Cencosud: gaining momentum in Q4

Date : 08 March 2018

After three quarters of decline Chilean-based Cencosud saw sales increase by 5.6% in Q4. This put the retailer’s sales performance in positive territory for the year, up 1.2%. We look at the results in more detail and the retailer’s strategy going forwards.

Sales driven by non-food

Turnover for Cencosud in 2017 was CLP1.96bn (US$3.2bn). The year’s results were driven by a positive Q4, with turnover increasing by +5.6%.

This came from the non-food sectors of the business, such as home improvement +30% and financial services +39%.

Performance between in supermarkets across the different markets was mixed. Argentina had the most positive results with same store sales for Q4 +15.1%. This was driven by the strengthening currency, rather than performance. For Chile same store sales were +2.3%, Peru +0.4%, Brazil -1.2% and Colombia -4.5%.

The retailer struggled due to the depreciation of all currencies against the Chilean Peso and deflation in Brazil. The macroeconomic environment across the region has also been challenging.

2018 strategy

Cencosud has said it feels positive about the year ahead. It has increasing confidence in the Brazilian marketplace as it is showing clear signs of recovery. Its strategy going forwards is to reinforce its value proposition through continuing to;

1. Invest in technology and improve the omnichannel experience

In 2017 Chile Cencosud increased supermarkets with online shopping from 48% to 68%. In Argentina it now offers two-hour delivery in 29 stores and implemented drive-thru in 13 new stores. In Peru delivery has been expanded to the provinces. In Colombia eight new online shopping stores were opened.

2. Enhance the shopper experience through remodelling stores

This included adapting process and changing store clustering.

3. Change the product mix to increase the health and wellness range, and private label

Chilean supermarkets have launched the Come Sano (Eat Healthy) campaign in reaction to increasing obesity levels in Chile. Another campaign called Club Jumbito gave children the opportunity to talk to doctors in store about food.

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