Falabella will invest USD 2.9 billion to develop its digital and physical ecosystem

CHILE - Falabella announced a USD 2.9 billion investment plan for the 2020-2023 period, focused on continuing the development of its physical and digital ecosystem, in order to further enhance its technological development and the geographic reach of its network, while improving the omnichannel experience of its customers.

Gaston Bottazzini, Falabella CEO, pointed out that “in recent years, Falabella has been executing a strong investment plan, which has allowed us to scale up the capabilities of our business units. Today our focus is to grow in e-commerce, to provide better omnichannel solutions to our customers with a high degree of digitization and customization, while capturing the value of the investments already made”.

The presented plan aims to continuing the ongoing transformation of Falabella. By having a plan that is less capital intensive in physical assets, the company will benefit from increased flexibility to adapt to new scenarios and opportunities. This plan will focus on:

- Decreasing the pace for future store openings, leveraging on the unmatched reach of the existing network of physical stores.

- New openings only in markets and formats where the company has lower presence.

- Increasing the resources allocated to technology with focus in e-commerce, focused on development of new functionalities and in integrating the store experience into digital.

- Enhancing the investments already made in logistics and infrastructure incorporating technological improvements and expanding the logistic network outside Chile.

Of the total (USD 1,085 million) investment plan, 38% will be allocated to the development of IT and logistics projects.

In the last 3 years, relevant investments have been made in logistics, such as the distribution center (DC) of Falabella Chile, the robotization (butlers) of the CD of Sodimac Chile, the multichannel white goods CD in Peru, and the implementation of 131 multiformat Click and Collect modules. Over the next four years, new distribution centers will be opened in Colombia and Peru, along with minor investments in automation of existing facilities in Chile. These investments will allow the company to continue growing the volume of e-commerce, increasing its pick-up and delivery efficiency, while ensuring a good service level to its customers.

In technology, the company will continue to migrate to a cloud-based architecture, further increasing cyber security standards and integrating business intelligence capabilities across all formats. This will be complemented by ongoing spending on technology and digitalization projects across all its business units.

The focus will be on improving the mobile shopping experience, introducing new features in their apps, incorporating new technologies in payment methods, financing platforms and solutions for sellers in our marketplaces. Another important aspect highlighted by Bottazzini will be the incorporation of functionalities that enhance the digital shopping experience in stores.

In order to further expand the regional physical network, 31% of the investment plan (USD 904 million) will be allocated to the opening of two shopping centers (Mallplaza Comas in Peru and Mallplaza Cali in Colombia) and 80 stores. The focus will be on continuing the expansion of the Tottus and the Hiperbodegas network, a business that consolidated itself in 2019 as the second player in the Peruvian market; on opening new Sodimac stores in Mexico and on deploying IKEA in Chile, Peru and Colombia.

At the same time, 31% (USD 883 million) will be invested in optimizing the existing network of stores in the region, through renovations and remodeling that seek to integrate the physical shopping experience with the digital proposal; in improving entertainment proposals in shopping centers; and in repairing damaged stores in Chile.

During 2019, seventeen stores were opened in total: twelve supermarkets, four in Chile and eight in Peru; four home improvement stores, two in Mexico (reaching five in that country), one in Brazil and one in Peru; and a Falabella store in Colombia. On the other hand, two shopping centers were opened: Mallplaza Buenavista, in Barranquilla, Colombia and Open Kennedy, in Santiago, Chile.

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