Question: Falabella Flourishes

Chilean Retail Giant: Latin American countries have experienced tremendous population growth. Yet this alone does not guarantee business success, because it is hard to get people to buy your products when they have very little money to spend. Big-name foreign companies, such as Sears and J.C. Penney, have called it quits in Chile because of this roadblock. A domestic retail company, however, has found a highly successful way around it.

Tailored to Consumers: Chile's S.A.C.I. Falabella began in 1889 as a small tailor shop and has since grown to become the largest department store chain in Chile and one of the largest in South America. Falabella's strategy for growth is simple: find a way to satisfy consumers' needs. In 1980, Falabella created CMR-its own credit card. Today, the CMR card, issued to more than 4 million people in Chile, Peru, Argentina, and Colombia, is the most widely used credit card in Chile. As an added incentive for frequent CMR users, Falabella offers rewards in the form of cellular phone minutes. Customers can even charge a cellular account directly to their card.

Diversify, Diversify: Despite great success with the CMR card, the department store did not realize its potential for growth until it expanded and diversified. Falabella opened stores in neighboring Argentina and Peru, acquired a large share of ownership in The Home Depot Chile, and purchased the home improvement chain Sodimac. Building on these successes, it created a travel agency and an insurance brokerage, then built a chain of Tottus super stores called hypermarkets. To help all financial aspects of the company work together smoothly, the company added a financial division with the new Banco Falabella (Falabella Bank) . This explosive growth has nearly tripled the number of Falabella-owned stores, and they all accept the CMR card.

Analyzing the Impact Question

1. Summarizing What services does Falabella provide?

2. Making Inferences Why has Falabella succeeded where others have failed?