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Chile: Learning From The Success Of Chilean Retail

By :

Mauricio Yuraszeck (Client Service Director – Qualitative) and

Carolina Vega (Account Group Director)

An important particularity of our Top 15 is the number of retail brands it includes. This is a characteristic that sets the Chilean ranking apart from those of other countries around the world. In fact, more than half of the brands in the Chilean ranking – and more than half of the ranking’s  total value – come from the retail category. Not only that: two of the three most valuable brands in Chile are from that same category.

As a country, Chile has one of the most competitive retail environments in the region, which has led to a constant search for innovation by brands seeking to differentiate themselves and make connections with consumers. What can we learn from the most valuable retail brands in our country, and what has led them to perform so well in the ranking?

There are five key components that help us understand the strength of the two leading retail brands in Chile:

·           Development of e-commerce: Without a doubt, retail brands have been working to strengthen online sales, a platform that has fueled the growth of the sector in the past two years. Online sales have grown exponentially over the past few years as consumers have grown used to shopping digitally. Today, retail brands concentrate a good portion of their advertising online, and often hold promotions specifically for online shoppers. They are working to make searching more efficient and improving the digital purchase experience. Social media  has also been a medium in which these brands have gambled to attract the attention of a consumer who is decreasingly loyal.


·           Own-brand development: Home improvement chains, large stores and supermarkets are in the process of developing and promoting their own brands. Today, private label goods no longer respond to only one convenient equation. There is a range of own-brand options, supported by communications that clearly set out the benefits of each. Consumers are increasingly willing to try and stay with these brands, especially in times of economic contraction. Both Falabella and Sodimac have done important work to connect their own brands to Chilean consumers’ needs.


·           Regional expansion: Chilean retail brands, led by Falabella and Cencosud, are expanding into other markets in the region, with a focus on Argentina, Peru, Colombia and Brazil. In most of these cases, this expansion has gone hand in hand with the purchase of local brands that consumers love, which has allowed them to narrow gaps in logistics and operations: they are achieving efficiency and effectiveness.


·           History and weight of brands: we are talking about solid, powerful brands with history and heritage. In Chile, retail holding companies allow businesses to different formats for customers’ varied needs: large stores, supermarkets, home improvement, financial, and more. Leading brands in the ranking have become part of Chilean consumers’ lives - not by chance, but through a conscious effort to do just that. Sodimac, for example, has established that the brand is “Chile’s home”.


·           Payment methods: For many brands in the ranking, significant leverage has been achieved by brands using their own credit cards and other financial instruments to provide access not just to credit but also shopper benefits, which  fuel customer loyalty.


Now, what is the key to their success?

In addition to these areas of focus, successful retail brands have established their customer as the center of their attention. They have become immersed in their needs, and have constantly reappraised what they offer. Another factor in their success has been constant, sustained and coherent communication: the most successful retail brands have used their communications to maintain relevance and develop their relationship with their customers. Without a doubt, emotional elements of communication have been key factors in driving predisposition and preference.

Where are the challenges for Chilean retail brands now? 

  • Differentiating themselves in an environment that leans toward a certain degree of commoditization.
  • Nowadays, Chile is a more complete and more regulated market. It is also a market developing on two fronts: local brands are growing, but they face increasing pressure from competing international brands.
  • They need to provide the highest quality service, by prompting and controlling their customers’ trips, to minimize any friction or disappointment. Today’s consumers are more empowered and demanding. This challenge is obvious in the offline world, but increasingly relevant in the online world.
  • They need to deploy big data and powerful analytics: use available information and manage it well.
  • Brands must seek to understand their customers’ consumption patterns by knowing their psychographic if they are to get ahead of the competition.
  • Outstanding advertising, which makes emotional connections with consumers, must be both relevant and help differentiate a brand from its rivals.