What: Department stores in Peru have reported a significant decline in sales over the past year, impacted by decreased domestic demand and challenging macroeconomic conditions.

Why it is important: Understanding the factors contributing to this downturn and the strategies being implemented to address these challenges is crucial for anticipating the future performance of the retail sector and the potential recovery in the coming months.

Peruvian department stores have faced considerable challenges over the past year, with a reported year-on-year sales decline of 8.2% as of April 2024, according to the Ministry of Production's General Office of Impact Assessment and Economic Studies. This decline, which contributed to an overall 2.6% contraction in the retail sector, has been primarily attributed to decreased domestic demand in categories such as clothing, footwear, and personal care products. Major retailers like Falabella, Ripley, and Oeschle have bolstered their digital presence and improved logistics, yet sales have continued to struggle. Despite this, there are signs of potential recovery, with consultancy Macroconsult forecasting a 3.4% growth in the sector for 2024. Factors such as controlled inflation, an improving economy, and strategic e-commerce initiatives are expected to drive this growth, alongside temporary boosts from released funds and seasonal bonuses.

Department stores report negative sales for the past year: what will happen in the coming months?