Falabella and Cencosud, two of Latin America’s largest retail groups, are adjusting their workforces across the region, resulting in more than 65,000 fewer employees, according to reporting from Perú Retail. The reductions are occurring as both companies navigate shifting economic conditions and evolving consumer behavior.
Falabella, a Chilean-based conglomerate with operations in Argentina, Chile, Colombia, Peru, and Uruguay, has been particularly active in streamlining its operations. The company has reportedly reduced its workforce by over 30,000 positions in the last year, a move attributed to restructuring efforts and a focus on improving efficiency. Cencosud, also headquartered in Chile, with a presence in Argentina, Brazil, Chile, Colombia and Peru, has implemented similar measures, cutting approximately 35,000 jobs.
The cuts are not uniform across all divisions. Both companies are investing in bolstering their e-commerce platforms and digital capabilities, suggesting a strategic shift towards online retail. This transition necessitates a different skillset within the workforce, leading to redundancies in traditional brick-and-mortar roles.
Argentina’s economic instability is a significant factor driving these adjustments. Recent reporting from América Economía highlights how the economic shock under the Milei administration is weakening consumption, even as it potentially facilitates long-term investment. Falabella and Cencosud both have substantial operations in Argentina, and the challenging economic climate there is directly impacting their staffing levels.
In Peru, the retail sector is closely linked to the banking system, with several retail groups having close ties to financial institutions, as reported by BNamericas. This interconnectedness means that broader economic trends and banking sector performance have a direct impact on retail employment.
Jaime Soler Bottinelli, a key figure in the fashion industry and included in The Business of Fashion’s BoF 500, has been observing these trends. While not directly involved in the workforce reductions at Falabella or Cencosud, his insights into the evolving retail landscape provide context for the broader shifts occurring in Latin America.
The changes within Falabella and Cencosud reflect a wider trend among Latin American retailers to adapt to a more competitive market and changing consumer preferences. A 2022 review and 2023 outlook from eMarketer indicated a dynamic retail ecommerce landscape in the region, with players needing to innovate to maintain market share. Chilean retailers, in particular, have been noted for a unique business model that is expanding regionally, according to Knowledge at Wharton, suggesting a potential for further consolidation and restructuring within the sector.
Neither Falabella nor Cencosud have publicly detailed specific future workforce adjustments beyond the reported 65,000 reductions.
