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Cencosud Day September 24, 2014 Daniel Rodríguez
Cencosud Day
September 24, 2014
Daniel Rodríguez
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GDP Growth
As a region, Latin America has performed
spectacularly in the past 20 years
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Poverty (1)
Latin America has led economic growth rates in the world in recent years and has
also significantly reduced poverty.
Source: FMI, World Bank, UN. | (1) Percentage of the population that lives with less than US$4 per day.
Latin America
World
U.S.
Europe
Japan
Average Age
Peru Brazil
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These achievements have led to a profound change in
society reflected in basic quality of life indicators
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Source: IMF, World Bank, UN. (1) Population in millions; (2) Total GDP per capita is the population-weighted average; (3)Local life expectancy is the population-weighted average; (4)
Rate of infant mortality (between 0 and 1 year) for every 1,000 live births, the total is the population-weighted average.
• The population grew 31%, equivalent to 78 million people
• The weighted GDP per capita of these countries grew by 258%
• Life expectancy increased by 6 years
Population1 GDP per Capita2
Life Expectancy3
Infant Mortal.4
Years of Democracy
Population1 GDP per Capita2
Life Expectancy3
Infant Mortal.4
Years of Democracy
Peru
Brazil
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GDP per Capita
Currently, the region is facing a slowdown but medium and
long-term prospects are still attractive
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In recent years, GDP per capita has increased at slower rates, a scenario that is
expected to reverse in the future
Source: IMF. | CAGR or compound annual growth rate corresponds to the weighted average of Argentina, Brazil, Chile, Colombia and Peru
World
Between 2005 and the beginning of 2008, the economy showed strong growth, which was affected by the 2008-2009 crisis
With the exception of Argentina, estimates point to economic recovery
Currently, one can see greater dynamism in the economy
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At Cencosud, we have executed a successful expansion
process during the region’s growth period
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2013 Sales US$ 20.8 BN
2002 Sales US$ 1 BN
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This has given us a powerful regional footprint
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Cencosud has 3.5 million m2 in its retail businesses throughout the region and 1.9 million in the shopping center business
• SUPERMARKETS Argentina – Brazil – Chile – Colombia – Peru 922 Supermarkets / Revenue: US$ 14.3 BN
• DEPARTMENT STORES Chile – Peru 83 Stores / Revenue: US$ 1.8 BN
• HOME IMPROVEMENT Argentina – Chile – Colombia 89 Stores / Revenue: US$ 2.2 BN
• FINANCIAL RETAILING Argentina – Brazil – Chile – Colombia – Peru 5.5 MN active accounts / Revenue: US$ 0.5 BN
• SHOPPING CENTERS Argentina – Brazil – Chile – Colombia – Peru 48 Malls / Revenue: US$ 0.4 BN
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We have a diverse and experienced board of directors, aligned with our
plan for regional expansion
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Horst Paulmann Chile Chairman and Cencosud founder
Heike Paulmann Chile Commercial Engineer from U. de Chile and MBA from U. Adolfo Ibáñez
Peter Paulmann Chile Commercial Engineer from U. Católica de Chile
David Gallagher U.K. MA in Modern Languages from Oxford University
Erasmo Wong Peru Engineer from U. Nacional de Ingeniería, Senior Management Program from U. de Piura and Presidents Program from U. de Piura
Roberto Philipps Argentina Degree in Business Administration and Accounting from U. de Buenos Aires and AEP from Kellogg School of Management, Northwestern University
Cristián Eyzaguirre Chile Economics degree from U. de Chile and Masters in Economics from the University of California, Berkeley
Julio Moura Brazil Engineer from the Instituto Federal Suizo de Tecnología and Masters from the MIT Sloan School of Management
Richard Büchi Chile Engineer from U. de Chile and MBA from Wharton School of Business of the University of Pennsylvania
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Our current
regional presence
allows us to
continue growing,
leveraging our
assets
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Cencosud’s operations are divided into two regions: Pacific and Atlantic
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The stability in the Pacific region is supported by its rating and balanced macroeconomic data
Peru
Brazil
Exports as a % of GDP
Investment as a % of GDP
Inflation Un-
employment
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Customers: E-Commerce and Loyalty
Productivity
People: Talent Management
Sustainability: CSR
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Empowered consumers, who
demand accountability from
companies
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Consumers increasingly have greater protection from government and influence over the media and social networks
Companies Fined $5.8 billion for
False Advertising
In the last few days, two such cases have surfaced: one involving Alpina
and the other Maxiboletos S.A.S.
Last year, the Superintendent of Industry and Commerce issued fines for $5.8 billion pesos to
companies for pulling the wool over consumers’ eyes.
Objective: Helps customers express complaints about bad service or attention
How the complaint book
works
Chile is the Latin American Country with the Highest Human
Development Index Rating According to the UNDP
According to the 2013 report by the United Nations Development Program, Chile is ranked 40th in the
world in human development. The list of 187 countries is led by Norway and ends with Niger.
Challenge to Dilma / The Countdown to the World Cup
A Day of Protests, Strikes and Looting
Escalate Social Tension in Brazil
Thousands of protesters took the streets in the country in the “fight
against the Cup”, relief felt in the government as it had expected an
even larger turnout
C O N S U M E R C O M P L A I N T S A G A I N S T F I N A N C I A L I N S T I T U T I O NS
Evolution of Annual GDP per Capita in Chile
All businesses with unique consumer registration open to the public are
required to have a complaint book. If not, they can be fined.
Consumer’s
Eye
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This situation has not overlooked us
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SERNAC beats Cencosud: it must refund
excess charges to Jumbo Mas cardholders
In this Tuesday’s edition, the Canal 13 “Contacto” program investigated various food industries to determine up to what point they comply with current health regulations or with promises made in their marketing.
Discovery of 3 brands of olive oil sold in Chile
not apt for human consumption
Published by Christian Leal
The Supreme Court upheld a class action lawsuit
against the chain for unilaterally increasing its
commission from $460 to $990 pesos. The highest
court said that the clause that permits it is abusive,
“null and void”.
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Sustainability: The evolution of our society
encourages us to further define CSR strategies
and commitments to our stakeholders
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• We approach the issue with a CSR strategy for each business, with programs that create value for each brand
• We generate programs that are easy to communicate to increase brand value internally and externally
CSR at Cencosud
Customers Employees
Community
Suppliers Environ- ment
CUSTOMERS
EMPLOYEES
SUPPLIERS
COMMUNITY
ENVIRONMENT
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Customers: In e-Commerce we are working so
that our digital channels support the value
proposition of our retailers
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• We work on strategies to provide our customers with a unique experience through our media and digital businesses
• We support our retailers to prepare for a future that is driven by technology with a higher share of online purchases
What are we doing?
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Customers: We are focusing on our loyalty
program in Chile by putting our customers at
the center of our strategy and improving their
experience
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• We are taking advantage of having one of the richest customer databases in the region
• We are improving our offering and will leverage the operational and promotional efficiency of our business
What are we doing?
• More than 4 million customers belong to the program
• 80% of loyalty sales in supermarkets
• 80% redemption rate, one of the highest in the world
In Chile
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Our business is people: talent management at
all levels is key to our performance and
sustainability
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DNA CENCOSUD
+
EACH BRAND’S CULTURE
• We manage our talent at all levels in the organization, not just at the top.
• Each segment has its own challenges, even if some issues are common to all.
• Policies, processes and systems are developed to serve as the "basic infrastructure" for talent management (e.g. role assessment, incentives and KPIs, performance evaluation, leadership skills, My Career Portal, talent inventory, leader in action system, etc.).
• Our customers’ experience will never be better than that of our employees. We measure it with GPTW (90 +% participation).
• Leadership in managing people and teams is key in an organization with our geographic distribution (over 1,000 stores) and volume (150,0000 associates).
Executives
Executives
Middle Managers
Store Management
In-Store Operations
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People: We have worked closely with the
different organizational cultures to identify and
disseminate the common “Cencosud DNA”
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• Each of our companies has its own culture, which comes from its history, traditions and value proposition to the customer
• However, the companies in our group share principles we call “Cencosud DNA"
• Our growth and size challenges us to "share" our way of doing things while preserving local characteristics
• Conveying our "DNA" to our newest businesses is a central role of our leaders and HR teams
• Our "DNA" and values are a guide so our employees and executives can make decisions that are consistent with our convictions
• We are aware that talent is increasingly mobilized by the culture of the companies where they choose to work
Our cultures are leveraged for talent management
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Productivity:
We care about
productivity and
see it as a key way
to improve our
performance and
fund future growth
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• Energy efficiency in stores • Reductions in bags and packaging • Mobile apps for shopping • Self-service scales, self-scanning • Greater efficiency at registers
What are we doing?
• LEAN leadership and people management • Process standardization • Performance management • Labor management
• Management tools • Master plan for staffing • Management of brand performance
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Conclusions
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• Latin America has shown sustained growth over the last decade with a significant reduction of poverty.
• Substantive improvement of quality of life indicators in a more stable democratic environment and with a higher proportion of middle class.
• Slowdown in growth in recent years, but with expectations that this will reverse in the future.
• Market leadership, scale and high diversification.
• Leadership position (#1/2) in the supermarket businesses in Chile, Peru, Argentina and Colombia.
• Presence in markets with an even lower penetration of the formal market.
• Profitable operations with clear growth opportunities and increased profitability in the markets and businesses in which we participate.
Advantages of the Region
Cencosud Advantages
