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Chile-based Cencosud are one of the top five grocery retailers in Latin America, with operations in Argentina, Brazil, Chile, Peru and Colombia. The business has announced plans to invest US$300m in 2019, of which 50% will be invested into new and remodelled stores. A third will be invested into enhancing its ecommerce business.  

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Currency volatility and reduced consumer spend have proved challenging for Chile-based Cencosud, who appointed a new CEO and new regional business leaders during Q3. We dive further into the retailers Q3’s results and its performance in all its markets.

The currency depreciation of the Argentine peso and Brazilian real against the Chilean peso have been the biggest contributing factor to an -8.1% revenue decline in Q3.

Snapshot of Q3’s results

  • Supermarket revenue decreased by -8.1% as reported
  • At a constant exchange rate revenue increased +8%
  • Chile’s year-on-year was +3.6% in Same Store Sales (SSS). In Chile increased revenues were driven by increased online sales and the net opening of six supermarkets
  • Argentina’s year-on-year was +25.6% (SSS). In Argentina revenue heavily declined due to the depreciation of the Argentine peso against the Chilean peso. As of 3Q2018, the application of the IAS 29 now places Argentina as a hyperinflationary economy
  • Brazil’s year-on-year was -1.6% (SSS). The depreciation of the Brazilian real against the Chilean peso, the closure of four stores and lower footfall during the World Cup all contributed to Brazil’s decline in revenue
  • Peru’s year-on-year was +2% (SSS). Peru’s revenue increased year-on-year due to the appreciation of its currency against Chilean peso, a third consecutive period of increased footfall and the net opening of three new stores
  • Colombia’s year-on-year was -2.9% (SSS). Revenues decreased despite the appreciation of the Colombian peso against the Chilean peso. This decrease is attributed to a year-on-year decline in same store sales and two store closures

Continuing to expand the ecommerce offer

Cencosud’s ecommerce arm has shown continuous year-on-year growth and increased penetration, with an encouraging set of results and an increased number of customers beginning to explore the channel.

Progress in Q3

  • Online channel sales increased +24.1% at constant currency
  • Reached +2.5% penetration for total retail sales compared to 1.8% in 2017Q3
  • New Jumbo websites have gone live in Chile and Argentina
  • The “Jumbo Ahora” express service has been well received by customers
  • Food picking from stores doubled in Columbia and Drive Thru online collection services were added in a further two stores

We review the latest news from Walgreens Boots Alliance in Chile and Thailand.

Boots, Thailand: new MD

Boots Retail Thailand announces the appointment of new Managing Director, Mike Wanliss.

He will take up the new role on 21 January 2019, reporting into Dean Thompson, VP and regional managing director for Asia international retail.

Wanliss brings with him 40 years’ experience in the retail industry. He joins the business from M.H. Alshaya Co, a leading international franchise operator, where he has acted as VP Boots Middle East since 2011.

Wanliss has also carried out leadership roles at both Woolworths and Cooperative Pharmacy.

Farmacias Ahumada, Chile: regaining its leadership position

In Chile, Farmacias Ahumada has undergone a series of changes throughout the past eight months, designed to rebuild its reputation in the industry. These changes include:

Farmacias Ahumada, Chile: investing in people

In April, Juan Martin Monsalve was appointed as the new CEO for Farmacias Ahumada.

Monsalve reports directly into Nicholas Osorio, who has been acting as interim MD for WBA Latin America since August 2016.

Monsalve joins the retailer from Walmart Chile where he acted as VP for general merchandise.

There have also been further changes throughout the business, with changes to around 80% of employees. These changes have focused on commercial, systems, logistics and operations teams.

Farmacias Ahumada, Chile: reasserting its healthcare and pharmacy proposition

Farmacias Ahumada is also committed to reasserting its position as a healthcare company, as opposed to a retailer.

The retailer has made adaptions to ranges. Focus has shifted away from food categories, and more towards the provision of specialist medicines.

The retailer is focusing on remodelling its existing stores in line with its Parque Arauco Pharmacy, designed to improve the beauty and pharmacy in-store experience.

Want to know more?

Retail Analysis subscribers can download and read our strategic outlook for WBA here.

Chilean based retailer Cencosud continues to experience challenges in 2018, leading to decreasing revenue. We look at its Q2 results in more detail. This includes each markets performance and how it plans on improving results through delivering a strong omnichannel proposition.

Challenging start to the year

Cencosud's Q2 results follow the pattern of Q1 with declining performance due to the heavy impact of currency fluctuations. Other Latin America-based retailers however have achieved positive performance. For example, Grupo Èxito Q2 results were +8.7% suggesting Cencosud could be facing other challenges.

Cencosud's results were;

  • Overall revenue -6.9%
  • At a constant exchange rate revenue +8.3%
  • Supermarket revenue -9%
  • Chile’s year-on-year was +2.3%. The positive performance was driven by increased promotional activity
  • Argentina’s year-on-year was -24.8%. Despite increased promotional activity the retailer was hampered by the challenging macroeconomic background in the market
  • Brazil’s year-on-year was -15.2%
  • Peru’s year-on-year was -5%. Sales were partially offset by the remodelling of one store
  • Colombia’s year-on-year was -5.5%. Higher online and apparel sales helped improve the results

Omnichannel progress

Cencosud has invested heavily in developing its omnichannel proposition. The aim is to generate better performance in the future as shoppers become more accustomed to using the channel. This investment continues and shows positive results. This will continue to be a priority for development in the future.

  • Online channel +54.1%
  • Reached +3.6% penetration compared to +2.2% 2Q2017
  • Click and collect is now in 267 stores
  • Drive thru is at 40 stores
  • Order from store to home in 133 stores
  • Self-checkout has been installed across multiple stores in Argentina, Chile and Peru

The retailer has also been continuously developing new technology internally to make processes more efficient such as; automated lighting, printed promotional posters about robotics to update stock prices.

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Presentations

04/06/2019
This figures-based deck summarises the forecast for the Latin American grocery market to 2023 and comes complete with a dataset.
18/01/2019
We look at five themes, including the growth of discounters and the continued strength of the atacajero format, that are set to shape the region's grocery markets in 2019 and beyond. With case studies from Brazil, Colombia and Mexico, amongst others, and retailers like Carrefour, GPA and Walmart, the presentation highlights the challenges and opportunities the region is expected to provide manufacturers in the short term.
22/12/2018
With internet penetration and smartphone ownership growing in Latin America we explore the growth of online grocery.
View all presentations

Key presentation

This in-depth guide to Chile explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

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