(January 31, 2007) Chile’s supermarket industry is set for an increase of between six and seven percent in the coming year, market analysts advise.

This large amount of growth will be powered by the industry leaders such as D&S, Cencosud and Falabella, who plan not only open several new stores but also to “develop” their existing ones.

“The intense competition will make sure that the prices stay down,” said Fernán González, an analyst at BanChile Investments. “Companies will have to compete for customers by keeping their prices at rock bottom.”

D&S, which owns the Lider supermarket chain, expects an 8.5 percent growth this year and a further 10 percent in 2008. Their main strategy is to open up many, smaller “Lider Express” stores. While these don’t make as many sales as the larger supermarkets, they promote brand loyalty through convenience.

Many other chains are buying up large plots of land for hypermarkets which have a greater reach for customers and make large sales due to the diversity of products available.

Surprisingly enough, the supermarket with the fastest expected rate of growth is the youngest competitor: Tottus.

Tottus, the supermarket chain owned by the Falabella, is planning on opening nine new supermarkets in 2007, all in “high demand” areas. This is a massive expansion, considering that the chain had only 17 supermarkets come the end of 2006. It plans to have over 35 stores by the end of 2008.

“Such massive expansion should increase their sales by close to 90 percent” said González. “And their 2008 expansion should increase that figure by an estimated 52 percent.”

SOURCE: EL MERCURIO
By Charles Sanchez (editor @santiagotimes.cl)