Retail Multi-Latins: the Falabella Case

During the 1990s, a business internationalization process took place in Chile, thus favoring new exports of goods and services, technology literacy and expansion of competitive horizons of Chilean companies. This internationalization was largely driven by the linkage between Chilean consolidated business groups with banks and institutional investors, which opened the door to foreign markets and international financing. By 2010, investments of Chilean multinational companies ranked 2nd in South America, most of them focusing on the services sector.

One particularly relevant sector in Chile is retail, represented mainly by Falabella, Cencosud and Ripley. The case of Falabella is of particular interest, as one of the first Chilean companies to internationalize its operations, driven by a steady growth in sales. The success is based on a unique business model that combines external market expansion by tapping into new markets, and internal expansion, by developing new different sectors within the Falabella Group.

Falabella kicked off its expansion in Argentina in 1993. In 1996, it targeted the Peruvian market, and in 2006 it launched operations in Colombia. During this expansion process, Falabella opened new business sectors in: construction (Sodimac), supermarkets (Tottus), insurance (Falabella Seguros), banking (Banco Falabella) and travel agencies (Viajes Falabella). The expansion strategies used by Falabella were adjusted based on the target country, leveraging the low competition in this type of retailers, and acquiring established brands, thus obtaining not only the products but the knowledge gained over years of operation.

Today, Falabella is the 5th largest retailer in the Latin American market and the 150th largest worldwide. The publication “Latin American multinationals” digs into this and other successful cases of Chilean and Brazilian large corporations.