Convert something that was a group of companies into the digital world into a single, customer-centric ecosystem, the goal
The retail sector (more commonly known as retail) faces a brutal transformation. Internet sales threaten one of the world's most profitable economic sectors.
Gaston Bottazzini, CEO of Falabella since June 1, is more than clear about the new challenges ahead, but it is also clear that the company is more than ready to face the changes.
The company has just completed a capital increase in which it raised $ 550 million, which will be used mainly to buy Linio and develop the Ikea franchise in South America.
"My mission is to accelerate some projects, but more than changes, it is a greater intensity in certain strategies already established. Moreover, the entire process of capital increase was a very important part of this transition," says Bottazzini in an interview with Diario Financiero .
The origins and challenges
While Gaston Bottazzini highlighted e-commerce as one of the major changes in the industry in the last 30 years, it also highlights the transformation undergone by the business with the addition of fast fashion, own brands and retail credit cards
"Between the late 1970s and the early 1980s, Falabella became interested in the financial business and I believe that along with the other retailers in the market they have transformed this sector and pioneered a process that was very relevant to the development of industry, and the country, "he says.
"Although we are already in seven countries, in 150 cities, in several markets we are just getting wet. So part of the seal that I am trying to print has to do with the consolidation of this process of internationalization in Latin America."
"With the purchase of Linio and the integration of a market format with the group's value proposition, there is a challenge to turn what was a group of companies into the digital world into a single, customer-driven ecosystem that strengthens and technological capabilities of the company, analytical, logistical and financial capabilities. That is where the experience of what we have done in the financial business would be promoted. "
-You already have an important presence in Latin America. Have you analyzed entering the United States with any of its formats?
We have studied many times to leave the area. Our vocation today is to be a group focused on Latin America, we believe that we still have much room for growth in the region.
– We're going to the markets. In Uruguay, the idea is to have only the Sodimac format or are you planning to add other divisions?
The more of our businesses we have in a country, the more successful we tend to be in the sense that subsidiaries are mutually reinforcing. However, not in all countries, we will grow and expand business at the same pace. Our focus where there is not a large group of divisions – Brazil, Uruguay and Mexico – is to consolidate the position we have, instead of thinking about entering new formats.
-In Brazil, the plan is to grow with the division of house improvement into new regions?
The plan in Brazil is to continue to develop the house improvement business focused on the state of São Paulo and prove that there is a model that is successful.
There are no plans to enter new formats in Brazil. There is not even a concrete plan to go to other regions beyond São Paulo.
-In Mexico, what is the status of the group today?
Our alliance with Soriana began two years ago. One year and three months ago, we started issuing CMR cards, called Falabella-Soriana, and today we have a base of 200,000 cards, according to our expectations.
Now we focus on better understanding the Mexican customer, adapting to our risk and admission models, and evolving from a process of growth in the number of cards to the growth of financial products. On the other hand, the agreement with Soriana also involves the development of Sodimac in Mexico. A couple of months ago, we opened the first store, had a very good reception of the Mexican customer, better respect for expectations. We will open a second store before the end of the year also in Mexico City and a third store in Cuernavaca.
– Given the positive results you mentioned, is it in the plans to speed up the opening of the stores?
In fact, the opening plan we have is quite ambitious because, unlike what happened in other markets where we arrived with a large store base like in Brazil, in Mexico it is 100% organic.
– Will Sodimac stores in Mexico always be associated with Soriana stores?
Most stores are associated with Soriana stores, which have 800 outlets, most of them large supermarkets. This has become a very important advantage because we can build a kind of power center between the two formats in places that have already been tested by Soriana.
– In Colombia, the group has several formats, such as Sodimac, multi-stores and malls, as well as financial businesses.
Chile, Colombia and Peru are the countries where we have the largest number of formats and companies and where Linio is also present. In these markets, we want to prioritize the development of what we call a digital ecosystem, which basically translates into exploiting the logistical and technological capabilities of our own brands and the financial business; all to make a proposal much more powerful.
At the same time, in Colombia, we see growth opportunities in shopping malls and we have grown a lot in the opening of department stores.
– Peru is a simile?
Overall, yes, with the difference that we have less room for growth due to the high presence of formats such as multi-stores and home improvement. In this country we are growing more in supermarkets and we believe that we have a space to grow with financial businesses. If we were to analyze the state of maturity by country, Chile is the first, then Peru and then Colombia. Given this, the greatest growth opportunity is in Colombia, where we have a relatively smaller business than Chile and Peru.
Argentina is a more complex market.
We are in the process of opening Sodimac stores in Argentina, but our focus in this country is much slower. The development of the financial business was slower; in department stores the same. This has to do with the fact that the same volatility in the market did not allow us to bet on a country that we believe has a lot of potential.
– Is it possible to meet the standards that exist in the US?
I have no doubt that it is. In Chile and Latin America, we will reach the same standards, but this will cost us more because we do not have the installed infrastructure that countries like the US and even Europe already have.
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