Study On Retail In Chile Business Essay


This paper deals with the retail channels that are provided in Chile. Channels include food retailers, department stores, household goods retailers, durable retailers. This includes the analysis of performances and the challenges faced by the Chile retailers. This also includes effect of inflation on household budgets, tradeoff between price and convenience, impact of new supermarket players on the market concentration, changes made by introducing online trading for the store retailers in the retail market of Chile. The effect of international competitors on the countries retail marketing their competition with the regional departmental stores, their growth in the countries retail , main retailers and other companies contribution in the retail growth of the country.

Surrounded by Andes mountain ranges in the East and Pacific in the West, Chile is a thin strip of land 2,174miles (3,500 kilometers) long and only 265 miles (430 kilometers) at its widest point. Climatic condition various from place to place; desert in the north, temperate in the central regions and cooler in the south.

Retailing in Chile

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Over the last 15 years, there is a dramatic change in the Chilean market due to the growth in the economy, an increase in consumption, and increase in the use of credit cards and, undoubtedly, there is an increase in advanced technology. Now-a-days, financial institutions are providing loans for the retailers such as Falabella, Ripley and Paris. This has also helped in increasing the sales volume as, apart from many other banks, they grant loans and credit to people on low incomes and, make them to purchase of big-ticket items available to all. They also have the potential for growth in the relatively small sized Chilean market and, expanded into many other countries like Latin American countries, such as Argentina, Peru and Colombia.

Inflation effects on household budgets

The purchasing habits of the Chilean consumers have changed as a result of the impact of rising inflation and focusing on more essential items. In recent years, the retailing sales growth had been fuelled by the development of the middle class. However, controlling inflation, have made the costumers to reduce their debt levels and spend more on the products. The credit availability has also tightened by the lenders, further eroding consumers capacity to buy. By increase in the retailing sales under inflation, the sales of currents term are almost stagnant.

Convenience of price in Chile

The development of retailing has been driven over the last decade due to the decade. The retailing format enables the Chileans to stimulate from the problems like long commuting times, tighter schedules and transportation problems. Thus the various ways of reinvigorating the business of independent retailers and convenience stores had been emerged. The higher footfall in the lower priced retailers created the conditions for the emergence of discounters. For example, Ekono and Bodega Acuenta which is introduced by Distributor Services D&S, the first ever discounter retain chain in the country. In addition to this, outlets concept had been developed by many retailers, in which the retail outlets are offering 80% discounts on the leading brand manufacturers.

Concentration of market on supermarket players

There is an increase market concentration by introducing supermarket players. Although there is a failed amalgamation between Falabella and D&S happened in 2007, the feature of retailing in Chile has been changed by Saieh Group (SUM) and later on by Southern Cross. By the end of year 2008 the new players are intended to buy the retail chains and bought out with relevant new supermarket chain. Later on there is a believer in the industry experts such that the Saieh Group and Southern Cross will also enter other formats like convenience stores and also continues with their purchasing independent operations.

Changes made by online marketing

Moreover, Chile is good not only for store retailing it is good for non-store retailing in the year 2008. The better performance is recorded in the year 2008 for internet retailing, this consequently slowdown the store retail sales. Most of the leading retailers in Chile have created more secured and friendly websites for the online users by investing more on the online formats. Moreover many leading retailers also provide high discounts for the online users over listed prices when they are buying the products online. Many customers have reduced their bill amount by shopping in this way which is easy to avoid temptations. In addition, the time and money is saved by the customers when comparing online retailing. Hence there is a rapid growth in potential online customers in which 31% of the Chilean households are now using internet facilities everywhere and they can use it even in school or at work. The level of profession , the well-built performance of the Chilean economy and the competitiveness of its retail sector made the other countries to target the Chile.

Conflicts between convenience stores and suppliers

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There are some conflicts between the supermarkets and the suppliers in Chile and these conflicts undergoing through the observation of Anti-Trust commission, one case still in the conflict was presented by Nestle. These are the issues accused by the suppliers of supermarkets:
No stability in price of the products, replica of products, conditions they keep for the products, action that inhibit sales or free completion;

  • Charge of commissions, discounts, devolution of products, losses;
  • Sales under cost, unilateral extension of payment dates, cross subsides;
  • Loss of credibility among consumers and buyers from other marketing channels (e.g. traditional stores) that consider to be charged higher prices by suppliers compared to supermarkets.