Cencosud: strategies after challenging Q1 results

Date : 31 May 2017

As Cencosud’s Q1 results show a challenging start to 2017, we look at its different strategies for each country and its plan to combat the challenging Latin American market.

Chile: expanding online

Chile saw same store sales of -0.1%. As Cencosud’s most mature market, Chile’s performance is critical to the businesses’ overall success. Chile has high internet penetration and Cencosud is focusing on increasing its online presence there.

Cencosud has launched a new Jumbo shopping app, and expanded its click and collect. It also supported Cyberday, Chile’s largest online shopping event in May. Jumbo had a Cyberday website set up to showcase offers across food and alcohol.

Argentina: differentiation through food-to-go

Argentina saw same store sales of +14.9%. Despite being a very positive result, this has been affected by the devaluation of the Argentine peso. In reality, Argentina still struggled.

Going forwards Cencosud will be developing its proximity and supermarket formats. It will focus on food-to-go with pre-prepared meals, and its Jumbo Fresh range.

Brazil: focusing on atacarejo

Brazil saw same store sales of -9.9%. This was mainly due to the decreasing sales in Rio de Janerio, and lower food inflation. Cencosud also said greater competition from atacarejo stores contributed to falling sales. Previously Cencosud has focused on supermarket and hypermarket formats. We therefore expect further expansion of its Mercantil Rodrigues atacarejo format in the future.

Peru: launching shopping app

Peru saw stable same store sales. This was positive after extensive flooding seriously affected the country, on the back of a challenging 2016. Cencosud is however positive about long term growth in the country, and will now focus on its online development.

Cencosud is launching the Wong supermarket app allowing customers to shop online. The CEO of Cencosud Peru has reflected on how people are now shopping “When you are used to the physical world it is difficult to understand that there is a demand different from the one you offer.”

Colombia: increasing promotional activity

Colombia saw same store sales of -6.2%. This reflects the impact of the increase in personal tax and VAT. Colombia has also seen increasing levels of unemployment. To combat this Cencosud has increased its promotional activity.