brazil (2013) 
Peru (2015) 
Mexico (2009) Mexico (2016) 
Chile (2016) 
Definition The middle class is 
growing, 
consumers are 
willing to explore 
organized formats, 
and government is 
relaxing 
restrictions. 
Consumers seek 
organized formats 
and exposure to 
global brands, 
retail shopping 
districts are being 
developed, and 
real state is 
affordable and 
available. 
Consumers 
spending has 
expanded, 
desirable real state 
is more difficult to 
secure, and local 
competition has 
become more 
sophisticated. 
Consumers are 
accustomed to 
modern retail, 
discretionary 
spending is high, 
competition for 
local and foreign 
retailers is fierce, 
and real state is 
expansive and not 
readily available. 
Typical 
Model 
Entry 
Minority 
investment in local 
retailer. 
Organic, such as 
trough direcly 
operated stores. 
Typically organic, 
but focus on tier 2 
and 3 cities. 
Acquisitions. 
 
 
Source: The 2017 Global Retail Development Index, Accenture, July 2017 
 
 26 
Exhibit 13 - Retail E-Commerce in Latin America 
Includes products or services ordered using the internet via any device, regardless of the method of 
payment or fulfillment; excludes travel and event tickets. 
 
 
 
 
 
 
 
 
* Forecasted numbers. 
** As of 1st quarter 2016. 
 
Source: “E-commerce in Latin America - Statistics & Facts”, Statista, 2016, website: 
https://www.statista.com/topics/2443/us-ecommerce/. Accesed, June, 2018. 
 
33,25
40,98
49,83
59,81
68,94
79,74
0
20
40
60
80
2014 2015 2016* 2017* 2018* 2019*
Sales (in billion USD)
103,9 115,8
126,8 137,1
147,2 155,5
0
50
100
150
2014 2015 2016* 2017* 2018* 2019*
Number of Digital Buyers (in millions)
33,6% 33,8% 33,5%31,5%
22,0%
33,9%
0%
10%
20%
30%
40%
Mexico Colombia Chile Peru Argentina Total
Mobile Buyer Penetration**
 27 
Exhibit 14 – Worldwide Retail E-Commerce Trends 
 
 
 
 
 
 
 
* Forecasted numbers. 
** Top 3 online stores revenues amounted to almost 100 billion USD in 2017. 
 
Source: “B2C E-Commerce”, Statista, 2018, website: https://www.statista.com/topics/2443/us-
ecommerce/. Accessed, June 4, 2018. 
 
 
 
 
1.336 1.548
1.845 2.304
2.842
3.453
4.135
4.878
-1.000
1.000
3.000
5.000
2014 2015 2016 2017** 2018* 2019* 2020* 2021*
Sales (in billion USD)
7,4% 8,6%
10,2%
11,9%
13,7%
15,5%
17,5%
0%
5%
10%
15%
2015 2016 2017 2018* 2019* 2020* 2021*
Share of Total Global Retail
 28 
Exhibit 15 - US Retail E-Commerce Trends 
 
 
 
 
 
 
 
 
 
 
 
 
* Forecasted numbers. 
** Forecasted number. Apparel and accessories retail is projected to generate over 121 billion USD in 
revenues by 2021. 
*** All data refers to the 4th quarter of respective year. 
 
Source: “E-commerce in the United States - Statistics & Facts”, Statista, 2018, website: 
https://www.statista.com/topics/2443/us-ecommerce/. Accesed, June, 2018. 
 
360.327 409.208
461.582 513.522
561.549 603.389
638.051
0
250.000
500.000
750.000
2016 2017 2018* 2019* 2020* 2021** 2022*
Sales (in billion USD)
4,6% 5,1% 5,5%
6,1% 6,6%
7,5% 8,2%
9,1%
0%
5%
10%
2010 2011 2012 2013 2014 2015 2016 2017
E-Commerce Share of Total Retail Sales***
3,6%
9,0% 11,3% 11,2%
13,0%
16,9%
21,0%
24,0%
0%
10%
20%
30%
2010 2011 2012 2013 2014 2015 2016 2017
Mobile-Commerce Share of Total E-Commerce Spending***
 29 
Exhibit 16 – E-Commerce Penetration for the Most Sold Product Categories 
 
 
 
 
* Data released by the U.S. Census Bureau. 
** E-Commerce Volume not Available. 
 
Source: CBRE. https://www.cbre.us/research-and-reports/E-Commerce-by-Retail-Category-Finally-
Revealed-by-US-Census-Bureau. Accesed, May, 2018. 
 
 
24,2
22,5
1,0 0,5
20,0%
9,5%
3,3%
0,1% 0,0%
0%
5%
10%
15%
20%
25%
0
5
10
15
20
25
30
Electronics & 
Appliances 
Cathegory**
Clothing & 
Acessories 
Cathegory
General 
Merchandise 
(department store 
inclusive)
Food & 
Beaverage stores 
(supermarket 
inclusive)
Motor vehicle & 
Parts Dealers
E-Commerce Penetration*
E-Commerce Volume (billion USD) E-Commerce Share
 30 
Exhibit 17 – Falabella and Cencosud: Market Leadership, Revenues and EBITDA 
 
 
Falabella Chile Peru Colombia Argentina Brazil Uruguay Mexico* EBITDA (100%) 
Department Stores #1 #1 #1 #1 17% 
Home Improvement #1 #1 #1 #2 #4 X X 18% 
Supermarkets #4 #3 4% 
Financial Services #1 #1 #5 X X 28% 
Real Estate (Malls) #1 #2 X 33% 
Revenues (100%) 62% 24% 6% 6% 2% 
EBITDA (100%) 74% 20% 4% 3% 
 
 
Cencosud Chile Peru Colombia Argentina Brazil EBITDA (100%) 
Department Stores #2 #4 15% 
Home Improvement #2 #2 #1 23% 
Supermarkets #2 #2 #3 #2 #4 43% 
Financial Services 12% 
Real Estate (Malls) #2 #1 7% 
Revenues (100%) 42% 9% 8% 25% 15% 
EBITDA (100%) 61% 11% 4% 24% 0% 
 
Legend: X - presence without leadership informed 
 
*When writing this case study, Falabella-Soriana had recently launched its credit card and Sodimac in 
Mexico would be launched soon. 
 
Sources: Respective Companies 2017 Earning Reports.
 
31 
 
Exhibit 18 - Falabella and Cencosud Market Value Evolution 
 
 
 
 
Falabella first went public in 1196 and market value was USD 1.6 billion. In April 2018, market value was 
USD 14.17 trillion. 
 
Source: computations from Bloomberg.com data. 
 
 
32 
Exhibit 19 - Most Popular Platforms used by Sampled Latin American Companies 
 
 
 
Source: IDB survey of Connectamericas.com companies, website: 
https://publications.iadb.org/bitstream/handle/11319/8166/Accelerating-Digital-Trade-in-Latin-America-
and-the-Caribbean.PDF?sequence=1, accessed April, 2018. 
0 10 20 30 40 50 60 70
Upwork, Workana and/ou Freelancer
eBay
Facebook
OLX
Amazon
Alibaba
Own online store
Mercado Libre
 
33 
Endnotes 
 
34 
1 “The world’s biggest public companies”. 2017 Rankings. Forbes. www.Forbes.com/global2000/. 
2 S.A.C.I. Falabella. Fourth quarter earnings report. 
3 S.A.C.I. Falabella Earnings Report 4th Quarter 2017 
4 Carlo Solari, Chairman of the board. Falabella. 2016 Annual report. 
5 S.A.C.I. Falabella Corporate Presentation. January 2018. 
6 S.A.C.I. Falabella 2008 Annual Report, p. 9. 
7 On Parque Arauco website: http://www.parauco.com/historia/, accessed February 2018. 
8 GLA stands for Gross Lettable Area. It is the total floor area designed for tenant occupancy. 
9 Sodimac 2016 Annual Report. 
10 For more informational about this case, see Constanza C Bianchi & Stephen J Arnold (2007) An 
Institutional Perspective on Retail Internationalization Success: Home Depot in Chile, The International 
Review of Retail, Distribution and Consumer Research, 14:2, 149-169. 
11 Sodimac 2016 Annual Report. 
12 Sodimac 2014 Annual Report, p. 16. 
13 Named Maestro. 
14 S.A.C.I. Falabella 2013 Annual Report. 
15 Patricio Poblete, “Carlo Solari: “Ya escogimos los países donde vamos a invertir en el corto plazo, y lo 
que vamos a hacer es profundizar y expandir”, Pulso, November 28, 2017. 
16 “Acquisition of 50,1% of Dicico”, S.A.C.I. Falabella Corporate Presentation, May, 2013. 
17 S.A.C.I. Falabella 2016 Annual Report. 
18 “Chilean big-box stores coming next year”, Mexico News Daily, April 20, 2016, website: 
https://mexiconewsdaily.com/news/chilean-big-box-stores-coming-next-year/ , accessed February, 2018. 
19 S.A.C.I. Falabella 2017 Financial Statement. 
20 S.A.C.I. Falabella 2016 Annual Report. 
21 “Chilean big-box stores coming next year”, Mexico News Daily, April 20, 2016, website: 
https://mexiconewsdaily.com/news/chilean-big-box-stores-coming-next-year/ , accessed February, 2018. 
22 Patricio Poblete, “Carlo Solari: “Ya escogimos los países donde vamos a invertir en el corto plazo, y lo 
que vamos a hacer es profundizar y expandir”, Pulso, November 28, 2017. 
23 http://www.emol.com/noticias/Economia/2018/05/17/906572/Falabella-firma-acuerdo-con-gigante-de-la-
decoracion-Ikea-para-abrir-tiendas-en-Chile.html. Accessed, May 30th, 2018. 
24 Source: Emol.com - http://www.emol.com/noticias/Economia/2018/05/17/906572/Falabella-firma-
acuerdo-con-gigante-de-la-decoracion-Ikea-para-adri- stores-in-Chile.html. Accessed, May, 30th. 2018. 
25 Company Overview of Tottus S.A., Bloomberg, website: 
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=47639256 , accessed 
February, 2018. 
26 “Chile retailers Falabella, D&S agree to merger”, Reuters, May 17, 2007, website: 
http://www.reuters.com/article/idUSN1742360020070517, accessed February, 2018. 
27 On America Retail website: http://www.america-retail.com/chile/chile-grandes-cadenas-de-
supermercados-concentraron-el-75-de-las-compras-en-2016/, accessed February, 2018. 
28 Patricio Poblete, “Carlo Solari: “Ya escogimos los países donde vamos a invertir en el corto plazo, y lo 
que vamos a hacer es profundizar y expandir”, Pulso, November 28, 2017. 
29 Falabella Annual Report. 2014. 
30 S.A.C.I. Falabella 3rd Quarter 2017 EARNINGS REPORT . 
31 S.A.C.I. Falabella 2016 Annual Report . 
32 Patricio Poblete, “Carlo Solari: “Ya escogimos los países donde vamos a invertir en el corto plazo, y lo 
que vamos a hacer es profundizar y expandir”, Pulso, November 28, 2017. 
33 Patricio Poblete, “Carlo Solari: “Ya escogimos los países donde vamos a invertir en el corto plazo, y lo 
que vamos a hacer es profundizar y expandir”, Pulso, November 28, 2017. 
34 S.A.C.I. Falabella 2016 Annual Report. 
35 Diario Financiero. https://www.df.cl/noticias/mercados/mercados-en-accion/falabella-integra-cmr-al-
banco-y-se-esperan-sinergias-por-hasta-us-20/2018-05-31/201618.html. Accessed June 7, 2018. 
36 S.A.C.I. Falabella January 2018 Corporate Presentation. 
37 Soriana 2016 Annual Report, website: 
http://recursos.soriana.com/recursos/resources/infoFin/2016/2017_07_17_ReporteAnual_2016.pdf, 
accessed February, 2018. 
 
 
 
35 
 
38 S.A.C.I. Falaella 2012 Annual Report. 
39 S.A.C.I. Falabella 2013 Annual Report. 
40 S.A.C.I. Falabella 2014 Annual Report. 
41 It redesigned online check-out process, which resulted in 40% fewer steps and fields to complete. 
42 For example, the sports and perfume categories doubled the number of products offered online that 
year. 
43 S.A.C.I. Falabella 2016 Annual Report, p. 42. 
44 S.A.C.I. Falabella 2015 Annual Report. 
45 Patricio Poblete, “Carlo Solari: “Ya escogimos los países donde vamos a invertir en el corto plazo, y lo 
que vamos a hacer es profundizar y expandir”, Pulso, November 28, 2017. 
46 S.A.C.I. Falabella 2016 Annual Report, p. 44. 
47 “La Crisis de Crescimiento de Falabella”, El Mercurio, February 28, 2018, website: 
http://www.elmercurio.com/Inversiones/Noticias/Acciones/2018/02/28/El-mercado-quiere-mas-de-
Falabella.aspx, accessed March, 2018. 
48 “The 2016 Global Retail Development Index. Global Retail Expansion at Crossroads”, ATKearney, 
2016, p. 6. 
49 Patricio Poblete, “Carlo Solari: “Ya escogimos los países donde vamos a invertir en el corto plazo, y lo 
que vamos a hacer es profundizar y expandir”, Pulso, November 28, 2017. 
50 “E-commerce in Latin America - Statistics & Facts”, Statista, 2016. Available at: 
https://www.statista.com/topics/2453/e-commerce-in-latin-america/, accessed June, 2018. 
51 “E-commerce in Latin America - Statistics & Facts”, Statista, 2016. Available 
at:https://www.statista.com/topics/2453/e-commerce-in-latin-america/, accessed June, 2018. 
52 Cencosud - Our History, website http://investors.cencosud.com/English/investor-overview/about-us/our-
history/default.aspx, accessed March, 2018. 
53 Cencosud 2012 Annual Report. 
54 Only where it has stores in the country: Northeast region, Minas Gerais and Río de Janeiro states. 
55 Cencosud 3Q17 Corporate Presentation. 
56 Cencosud 4Q17 Corporate Presentation. 
57 Pick up at a special counter inside the store. 
58 “Supermarkets in Chile - Cencosud Day presentation 2017”, website: 
http://s2.q4cdn.com/740885614/files/doc_presentations/2017/10/Cencosud-Day-2017-SM-Chile-ENG.pdf, 
accessed March 2018. 
59 Cencosud 2016 Annual Report, p. 25. 
60 E-commerce site where product or service information is provided by multiple third parties, whereas 
transactions are processed by the marketplace operator. 
61 A dark store is generally a large warehouse that can either be used to facilitate a "click-and-collect" 
service, where a customer collects an item they have ordered online, or as an order fulfilment platform for 
online sales. 
62 “Argentina Supermarket”, Cencosud Day 2017 presentation, website: 
http://s2.q4cdn.com/740885614/files/doc_presentations/2017/10/Cencosud-Day-SM-ARG-ENG.pdf, p.26. 
63 “Análisis del Sector Retail: Supermercados, tuendas por departamento y Mejoramento de Hogar”, 
Equilibrium Clasificadora de Riesgos, July, 2015, website: 
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