Santander's Latin America Desk Head, Mauricio Munguia, discusses exporting opportunities offered by Chile's retail sector.
Small can have its advantages. On the face of it, it seems that one drawback of exporting in Chile is its relatively low population of 17.6 million people. Yet, in purchasing power, Chile is no small market. With falling poverty levels, steady economic growth and the highest level of per capita Gross Domestic Product in Latin America, the country is a beacon of opportunities for international exporters.
With 62 free trade agreements, today's Chile is one of the region's most globalised markets. Under the current president, Michelle Bachelet, an advocate of trade, Chile represents a robust, business-friendly and increasingly diversified market.
Strong consumer base
Despite economic slowdown, Chile's retail sector continues to report steady growth, especially in apparel. This is largely due to its strong consumer base. In 2010, it became the first Latin American country to join the Organisation for Economic Cooperation and Development (OECD), devoted to improving economic and social well-being. Today, Chile is a predominantly middle class country.
Living in one the region's fastest growing economies, Chilean consumers benefit from rising disposable incomes and increased access to credit. As a result, the country's retail infrastructure is quite sophisticated. The Costanera Centre, for instance, is one of the largest retail malls in Latin America and host to a variety of fashion brands, from Topshop to Hugo Boss.
With the support of high-quality internet, safe online payment mechanisms and a well-developed highway network, Chile's online retail market is booming. In fact, A.T. Kearney, the global management consulting firm, estimates that seven out of 10 people in Chile purchase something online. With more Chileans prioritising the variety, convenience and affordability offered by internet retailing, opportunities to export to Chilean consumers are rising.
Departmental stores have been keen to satisfy the Chilean appetite for international brands, particularly apparel and luxury. Almacenes Paris, for instance, one of Chile's largest department stores, has sections mainly dedicated to exclusive brands as well as "brand corners" with international labels such as Esprit and Calvin Klein.
Chile's retail expansion does not only benefit large companies. Consumer attitudes are changing. The buzzwords now are, ease of use and more focused shopping experience. New and smaller store formats like boutiques and low-budget stores are spreading across residential areas, coming closer to potential consumers. This gives low-to-mid-range exporters room to grow. Thus, Chile provides facilities for all categories of retailers.
Despite all opportunities, exporting to take advantage of Chile's retail boom is easier said than done. Expanding into new markets does not come without regulatory, commercial and financial challenges. Chile is not often the first choice for exporters despite its strong economy and expanding middle class.
A key role for Santander, therefore, is explaining the Chilean opportunity and helping exporters to "think Chile." Once exporters are convinced of why they should export to Chile, they need to learn how to do so. Fortunately, Santander Chile and government organisations provide invaluable expertise and guidance to create networks necessary for the growth.
For many exporters, Chile presents both a fresh and sophisticated market. With growing income and rising living standards, Chileans are more than ready for quality products from all over the globe.