Caso Falabella

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W20951
FALABELLA: GROWTH OPTIONS IN UNCERTAIN TIMES1
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Jorge Tarziján wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective
or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to
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Copyright © 2020, Ivey Business School Foundation Version: 2020-12-03
By the beginning of 2020, Falabella was one of the main Latin American retailers in terms of annual
revenues and earnings before interest, taxes, depreciation, and amortization (EBITDA) (see Exhibit 1).2
The company, headquartered in Santiago, Chile, had more than 110,000 employees and operated
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department stores, supermarkets, home improvement stores, shopping malls, and a credit business in seven
countries, including Brazil and Mexico.3
The phenomenal growth of the Latin American online marketplace Mercado Libre, and the recent
announcement of the arrival of Amazon.com Inc. (Amazon), Alibaba.com (Alibaba), and other e-commerce
vendors into Latin America, posed significant challenges for Falabella.4 While its main businesses remained
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driven by sales in physical stores, Falabella had initiated a more aggressive expansion into online sales,
which made up almost 10 per cent of total revenues in 2019 and grew at a yearly rate of 124 per cent in the
second quarter of 2020.5 Carlo Solari Donaggio, chairman of Falabella’s board, noted,
The emergence of new technologies such as e-commerce, widespread cell phone adoption,
communications and logistic innovations and big data processing, among others, have all changed
the entire retail map. This has required companies to strongly innovate, react more promptly, and
clearly stand out from competition.6
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In 2020, the COVID-19 pandemic brought additional challenges for Falabella’s management team. Due to
the pandemic, most shopping malls and stores were obliged to close for a rather long period of time, and it
was unlikely that the expected increase in online sales would compensate for the decrease in physical sales.7
Partly as a result of the financial challenges brought by the closing of stores and shopping malls, by the end
of April 2020, Fitch Ratings Inc. had decreased Falabella’s credit rating from “BBB+” to “BBB,” and rating
agencies warned of the Falabella’s increasing debt levels.8
In this scenario, there were different options for growth. For instance, Falabella could choose further growth
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in the brick-and-mortar stores, where there were still important opportunities (including its recently opened
operations in Brazil and Mexico), or it could promote growth in the online business. In its online activities,
Falabella could choose between organic growth (e.g., further investing in the marketplace business or its e-
commerce website),9 joint ventures, or acquisitions. The question of how to approach the retail world in
these turbulent times did not have an obvious answer, and there was also the question of whether the
historical strength of Falabella, fuelled by horizontal, vertical, and international expansion, would remain
This document is authorized for educator review use only by CARLOS MUENTE, Universidad Peruana de Ciencias Aplicadas (UPC) until Oct 2021. Copying or posting is an infringement of
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a source of value, or whether the company should focus on the online business, even at the cost of
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withdrawing or reducing its participation in some of the brick-and-mortar businesses.
BUSINESS UNITS AND INTERNATIONALIZATION
Falabella was a corporation based in Chile that offered a wide range of products and services in five business
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divisions and seven countries (see Exhibits 2, 3, and 4). The integrated retail format sought to achieve cost
and revenue synergies.10
Department Stores
Falabella was founded in 1889, when Salvatore Falabella, an Italian immigrant, opened the first tailor shop
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in northern Chile.11 In 1958, the shop evolved into a department store through the introduction of a wide
array of home products. Fuelled by organic growth and acquisitions, by January 2020, Falabella operated
111 department stores (a total of 730,000 square metres), which were located throughout Chile, Peru,
Colombia, and Argentina, and brought in more than US$3.6 billion in annual revenues.12 Falabella’s
business strategy in department stores was characterized by offering a wide variety of products and
establishing strong relationships with its suppliers. The company had introduced an increasing selection of
its own brand name products. Though the company operated stand-alone stores and stores in third-party
shopping centres, Falabella’s department stores were also located in Falabella-owned shopping malls.13
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The internationalization of the department store business began in 1993, when the company opened a store
in Argentina. Two years later, Falabella entered Peru by acquiring 70 per cent of the local department store
chain Saga. In 2006, Falabella entered Colombia, where it opened three stores in two years, while in 2008
acquired Casa Estrella, a Colombian department store chain consisting of five stores. The growth of
Falabella’s department stores continued in all four countries, and in 2020, Falabella had the largest market
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share in department stores in each of the markets it participated in.14
Shopping Malls
In 1990, the company entered the shopping mall business with a controlling stake in the Mall Plaza group.
It launched Mall Plaza Vespucio, the first of several shopping centres opened in Chile, targeted mainly at
middle-income consumers. At that time, there was only one mall in Chile: Parque Arauco, launched in 1982
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by an independent mall developer.15
The shopping mall industry had seen growth in Latin America. One of the main reasons behind this growth
was an increasing preference for purchasing different goods and services in the same place (i.e., one-stop
shopping). Mall Plaza shopping malls also offered medical centres, gymnasiums, game zones, education
centres, and public libraries.16
By the beginning of 2020, Mall Plaza (a publicly traded company with a market capitalization of about $3 billion)
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had 26 shopping malls in Chile, 14 in Peru, and three in Colombia and was the largest player in Chile and Peru.
By the beginning of 2020, Falabella owned approximately 59 per cent of the Mall Plaza group.17
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Home Improvement
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Falabella entered the home improvement market in 1998 with the announcement of a joint venture with
Home Depot Inc. (Home Depot), the largest home improvement chain in the United States, which was about
to start operations in Chile.18 Home Depot held a controlling interest in the partnership by owning two-
thirds of the shares. It brought to Chile the concept of do-it-yourself (DIY). DIY customers were generally
people who repaired and renovated their homes. The DIY concept was less developed in Chile than in the
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United States, and this was reflected in a lower level of consumer involvement in DIY activities in Chile,
where consumers gave more importance to the attractiveness of the store, service quality, and product
assortment than to DIY or low prices.19 Despite opening five stores, after three years of operations and
mounting financial losses, Home Depot announced its intention to exit Chile.20
In December 2001, Home Depot sold its shares to Falabella, which, operating under Home Depot’s brand
name and management, quickly recovered losses. Despite its success, in 2003, Falabella had only a small
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share of Chile’s $4 billion home improvement market. With 51 stores in Chile and six in Colombia,
Falabella’s competitor Sodimac dominated the market. Sodimac had introduced a new style of store,
combining home products (such as furniture and appliances) with home improvement and construction
goods. After extended negotiations, in 2003, Falabella acquired and merged with Sodimac.21
Falabella increased its internationalization with the opening of its first home improvement stores in Peru, in
2004, and in Argentina, in 2008. In 2014, it acquired the main Peruvian competitor, Maestro, and reached
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about 20 per cent market share in a highly fragmented market. In 2013, Falabella acquired a home
improvement chain named Dicico, which had a strong presence in the state of São Paulo, Brazil, with 56
stores. The home improvement market in Brazil was very fragmented, with the top five players accounting
for less than 10 per cent of the market.22 In 2017, Falabella announced a partnership with Organización Soriana
(Soriana) to jointly develop the home improvement market in Mexico. Soriana was Mexico’s second-largest
retailer based on sales, behind the Mexican arm of Walmart Inc. (Walmart). Valued at $30 billion annually,
the Mexican home improvement market was the second largest in Latin America, after Brazil.23 By the
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beginning of 2020, Falabella had 254 home improvement stores; the largest market share in Chile, Peru, and
Colombia; the second-largest market share in Argentina; and the fourth-largest market share in Brazil.24
Regarding Sodimac’s strategy in the home improvement market, Solari Donaggio said,
We realized that the increase in per capita income in Latin America, which translates into higher
spending by households, was not being well addressed by the few competitors in the home
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improvement category. So, we took advantage of the opportunity and entered Brazil, Uruguay, and
Mexico. We are strengthening our presence in countries where we have operations, and we are betting
heavily in Brazil and Mexico.25
In 2018, Falabella signed an agreement with IKEA to build and operate at least nine IKEA stores in Chile,
Peru, and Colombia in the next 10 years. The first store was expected to open by 2021. IKEA was a world-
class Swedish company that designed and sold ready-to-assemble furniture and home accessories.26
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Supermarkets
Falabella entered the supermarket business in 2002, when it launched a supermarket chain in Peru named
Tottus. After opening several Tottus stores in Peru, Falabella entered the Chilean supermarket business by
acquiring a supermarket chain with 4 per cent market share. Although customers’ average purchase amount
per visit to a supermarket was lower than their average purchase amount per visit to a department or home
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improvement store, customers visited supermarkets more often.27 Solari Donaggio reasoned that “Formal
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market penetration in Peru is less than 30 per cent, whereas in Chile, given the much higher penetration of
the supermarket industry, our strategy has been differentiation.”28
By the beginning of 2020, Falabella had 69 stores in Chile and 77 stores in Peru totalling 490,000 square
metres, with total annual revenues of $2.8 billion (see Exhibit 5).29 The main players in the Chilean
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supermarket industry were Walmart and Cencosud, with market shares in the vicinity of 30 per cent each.
Falabella was in fourth place, far from the market leaders. In Peru, the leaders were Supermercados
Peruanos, Cencosud, and Falabella, with similar market shares.30
Financial Business
From its beginnings, Falabella had extended credit to its customers. In 1980, the company became the first store
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to introduce its own credit card, CMR Falabella (CMR), which customers could use to make purchases in
Falabella stores. To start a relationship with a client without a financial history, Falabella offered clients a credit
card with a small credit line, which was dynamically modified according to the consumer’s behaviour. As a
result, Falabella acquired valuable information from its customers and increased its client base. In 2010, CMR
established alliances with Visa Inc. and Mastercard Incorporated (Mastercard), which allowed the credit card to
be used in third-party stores. By the end of 2019, Falabella was partnered only with Mastercard.31
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CMR was the largest credit card issuer in Chile and Peru and the fourth-largest in Colombia. CMR’s
strategy was to offer a large set of products and discounts to consumers if they paid with CMR in any
Falabella store (see Exhibit 6).32 Wherever a new Falabella business was opened (e.g., a department store,
home improvement store, or supermarket), CMR was introduced and offered to customers.
Falabella’s expansion into new business sectors included the launch of Banco Falabella in 1998. As Solari
Donaggio explained, “The financial area has always been very relevant within the group. We realized that
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to maintain a relationship with customers, we had to go from being a credit card company to being a bank
for people (personal banking).”33
Insurance services, a travel agency, and virtual mobile operators were integrated with the financial services
business unit, “combining the stability of a traditional financial business with the proximity to customers
that characterizes a retail company.”34
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CMR expanded to Peru in 1998 and then to Colombia and Argentina in 2006. By the end of 2019, CMR
had five and a half million active accounts, and Banco Falabella had 256 branches across Chile, Peru,
Colombia, Mexico, and Argentina.35 Falabella pursued strong growth in Mexico by offering integrated
services and credit products within more than 800 Soriana stores.36
The Online Business
In 1999, Falabella launched its first e-commerce platform for its department stores in Chile, expanding to
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Argentina in 2005 and Colombia in 2010. Later, in 2012, it updated its online platform and launched “click
and collect,” which enabled customers to purchase online and pick up orders at the store, as part of an omni-
channel and digitalization strategy.37 In 2014, Falabella started rolling out e-commerce-enabled tablets to
its salespeople. With these tablets, the salespeople were able to offer a wider range of products than was
physically available on the sales floor.38 Sodimac and Tottus profited from the online development of
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Falabella’s department store. Sodimac’s e-commerce was launched on 2001, while Tottus’s e-commerce
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was launched in 2010.39
Out of the $2.9 billion of Falabella’s expected investments for the period 2020–2023, 38 per cent was for
technology and logistics associated with online sales (see Exhibit 7).40 Falabella built a new distribution
centre in Chile—one of the most modern distribution centres in South America—mainly to handle the
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logistics of the home delivery of online sales. However, as a result of the COVID-19 pandemic, in April
2020, Falabella announced the freezing of investments in both the remodelling and expansion of shopping
malls and stores, though it kept investing in online activities.41
The rapid penetration of smartphones with high-speed Internet facilitated the growth of online commerce
(see Exhibit 8). In 2019, Falabella sold more than $1.2 billion in products via online sales and more than
$1.33 billion in financial products through digital channels.42 By 2019, over 60 per cent of the products sold
on Falabella’s website (www.fallabella.com) in Chile were picked up in stores. By the end of 2019,
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Falabella was an important online player in Chile, Peru, and Colombia.43
To increase its online presence, in 2018, Falabella acquired Linio, a marketplace application (app) with
operations in Mexico, Colombia, Peru, and Chile, for $138 million. Immediately after the announcement,
Falabella’s stock price fell 4.5 per cent.44 Linio expanded its offering by integrating the Falabella, Sodimac,
and Tottus catalogues and by including many products from domestic and international sellers. In 2019,
Linio had more than 8,600 active sellers, 290 million annual visits, $188 million in sales, and a 49 per cent
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increase in traffic compared with the previous year.45
In the second quarter of 2020, Gaston Bottazzini, chief executive officer of Falabella, announced two new apps
to complement Falabella’s offerings and expand online sales: Fazil, a last-mile app that offered products from
Tottus, Falabella, and Sodimac, and Fpay, a new digital payment app.46 Fazil allowed users to access the
assortment of products available in stores from their mobile phones as well as schedule deliveries at their
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convenience, monitor the status of their orders in real time, and interact with the person in charge of preparing
and delivering their order. With Fpay, users could use QR codes to make purchases in Falabella’s stores and
affiliated businesses, using credit cards from any bank. Fpay users could also transfer money to their contacts
through the Fpay app. According to Bottazzini, “Fazil and Fpay are part of the solutions we want to deliver to
our customers to help them simplify their lives, strengthening their supply alternatives, making available all our
product offerings while delivering digital payment solutions.”47
With regard to Falabella’s online strategy, Solari Donaggio said,

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We believe in the increasing relevance of digital channels. However, we also believe these will not
replace the store experience. The e-commerce is complemented by and integrated with physical
commerce. In countries more digitized than those in Latin America, physical stores help attract new
customers, increase brand awareness and therefore brand choosing, facilitate product deliveries,
and especially product returns.48
MAIN COMPETITORS
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Falabella faced competition domestically and internationally from large companies at the integrated retail
level (i.e., retailers that managed a set of businesses), focused competitors within each of its business units,
and online players. The main competitors at the integrated level were Cencosud and Ripley Corp. SA
(Ripley), whereas the main competitor at the focused business level in Chile and Mexico was Walmart.
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Cencosud
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In 2012, Cencosud ended a period of major acquisitions that saw it spend more than $2.2 billion and reach
sales of over $19 billion.49 In that year alone, Cencosud acquired a supermarket chain in Brazil and
Carrefour SA (Carrefour) operations in Colombia, opened the biggest shopping mall in Chile, and built the
tallest building in South America (also located in Chile), reaching substantial operations in all countries
where it had presence: Chile, Argentina, Peru, Brazil, and Colombia.50 In the credit card business, Cencosud
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developed joint ventures with local banks in Chile (Scotiabank), Brazil (Banco Bradesco SA), and Colombia
(Colpatria by Banco Colpatria SA), dissolving its own credit card subsidiaries in these countries.51
Cencosud’s EBITDA was concentrated in the supermarket sector, followed by home improvement stores,
department stores, shopping malls, and financial services (see Exhibits 9 and 10). At the end of 2019,
Cencosud had 1,108 retail stores.52
In 2016, Cencosud launched its omni-channel strategy and innovated on delivery possibilities. Customers could
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buy online, by telephone, or in store. Delivery could happen at the destination, through a click-and-collect
service, or at a specific parking lot outside the store. In 2019, Cencosud’s online supermarket sales were 2.1 per
cent of Cencosud’s total supermarket sales; online department store sales were 22.4 per cent of total department
store sales; and online home improvement sales were 6.6 per cent of Cencosud’s total home improvement sales.53
In June 2019, Cencosud successfully launched an initial public offering (IPO) for its shopping mall
business, Cencosud Shopping. It was the largest-ever IPO in Santiago’s stock exchange, netting the
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company $1.06 billion for 474 million shares (27.7 per cent ownership in the newly created company).54
The main buyers of Cencosud Shopping shares were pension funds, financial institutions, and foreign
investors. The remaining 72 per cent of Cencosud Shopping shares remained in the hands of Cencosud.
Cencosud Shopping was the largest owner and operator of shopping malls in Chile and the second largest
in South America. Cencosud Shopping had said that the capital raised by the IPO would be used to pay off
debt to Cencosud.55
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Ripley
Ripley had three main businesses: department stores, banking, and shopping centres. In 2019, almost half
of the company’s EBITDA originated from its financial services division (1.8 million active cards),
followed by the retail division (76 stores) and real estate (13 shopping malls).56 Ripley had a leading
position in Peru, and it was the third-largest retailer in Chile. The firm’s online sales had grown more than
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20 per cent annually in Chile and Peru between 1990 and 2019. On April 2017, Ripley launched a new
platform to allow third parties to sell their products through its website, Mercado Ripley. By the end of
2019, Ripley’s online sales accounted for 20 per cent of its total retail sales.57
Parque Arauco and VivoCorp Shopping Malls
Two additional competitors in the shopping mall business were Parque Arauco and VivoCorp. By June
2020, Parque Arauco had 48 shopping malls and strip malls in Chile, Peru, and Colombia. Between 2014
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and 2020, it had almost doubled its gross leasable area.58 VivoCorp had 23 shopping malls and strip malls
in Chile and was the fourth-largest shopping mall player in the country.59
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Falabella’s Main Competitors in Other Latin American Countries
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In Peru, Falabella’s main competitor was Supermercados Peruanos, which held grocery store leadership.
Other relevant competitors were Cencosud and Makro. Department store competitors included Ripley,
Cencosud, and Oechsle SA. In the home improvement sector, the leaders were Cencosud and Falabella.60
In Colombia, Falabella was the main department store. In the home improvement sector, Falabella’s main
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competitor was Cencosud. Some of the country’s most relevant supermarket chains were Almacenes Éxito
SA, a leading Colombian food retailer with presence also in Brazil and Argentina, and Olímpica SA, a
Colombian supermarket and drugstore retailer with geographical coverage in Central America.61
In Argentina, Carrefour was a leading player in supermarkets, competing with Cencosud and Walmart,
among others. In the home improvement sector, Falabella’s main competitor was Cencosud.62 However, in
Argentina, retail was a highly fragmented channel featuring numerous independent players with one or two
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branches.63 In May 2020, Walmart announced its intention to sell its operations in Argentina.64
In Brazil, the home improvement market was highly atomized, and the main players were Leroy Merlin
and C&C Casa e Construção. The biggest retailers were the supermarket chains Pão de Açucar and
Carrefour.65 In Mexico, the leading home improvement player was Home Depot. In supermarkets, the
Mexican branch of Walmart was the leader, holding a strong position against the second-largest player,
FEMSA (which owned OXXO, the largest convenience store chain in Latin America). Another major
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retailer in Mexico was El Puerto de Liverpool SAB de CV (El Puerto), which participated in department
stores, consumer finance, and shopping centres. More than 45 per cent of El Puerto’s total sales was done
through its own credit cards.66
Main Online Competitors

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The retail industry had been influenced by several technological changes. The emergence of new
technologies, such as e-commerce; widespread mobile phone adoption; communications and logistic
innovations; and big data processing had changed the entire retail map.67 Solari Donaggio stated, “For many
years we [Falabella] have been talking about competing with the main players in the world. We no longer
compete with local players.”68 Among the most popular online retailers in Latin America were Mercado
Libre, Amazon, and Alibaba (see Exhibit 11).
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Mercado Libre
Mercado Libre hosted the largest online commerce and payment ecosystems in Latin America, with
operations in 18 countries, including Argentina, Brazil, Mexico, Colombia, Chile, Venezuela, and Peru.
Mercado Libre was a marketplace that allowed both businesses and individuals to offer any item for online
purchase, including payment services. Mercado Libre also served users by making capital more accessible
through different credit products and by offering optional advertising and logistic support for sellers.
Mercado Libre did not have brick-and-mortar stores.69
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One Mercado Libre business with growing potential was an integrated online payments solution, Mercado
Pago, which offered payment solutions designed to facilitate transactions both on and off the marketplace.70
As such, Mercado Pago complemented the Mercado Libre marketplace. With more than 800 million
payment transactions in 2019,71 Mercado Libre had more than $1.3 billion in revenues from marketplace
(commerce) activities and $1 billion in revenues from non-marketplace activities (mainly financial
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services). Launched in 1999, by August 2020, Mercado Libre had a market capitalization of over $54 billion
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(more than seven times Falabella’s market capitalization), was among the top-10 online retail sites in the
world, and was the top online vendor in Latin America.72
Amazon
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With $280 billion revenues in 2019 ($75 billion in the international segment, outside North America),
Amazon was the largest and most valuable retail company in the world (with a market cap of about $1.5
trillion by August 2020).73 Amazon was primarily an online retail store, offering a wide range of product
categories as well as software, cloud storage services, and online video and streaming. In a surprising move,
Amazon bought the organic supermarket chain Whole Foods Market Inc. (Whole Foods) in 2017, in a deal
valued at $13.7 billion. Whole Foods had more than 450 stores.74
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Amazon, which not only sold its own products but also maintained a significant third-party marketplace, offered
services such as warehousing, shipping, customer service, payment processing, and return services. In 2015,
Amazon launched Amazon Business, a marketplace tailored to business customers. Amazon charged third
parties a percentage of sales as well as additional fees for warehousing, shipment, and logistics.75 More than
eight million sellers had sold through Amazon’s marketplace, accounting for approximately 50 per cent of the
total items sold by Amazon in 2019.76 Every year, more than a million new sellers join Amazon; however,
less than 10 per cent of active sellers were able to achieve $100,000 in yearly sales, and only 1 per cent
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achieved $1 million in sales. This was consistent with the general behaviour observed in online
marketplaces: a large portion of sales was usually generated by a small fraction of sellers.77
Amazon had been building warehouses closer to major consumption centres to offer same-day delivery in
some product categories and two-day delivery in others. Amazon had also been investing heavily in
fulfillment facilities (including handling, warehousing, logistics, and shipment) in Europe, Asia, and the
Americas.78 In January 2017, Amazon arrived in Chile with Amazon Web Services, a business line that
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grouped the firm’s computing and technology businesses.79 Amazon rented locations and hired executives
to increase its presence in Chile and Latin America, announcing the possible implementation of its service
Prime Now and analysis of further expansions in the region.80
Alibaba
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Founded in 1999, Alibaba was a Chinese multinational marketplace and Internet and technology conglomerate.
It provided consumer-to-consumer (C2C), business to consumer (B2C), and business-to-business (B2B) services
in web portals.81 It also offered electronic payment services, cloud computing services, and and shopping search
engines. Alibaba’s market capitalization in August 2020 was about $666 billion.82
Alibaba’s business had grown in Latin America, where it had operations in Argentina, Brazil, Colombia,
Chile, Mexico, and Peru; Alibaba used a multilanguage portal to reach clients from different countries.
Alibaba’s first experience in Latin America was its entry into Brazil in 2010, followed by its establishment
of cross-border B2B and B2C e-commerce platforms, which developed well in that country.83 Alibaba had
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conducted a number of studies and worked with extensive databases to identify countries to expand to, and
Chile was one of them—mainly because it had political stability, positive growth prospects, and a high
Internet penetration rate.84 Regarding competition from online vendors, Solari Donaggio said that “the
Internet lowers entry barriers and makes these great foreign actors compete through the Internet in Chile,
Peru, or Colombia. It is not a question about whether they will arrive; we are already competing with them.
In this game, our competitors will be all the actors in the world.”85
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SOME INSTITUTIONAL INFORMATION
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Chile had opened its economy to international trade and deregulated its markets, as evidenced in its free
trade agreements with the United States, China, and the European Union.86 As a result, exports and imports
strongly increased. The openness to international trade was correlated with a growing per capita income.
As Solari Donaggio said, “We have benefited from the growth of the middle classes that has occurred in
the Latin American region, and as the countries continue to grow, this trend will continue.”87
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In The Global Competitiveness Report 2019, Chile was ranked as the 33rd most competitive country in the
world and the first most competitive country in Latin America, above Brazil (71), Mexico (48), Peru (65),
Colombia (57), and Argentina (83).88 The 2019 per capita gross domestic product (purchasing power parity)
was $26,317 in Chile, $20,055 in Argentina, $16,462 in Brazil, $15,541 in Colombia, $20,877 in Mexico,
and $14,719 in Peru. The 2019 per capita gross domestic product (purchasing power parity) was $65,112
for the United States and $19,503 for China (see Exhibit 12).89
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Historically, the level of banking penetration in Latin America had been lower than in the United States.
However, the number of users of banking services had increased in the last decades, mainly due to higher
incomes, better technology and scoring systems, and higher market competitiveness. Alongside the higher use
of banking services, there was also an increase in the total number of active credit cards issued by banks.90
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LOOKING AHEAD
By mid-2020, Falabella’s senior management team had to outline key priorities for the growth expectations
of investors. The last few months had been especially challenging, as the COVID-19 pandemic obliged
most shopping malls and stores to close. How to allocate future investments and approach growth were
among the key priorities. As Solari Donaggio pointed out, “In order to have the scale that allows us to make
investments in technology, in logistics, to attract the best talent, to be able to buy from all parts of the world
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at the best price, we need to grow.”91
One debate concerned whether Falabella should prioritize the online business, a more aggressive
international expansion, or a combination of both. A related debate was whether Falabella should sell part
of its stake in the shopping mall business, or in any of the other businesses, to focus on the development of
further capabilities in its online or international efforts or both.
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In the online business, questions were associated with whether it would be a good idea to explore an alliance
with companies such as Amazon and Alibaba, or whether to invest more heavily in the marketplace
business, where third-party suppliers could sell their own products to final consumers. A follow-up question
was whether Falabella should allow its existing suppliers to sell in the marketplace, or whether it should
focus on suppliers not currently sourcing Falabella.
The most intriguing question concerned whether the company should take advantage of its strengths to
compete in the dual online and off-line retail world in these challenging times.
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EXHIBIT 1: FALABELLA’S FINANCIALS (US$ MILLIONS)
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2018 2019
Income Statement
Revenues of Non-banking Operations 10,194 10,898
Revenues of Banking Operations 1,705 1,837
Total Revenues 12,499 12,735
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COGS of Non-banking Operations (7,112) (7,352)
COGS of Banking Operations (752) (833)
Gross Profit 4,636 4,550
SG&A Expenses (3,446) (3,595)
Operational Income 1,189 955
Depreciation + Amortization 440 590
EBITDA 1,630 1,544
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Other Income / (Expenses) 33,365 28
Net Financial Income / (Cost) (227) (277)
Profit / (Loss) in Associates 10.3 1,6
Exchange Rate Differences (21) (29,86)
Non-operating Profit (204) (276,8)
Profit before Tax Expenses 985 678
Income Tax (250) (196)
Minority Interest (88) (82)
op
Net Profit / (Loss) 647 400
Gross Profit (% of Revenue) 37.1% 35.7%
SG&A Expenses (% of Revenue) 27.6% 28.2%
EBITDA (% of Revenue) 12.0% 12.1%
Balance Sheet
tC
Current Assets − Non-banking Business 3,451 3,285

Non-current Assets − Non-banking Business 9.693 11,727
Total Assets − Non-banking Business 13,144 15,011
Total Assets − Banking Business 8,346 9,798
Total Assets 21,491 24,809
Total Liabilities − Non-banking Business 7,370 8,759
Total Liabilities − Banking Business 6.019 7,616
Total Liabilities 13,389 16,375
No
Total Equity 8,102 8,434

Total Liabilities + Equity 21,491 24,809
Note: US$1 = CLP739 on January 1, 2020; COGS = cost of goods sold; SG&A = selling, general, and administrative expenses;
EBITDA = earnings before interest, taxes, depreciation, and amortization.
Source: Falabella, Annual Report 2018, accessed May 9, 2020, https://s22.q4cdn.com/351912490/files/doc_financials/annual
/190613_Falabella_Inglés_SVS.pdf; Falabella, Annual Report 2019, accessed May 9, 2020,
https://s22.q4cdn.com/351912490/files/doc_financials/annual/MEMORIA-FALABELLA_INGLES_JUNIO2020.pdf.
Do
Page 11 9B20M205
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EXHIBIT 2: FALABELLA’S PRESENCE, 2019
os
No. of No. of Home Financial
No. of Real Estate,
Department Improvement Services, No. of
Country Supermarkets No. of Malls
Stores Stores Active CMR
(Total Size) (Total Size)
(Total Size) (Total Size) Cards
Chile 47 89 69 2,780,000 26
(328,000 m2) (768,000 m2) (225,000 m2) (1,593,000m2 )
rP
Peru 29 55 77 1,100,000 14
(176,330 m2) (376,000 m2) (264,000 m2) (519,000 m2)
Colombia 25 40 1,080,000 3
(175,000 m2) (386,000 m2) (123,000 m2)
Argentina 10 9 385,000
(57,000 m2) (94,000 m2)
Brazil 53
(172,000 m2)
yo
Uruguay 3
(25,000 m2)
Mexico 5 185,000
(57,000 m2)
Note: Does not include 982,000 m2 of additional GLA in free-standing stores in the region, also owned by Falabella; m2 =
square metres.
Source: Juan-Luis Carrasco and Pablo Muñoz Norero, The Creation of a Business Model for One of the Leading Retailers in
op
Latam (Falabella, March 2020), accessed August 9, 2020, https://s22.q4cdn.com/351912490/files/doc_presentations/English
/2020/Corporate-Presentation-March-2020.pdf.
EXHIBIT 3: FALABELLA, REVENUE AND EBITDA BREAKDOWN BY COUNTRY, 2019
Revenues EBITDA
Country % of Revenue % of EBITDA
(US$ Millions) (US$ Millions)
tC
Colombia 880 7 137.0 9

Peru 3,276 26 381.0 25
Chile 7,560 60 976.0 64
Brazil 252 2 7.5 <1
Uruguay 120 <1 7.5 <1
Argentina 504 4 30.0 2
Note: EBITDA = earnings before interest, taxes, depreciation, and amortization. Values are approximated.
No

EXHIBIT 4: FALABELLA, REVENUE AND EBITDA BREAKDOWN BY BUSINESS UNIT, 2019
Business Unit % of Revenue % of EBITDA

Supermarkets 18 9
Department Stores 30 13
Home Improvement 34 19
Do
Financial Services 15 33
Real Estate 4 27
Note: EBITDA = earnings before interest, taxes, depreciation, and amortization; Values approximated.
Page 12 9B20M205
t
EXHIBIT 5: NUMBER OF FALABELLA STORES, 2009–2019
os
2009 2011 2013 2014 2017 2019
Department Store 68 75 89 99 111 111
Argentina 10 11 11 11 11 10
Chile 35 36 40 45 45 47
rP
Colombia 9 11 15 18 26 25
Peru 14 17 23 25 29 29
Home Improvement 101 116 201 240 248 254
Argentina 4 6 7 8 8 9
Brazil 0 0 56 58 56 53
Chile 65 70 82 84 87 89
Colombia 19 23 32 34 38 40
Peru 13 17 24 56 56 55
yo
Uruguay 0 0 0 0 3 3
Supermarket 43 64 88 101 124 146
Chile 26 37 48 52 63 69
Peru 17 27 40 49 61 77
Grand Total 212 255 378 440 483 511
Note: In 2019, there were five new home improvement stores in Mexico.
Source: Falabella, Memoria Anual 2009, accessed May 11, 2020,
op
https://s22.q4cdn.com/351912490/files/doc_financials/annual/FALABELLA.pdf; Falabella, Memoria Anual 2011, accessed May
11, 2020, https://s22.q4cdn.com/351912490/files/doc_financials/annual/memoria-final-11.pdf; Falabella, Annual Report 2014,
accessed May 11, 2020, https://s22.q4cdn.com/351912490/files/doc_financials/annual/AnnualReportSACI_2014_english.pdf;
Falabella, Annual Report 2017, accessed May 11, 2020, https://s22.q4cdn.com/351912490/files/doc_financials/annual
/MemoriaFalabella2017_SVS_eng(finalwebIR).pdf; Falabella, Annual Report 2019, accessed May 11, 2020,
tC
EXHIBIT 6: PERCENTAGE OF SALES MADE WITH CMR CARDS, 2019
Business Unit % of Sales with CMR Card*

Chile—Falabella (Department Store) 47.2
Chile—Sodimac (Home Improvement) 26.3
Chile—Tottus (Supermarket) 18.7
Peru—Saga, Sodimac, and Tottus 35.4
Colombia—Falabella and Sodimac 25.7
No
Argentina—Falabella and Sodimac 14.8
Note: *The amount of sales revenue, as a percentage of total sales for that retail format, that corresponded to transactions
made with CMR credit cards.
Source: Falabella, Fourth Quarter 2019 Financial Results, 16, accessed August 11, 2020,
https://s22.q4cdn.com/351912490/files/doc_financials/quarter_english/2019/20202502-Release-4Q19-inglés.pdf.
Do
Page 13 9B20M205
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EXHIBIT 7: FALABELLA’S INVESTMENT PLAN, 2020–2023
os
% of US$2.9 Billion
Item
Investment Plan
New Stores and Shopping Centres 31
Remodelling and Expansion of Existing Stores and Shopping Centres 31
Information Technology, Logistics, and Other 38
rP
EXHIBIT 8: SMARTPHONE PENETRATION BY COUNTRY, END OF 2019
Country Smartphone Penetration Rate (%)
yo
Argentina 53.0
Brazil 45.6
Chile 60.3
Colombia 41.1
Mexico 49.5
United States 79.1
op
Source: “Cell Phone Usage Worldwide, by Country” Bankmycell, accessed October 10, 2020, www.bankmycell.com/blog/how-
many-phones-are-in-the-world.
EXHIBIT 9: CENCOSUD, REVENUE AND EBITDA BREAKDOWN BY COUNTRY, 2019
Country % of 2019 Revenues 2019 EBITDA

Chile 48% 51%
tC
Argentina 18% 19%

Colombia 9% 4%
Peru 11% 20%
Brazil 14% 6%
Note: EBITDA = earnings before interest, taxes, depreciation, and amortization; Total revenues for 2019 were US$13.487
billion.
Source: Cencosud, Corporate Presentation: First Quarter 2020, accessed August 10, 2020,
No
http://s2.q4cdn.com/740885614/files/doc_presentations/2020/05/CORPORATE-PRESENTATION-1Q20-ENG.pdf.
EXHIBIT 10: CENCOSUD, REVENUE AND EBITDA BREAKDOWN BY BUSINESS UNIT, 2019
Revenue % of EBITDA % of
Business Unit
(US$ Millions) Revenue (US$ Millions) EBITDA
Supermarkets 9,734 72 652 50
Department Stores 1,560 12 67 5
Home Improvement 1,607 12 184 14
Do
Financial Services 243 2 138 1

Real Estate 330 2 263 20
Note: EBITDA = earnings before interest, taxes, depreciation, and amortization.

Source: Cencosud, Corporate Presentation: First Quarter 2020, accessed August 10, 2020,
Page 14 9B20M205
t
EXHIBIT 11: MOST POPULAR ONLINE RETAILERS IN LATIN AMERICA, BASED ON NUMBER OF
os
UNIQUE VISITORS
Online Retailer Visitors (Millions)

Mercado Libre 56.3
Amazon.com 22.4
B2W Companhia Digital 16.1
rP
Alibaba.com 11.8
eBay Inc. 9.5
Source: “Most Popular Online Retailers in Latin America as of May 2018, Based on Number of Unique Visitors (in Millions),”
Statista, August 2018, accessed May 12, 2020, www.statista.com/statistics/321543/latin-america-online-retailer-visitors/.
EXHIBIT 12: MARKET SIZES AND GDP PER CAPITA
yo
Selected Latin American Countries
Population GDP per Capita

Country
(Millions) PPP (US$ Thousands)
Argentina 45 20,055
Brazil 213 16,462
op
Chile 19 26,317
Colombia 51 15,541
Mexico 129 20,867
Peru 33 14,719
Uruguay 3 23,580
tC
Note: GDP = gross domestic product; PPP = purchasing power parity.

Source: “Lista de países ordenados por población,” PopulationPyramid.net, December 2019, accessed May 12, 2020,
www.populationpyramid.net/es/población-por-pais/2020/; “World GDP per Capita Ranking 2019 | Data and Charts,” Knoema,
accessed May 21, 2020, https://knoema.com/sijweyg/world-gdp-per-capita-ranking-2019-data-and-charts.
No
Do
Page 15 9B20M205
t
ENDNOTES
os
1
This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives
presented in this case are not necessarily those of Falabella or any of its employees.
2
Falabella, Fourth Quarter 2019 Financial Results, accessed August 11, 2020,
https://s22.q4cdn.com/351912490/files/doc_financials/quarter_english/2019/20202502-Release-4Q19-inglés.pdf.
3
Falabella, Annual Report 2019, accessed May 9, 2020,
rP
4
“Chile: La llegada de Amazon y sus efectos en la escena local,” América Retail, December 19, 2018, accessed May 8, 2020,
www.america-retail.com/chile/chile-la-llegada-de-amazon-y-sus-efectos-en-la-escena-local/.
5
Falabella, Earnings Call Presentation: Second Quarter 2020, accessed December 3, 2020,
https://investors.falabella.com/English/financials/default.aspx.
6
Falabella, Annual Report 2016, accessed November 23, 2019,
https://s22.q4cdn.com/351912490/files/doc_financials/annual/SVS_Ingles-_FINAL.pdf.
7
“Fitch Downgrades Falabella to ‘BBB’ from ‘BBB+’; Outlook Negative,” Fitch Ratings, April 20, 2020, accessed August 10,
2020, www.fitchratings.com/research/corporate-finance/fitch-downgrades-falabella-to-bbb-from-bbb-outlook-negative-20-04-
2020.
yo
8
Ibid.
9
For a short discussion of the main differences between marketplaces and e-commerce, see Charlène Guicheron, “10
Differences between Marketplace and E-commerce You Should Know,” Kreezalid, June 19, 2018, accessed September 14,
2020, www.kreezalid.com/blog/78427-10-differences-between-marketplace-and-e-commerce-you-should-know.
10
Falabella, Annual Report 2019, op. cit.
11
Falabella, Annual Report 2018, accessed December 3, 2020, https://investors.falabella.com/English/financials/default.aspx.
12
Juan-Luis Carrasco and Pablo Muñoz Norero, The Creation of a Business Model for One of the Leading Retailers in Latam (n.p.:
Falabella, March 2020), accessed August 9, 2020, https://s22.q4cdn.com/351912490/files/doc_presentations/english/2020/Corporate-
Presentation-March-2020.pdf; All dollar amounts in US dollars.
op
13
Falabella, Road Show Presentation, October 2018, accessed August 9, 2020,
https://s22.q4cdn.com/351912490/files/doc_presentations/english/2018/10/2018.10.10-Falabella-Roadshow-
Presentation_Final-PresentadaRev-v.2.pdf; Falabella, Annual Report 2018, op. cit.
14
15
Ibid.; “History,” Parque Arauco, accessed August 7, 2020, www.parauco.com/en/historia/.
16
Mallplaza, Memoria Anual Plaza S.A. 2019, accessed August 7, 2020, www.mallplaza.com/files/PUNTO-
COM/MP_MEMORIA_2019_%20FINAL.pdf.
17
“MALLPLAZ:CI,” Bloomberg, accessed May 12, 2020, www.bloomberg.com/quote/MALLPLAZ:CI; Carrasco and Muñoz
tC
Norero, op. cit.; Falabella, Annual Report 2019, op. cit.

18
https://s22.q4cdn.com/351912490/files/doc_financials/annual/Memoria_SACI_Falabella2013EN.pdf.
19
Constanza Bianchi and Stephen Arnold, “An Institutional Perspective on Retail Internationalization Success: Home Depot
in Chile,” International Review of Retail, Distribution and Consumer Research 14, no. 2 (2004): 149–169.
20
Constanza Bianchi, “Case Study: Home Depot in Chile,” Journal of Business Research 59, no. 3 (2006): 391–393.
21
Sodimac, Annual Report 2016, accessed August 10, 2020, www.gtm.sodimac.cl/static/site/nuestra-empresa/RS-
sodimac2016/pdf/AnnualReportSodimac2016.pdf.
22
Falabella, Acquisition of 50,1% of Dicico, May 2013, accessed March 20, 2020,
https://s22.q4cdn.com/351912490/files/doc_presentations/english/2013/20130528PresentationDicico.pdf.
No
23
“Chilean Big-Box Stores Coming Next Year,” Mexico News Daily, April 20, 2016, accessed February 21, 2018,
https://mexiconewsdaily.com/news/chilean-big-box-stores-coming-next-year/.
24
Carrasco and Muñoz Norero, op. cit.
25
Patricio Poblete, “Carlo Solari: ‘Ya escogimos los países donde vamos a invertir en el corto plazo, y lo que vamos a hacer
es profundizar y expandir,’” La Tercera, November 27, 2017, accessed August 10, 2020, www.latercera.com/pulso/carlo-
solari-ya-escogimos-los-paises-donde-invertir-corto-plazo-lo-profundizar-expandir/.
26
Falabella, “Empresas Falabella Signed an Agreement with IKEA for the Development of Its Concept in Chile, Peru and
Colombia,” press release, May, 17, 2018, accessed August 9, 2020,
https://s22.q4cdn.com/351912490/files/doc_news/english/2018/2018-05-17-SACI-Falabella-signs-MOU-with-IKEA.pdf; Julia
Fernandez, “IKEA,” Medium, April 18, 2019, accessed May 12, 2020, https://medium.com/marketing-marques-innovation-
bordeaux/ikea-edf85df1c31d.
Do
27
Falabella, Memoria Anual 2009, accessed May 11, 2020,
https://s22.q4cdn.com/351912490/files/doc_financials/annual/FALABELLA.pdf.
28
Poblete, op. cit.
29
30
31
Ibid.
32
Ibid.
33
Poblete, op. cit.
Page 16 9B20M205
t
os
34
35
Falabella, Road Show Presentation, op. cit.
36
Organización Soriana, Organización Soriana, S.A.B.DeC.V., accessed February 21, 2018,
http://recursos.soriana.com/recursos/resources/infoFin/2016/2017_07_17_ReporteAnual_2016.pdf.
37
38
Falabella, Annual Report 2014, accessed May 11, 2020,
https://s22.q4cdn.com/351912490/files/doc_financials/annual/AnnualReportSACI_2014_english.pdf.
rP
39
https://s22.q4cdn.com/351912490/files/doc_financials/annual/sva15_eng-2.pdf.
40
41
Fabián Andrés Cambero, “Chilena Falabella reprogramará inversiones en medio de contingencia por coronavirus,” Infobae,
April 28, 2020, accessed, August 11, 2020, www.infobae.com/america/agencias/2020/04/28/chilena-falabella-reprogramara-
inversiones-en-medio-de-contingencia-por-coronavirus-3/.
42
43
Ibid.
44
Sophia Wood, “Falabella Acquires Linio for $138M,” LatamList, August 1, 2018, accessed, August 11, 2020,
yo
https://latamlist.com/2018/08/01/falabella-acquires-linio-for-138m/.
45
46
Falabella, “Falabella Discloses Results of Its Digital Transformation Process and Introduces Last Mile Application and Digital
Wallet,” press release, April 28, 2020, accessed August 11, 2020,
https://s22.q4cdn.com/351912490/files/doc_news/english/2020/20200405-Falabella-comparte-resultados-de-su-proceso-de-
digitalización-y-a.._-inglés.pdf.
47
Ibid.
48
Falabella, “Letter from the Chairman to Shareholders,” accessed October 9, 2020,
https://investors.falabella.com/English/governance/default.aspx.
49
op
“Our History,” Cencosud, accessed March 21, 2017, http://investors.cencosud.com/English/investor-overview/about-us/our-
history/default.aspx.
50
Cencosud, Annual Report 2012, accessed March 21, 2017,
http://s2.q4cdn.com/740885614/files/doc_financials/2012/annual/cencosud2012memoriaanualannualreport19.pdf.
51
Cencosud, Corporate Presentation: 3Q17, accessed May 21, 2018,
http://s2.q4cdn.com/740885614/files/doc_presentations/2017/12/Corporate-Presentation-3Q17-(ENG).pdf.
52
Cencosud, Corporate Presentation: Fourth Quarter 2019, accessed August 10, 2020,
53
Ibid.
tC
54
Cencosud, Integrated Annual Report 2019, accessed May 21, 2020,
http://s2.q4cdn.com/740885614/files/doc_financials/2019/ar/Integrated-Annual-Report-Cencosud-ENG-14042020-V2.pdf.
55
Christina McKeon Frutuoso, “Cencosud Shopping Makes Chile’s Biggest Ever IPO,” Latin Lawyer, July,12, 2019, accessed
August 10, 2020, https://latinlawyer.com/article/1195042/cencosud-shopping-makes-chile’s-biggest-ever-ipo.
56
Ripley Corp, Junta de Accionistas 2019, accessed June 18, 2020, http://ripleyinversionistas.cl//wp-
content/uploads/2019/04/R-Corp-JOA-2019-PPT_web.pdf.
57
Ibid.
58
Parque Arauco, Investor Presentation 2Q20, accessed September 14, 2020, www.parauco.com/wp-
content/uploads/2020/08/Investor-Presentation-2Q20.pdf.
No
59
VivoCorp, Memoria Anual 2019, accessed September 14, 2020, www.vivocorp.cl/wp-content/uploads/2020/04/MEMORIA-
VIVOcorp-2019.pdf.
60
Equilibrium Clasificadora de Riesgo S.A., Análisis del Sector Retail: Supermercados, Tiendas por Departamento y
Mejoramiento de Hogar, July 2015, accessed October 10, 2020, https://docplayer.es/16711947-Analisis-del-sector-retail-
supermercados-tiendas-por-departamento-y-mejoramiento-de-hogar-equilibrium-clasificadora-de-riesgo-s-a.html.
61
Almacenes Éxito, Integrated Report 2016, accessed October 10, 2020, www.grupoexito.com.co/es/integrated-report-
2016.pdf; “Nuestras tiendas,” Olimpica, accessed October 10, 2020, www.olimpica.com/nuestras-tiendas.
61
Dun&Bradstreet, “Supertiendas y Droguerías Olímpica SA”, accessed December 3, 2020, www.dnb.com/business-
directory/company-profiles.supertiendas_y_droguerias_olimpica_s_a.b0b52f9de5c03b27c9dbb9e9b2517059.html.
62
63
Euromonitor International, “Home and Garden Specialist Retailers in Argentina,” April 2020, accessed August 10, 2020,
Do
www.euromonitor.com/home-and-garden-specialist-retailers-in-argentina/report.
64
Valora Analitik, “Walmart evalúa venta de su negocio en Argentina,” Valora Analitik, May 4, 2020, accessed August 9, 2020
www.valoraanalitik.com/2020/05/04/walmart-evala-venta-de-su-negocio-en-argentina/.
65
Bradutch, “The 10 Main Brazilian Supermarket Chains [in Portuguese],” August 4, 2015, accessed October 10, 2020,
www.bradutch.com/2015/08/04/the-10-main-brazilian-supermarket-chains/.
66
El Puerto de Liverpool, S.A.B. de C.V., Third Quarter 2017 Results, January 2018, accessed April 21, 2018,
www.elpuertodeliverpool.mx/docs/presentaciones/Presentacion-Inversionistas-ENE-2018.pdf.
67
68
Poblete, op. cit.
Page 17 9B20M205
t
os
69
Mercado Libre, Business Overview, 2019, accessed August 11, 2020, http://investor.mercadolibre.com/static-
files/c9c7e0d2-ec16-45b2-bf0b-0630e944c0b7.
70
Ibid.
71
José Gabriel Navarro, “Mercado Libre—Statistics & Facts,” Statista, September 10, 2020, accessed October 10, 2020,
www.statista.com/topics/6357/mercado-libre/.
72
“MercadoLibre, Inc. (MELI),” Yahoo! Finance, accessed August 10, 2020, https://finance.yahoo.com/quote/MELI/.
73
Amazon.com, Inc., Form 10-K for the Fiscal Year Ended December 31, 2017, 70, accessed February 21, 2019,
rP
www.sec.gov/Archives/edgar/data/1018724/000101872418000005/amzn-20171231x10k.htm; “AMZN:US,” Bloomberg,
August 12, 2020, accessed August 12, 2020, www.bloomberg.com/quote/AMZN:US.
74
Paul R. La Monica and Chris Isidore, “Amazon Is Buying Whole Foods for $13.7 Billion,” CNN Business, June 16, 2017,
accessed August 12, 2020, https://money.cnn.com/2017/06/16/investing/amazon-buying-whole-foods/index.html.
75
Amazon.com Inc., 2016 Amazon.com Annual Report, accessed August 11, 2020,
www.annualreports.com/HostedData/AnnualReportArchive/a/NASDAQ_AMZN_2016.pdf.
76
Ibid.
77
“Number of Sellers on Amazon Marketplace,” Marketplace Pulse, accessed August 11, 2020,
www.marketplacepulse.com/amazon/number-of-sellers.
yo
78
Amazon.com Inc., 2017 Amazon Annual Report, accessed August 11, 2020,
www.annualreports.com/HostedData/AnnualReportArchive/a/NASDAQ_AMZN_2017.PDF.
79
“Amazon Web Services inaugura sus oficinas en Chile,” InvestChile, January 27, 2017, accessed August 10, 2020,
https://investchile.gob.cl/es/amazon-web-services-inaugurates-its-offices-in-chile/.
80
Prime Now was a rapid-delivery option for subscribers to Amazonès Prime service. Prime membership offered free shipping,
streaming of videos and music, and other benefits. See “Frequently Asked Questions,” Amazon Prime Now, accessed August
11, 2020, https://primenow.amazon.com/onboard?forceOnboard=1&sourceUrl=%2Fhome.
81
John R. Wells, Benjamin Weinstock, Galen Danskin, and Gabriel Ellsworth, Amazon.com, 2019 (Boston, MA: Harvard
Business School, 2019), 1–45. Available from Ivey Publishing, product no. 716402.
82
op
“BABA:US,” Bloomberg, accessed August 12, 2020, www.bloomberg.com/quote/BABA:US.
83
Yang Ge, “Quick Take: Alibaba Eyes More Latin American Markets after Brazil,” Caixin, April 27, 2017, accessed April,
2018, www.caixinglobal.com/2017-04-27/101083978.html.
84
Fernanda Villalobos Díaz, “Alibaba revela su estrategia para ganar confianza de chilenos y latinoamericanos,” Emol, May
30, 2015, accessed August 10, 2020, www.emol.com/noticias/economia/2015/05/29/719215/como-alibaba-se-gano-la-
confianza-de-los-consumidores-latinoamericanos.html.
85
Poblete, op. cit.
86
Equipo Legal Chile, “What Are the Free Trade Agreements in Chile? [in Spanish],” Biz Latin Hub, June 4, 2020, accessed
August 10, 2020, www.bizlatinhub.com/es/acuerdos-libre-comercio-chile/.
tC
87
Poblete, op. cit.
88
Klaus Schwab, The Global Competitiveness Report 2019 (Geneva, Switzerland: World Economic Forum, 2019), accessed
August 11, 2020, www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf.
89
“World GDP per Capita Ranking 2019 | Data and Charts,” Knoema, accessed May 21, 2020,
https://knoema.com/sijweyg/world-gdp-per-capita-ranking-2019-data-and-charts.
90
Juan-Pablo Montero and Jorge Tarziján, “The Success of Commercial Houses in Chile: Regulation or Good Management?
[in Spanish],”(working paper no. 565, Central bank of Chile, Santiago, Chile, March 2010), accessed August 10, 2020,
https://si2.bcentral.cl/public/pdf/documentos-trabajo/pdf/dtbc565.pdf.
91
Poblete, op. cit.
No
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FALABELLA: GROWTH OPTIONS IN UNCERTAIN TIMES1

Copyright © 2020, Ivey Business School Foundation Version: 2020-12-03

BUSINESS UNITS AND INTERNATIONALIZATION

share in department stores in each of the markets it participated in.14

by an independent mall developer.15

The Online Business

With regard to Falabella’s online strategy, Solari Donaggio said,

Parque Arauco and VivoCorp Shopping Malls

Main Online Competitors

at the best price, we need to grow.”91

Current Assets − Non-banking Business 3,451 3,285

Total Equity 8,102 8,434

EXHIBIT 3: FALABELLA, REVENUE AND EBITDA BREAKDOWN BY COUNTRY, 2019

Colombia 880 7 137.0 9

Latam (Falabella, March 2020), accessed August 9, 2020, https://s22.q4cdn.com/351912490/files/doc_presentations/English

EXHIBIT 4: FALABELLA, REVENUE AND EBITDA BREAKDOWN BY BUSINESS UNIT, 2019

Business Unit % of Revenue % of EBITDA

EXHIBIT 6: PERCENTAGE OF SALES MADE WITH CMR CARDS, 2019

Business Unit % of Sales with CMR Card*

Argentina—Falabella and Sodimac 14.8

EXHIBIT 8: SMARTPHONE PENETRATION BY COUNTRY, END OF 2019

Country Smartphone Penetration Rate (%)

EXHIBIT 9: CENCOSUD, REVENUE AND EBITDA BREAKDOWN BY COUNTRY, 2019

Country % of 2019 Revenues 2019 EBITDA

Argentina 18% 19%

Financial Services 243 2 138 1

Note: EBITDA = earnings before interest, taxes, depreciation, and amortization.

Online Retailer Visitors (Millions)

EXHIBIT 12: MARKET SIZES AND GDP PER CAPITA

Population GDP per Capita

Note: GDP = gross domestic product; PPP = purchasing power parity.

Norero, op. cit.; Falabella, Annual Report 2019, op. cit.

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