Falabella announces gradual closure of physical stores in Colombia

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The measure seeks to boost the company's virtual platform and avoid massive employee layoffs

Falabella announces gradual closure of physical stores in Colombia

File image. Falabella announces gradual closure of physical stores in Colombia. REUTERS/Rodrigo Garrido

The retail company Falabella announced the closure of up to 6% of its physical stores in Colombia. The news has to do with a strategy to strengthen sales through its digital channel, which is also being implemented in countries such as Peru and Chile.

“We had a quarter that faced a high comparative base, evidenced the impacts of the complex global and local scenario, in addition to the economic slowdown in the region”, the CEO of Falabella, Gastón, explained to La República. Bottazzini. According to the newspaper, the company reported losses in the third quarter of 24,870 million pesos due to the decrease in margins in the retail business and increases in administrative and sales expenses.

The CEO indicated that the scenario is complex and “of less dynamism in consumption”. To respond to this situation, Bottazzini explained that the company devised an “efficiency plan and the advancement of the maturity of the marketplace and payment platforms —which— will generate good results.”

< p class="paragraph">In context: The international chain Falabella announced the closure of some of its stores in Colombia

For his part, the corporate general manager of Falabella, Francisco Irarrázaval, detailed in a meeting with investors that the change in operations has been discussed for more than a month. “The move is part of the constant reassessment of the company's profitability,” said the company's spokesperson, according to the newspaper El Espectador.

In order to avoid massive layoffs, the closure of physical stores will be done gradually, taking into account that massive staff cuts of 11,000 workers on Facebook and 50% on Twitter were recently announced.

Avoid mass layoffs: a Falabella policy

In total, the chain has some 240 locations distributed in seven Latin American countries, although most of these are in Chile and Peru, where it has 85 and 87 establishments. In the case of Colombia, there are 26 physical offices in 10 cities in the country: Barranquilla, Cartagena, Medellín, Pereira, Cali, Ibagué, Villavicencio, Bucaramanga, Manizales and Bogotá. According to El Espectador, 6% of the closures will correspond —for the moment— to two stores.

Portfolio, for its part, specified that in closings in the next five years it will be 5 to 10%of physical department stores, “as part of a gradual process, which does not consider massive closures.” If the closure of up to 10% were to take place, an average of 24 stores would cease to exist in these three countries, in the case of Colombia at least 3 stores would be closed.

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According to a press release known by the economic environment, the decision was made within the framework of a review process of the “contribution of each store to our value proposition and based on the needs of customers.”

It should be remembered that Falabella is a widely known brand in the Latin American region, it arrived in Colombia in 2003 and for several years it expanded and became one of the best-known minority stores in the country. It has even maintained alliances with companies such as Sodimac, more recognized for being the owners of Corona and Homecenter.