Chile’s Falabella Bets On Continued Retail Strength in Argentina

Falabella is betting Argentine consumers are ready to get waist deep with new purchases.

Sales of consumer durables have always been a good gauge of market sentiment and overall consumer confidence. An even better barometer lies in the capital spending plans of major retailers who supply the stainless steel refrigerators, 42″ LCD TVs and the increasingly popular lavadoras de carga frontal.

According to Reuters, Santiago-based Falabella (Chart), plans to spend $1.72 billion in Argentina and three other countries between now and 2012. With stores in Argentina, Colombia, Chile and Peru, “Falabella plans to invest around $492 million this year, $620 million in 2011 and $632 million in 2012, Reuters notes, “Falabella invested $280 million in 2009, when the financial crisis hit consumer pockets in Latin America.”

A retail analyst at Banchile put the announcement in perspective: “In our opinion, the aggressive expansion plan will allow Falabella to reinforce its solid market share and postion the company to take advantage of the consumer spending recovery we anticipate in the region.” The 2010-2012 Plan will allow Falabella, the South American equivalent of Best Buy, the chance to expand existing retail floor space by 45%. Time will tell if the average Argentine consumer’s confidence matches the retail giant’s, but it’s an encouraging start to the new year.

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