A combination of the country's excellent economic situation, innovative retail format potential, and worldwide opportunities has spurred Chilean merchants into action. Major Chilean retailers aim to spend $7.143 billion by 2017, according to a research in the business journal Pulso. In accordance with the report, Falbella has plans for a nearly $4 billion growth, which will see the company's retail portfolio grow to 527 locations and 51 malls.
SMU is to invest $1 billion, followed by Cencosud with an estimated $1.169 billion investment, Cencosud with an estimated $1 billion investment, and Parque Arauco with an estimated $450 million investment. copany
Retailers such as Ripley, La Polar and Hites aim to invest a combined $350 million, $150 million, and $101 million.
One of the factors driving the investment strategy is an increase in market demand, supported by solid economic growth, consumer credit availability, and increased customer trust. Because of Chile's anticipated $100 billion in mining investments, cities surrounding mining areas, which are predicted to see significant economic and population expansion and have low GLA per capita ratios, now have long-term potential for huge retail formats.
Larger format saturation levels and longer journey times are becoming more common in Santiago because to an increase in car ownership and insufficient expansion of road routes. Smaller sizes have become more popular as a result, particularly in newly developed suburban areas outside of urban areas.
However, the majority of the money will go to places outside of Chile. With a focus on bringing operational know-how to places with significant economic growth potential but low retail penetration rates and chances for consumer credit expansion and lower operating costs, Chilean retailers have already made inroads in Argentina as well as Peru, Brazil, and Colombia. While Falabella plans to grow into Mexico, Ripley plans to open ten stores there.
Capital-intensive growth strategies are also aided by declining capital costs. Private enterprises were able to broaden their overseas capital raising tactics in 2012 because to Chile's unprecedented low-rate issuance of foreign currency-denominated sovereign bonds There's no reason to be surprised if foreign funds fund a significant share of Chilean retailers' development plans, given the high capital requirements of Chilean retailers and the big number of foreign investors trying to realign their portfolios with exposure to future higher-growth regions.
Chile's stock market is growing more upbeat about the outlook for the retail industry. There has been a 15% year-on-year increase and a 7.45 percent 30-day increase in the Santiago Stock Exchange's Retail Index. Retailer stock prices are anticipated to be volatile in the future as companies progressively expand operations across various geographies with unpredictable economic development patterns and high operational risks.