Consumer companies in Chile further cut their expenses

2021 was a historic year in terms of consumption in Chile. The liquidity of households as a result of the withdrawals of the AFPs and the fiscal aids translated into historical income for the majority of the companies in the commerce sector. Until the rebound came.

Data from the National Chamber of Commerce (CNC) show that the third quarter closed with a 21.6% drop in face-to-face sales, which is explained by the lower purchasing power of people and persistent inflation.

This, added to the increases in import costs at a global level, has contracted the margins of companies that, faced with an already depressed consumption, cannot immediately transfer all these increases to the final price.

Faced with this scenario and after seeing their results hit in the third quarter, large companies have reacted by generating containment plans to cut expenses and streamline their operations.

In retail, the most affected categories are durable goods, such as electronics, appliances and home improvement. Supermarkets, on the other hand, have shown better performances, concentrating their income on the sale of essential goods.

This makes retail, which also directly suffers from increases in import costs, one of the most affected sectors.

An example is Falabella, whose income in retail formats decreased by 18% in that period. For this reason, Gastón Bottazzini, CEO of the company, announced a plan to improve margins, which is expected to bear fruit in 2023.

The strategy contemplates measures such as increasing operational integrations between the different retailers of the group, and selective closures in stores.