Falabella & Cencosud: Profits Rise as Retail Giants Cut Jobs in Latin America

Retail Giants Falabella and Cencosud Navigate Shifting Labor Landscape

Chilean retail groups Falabella and Cencosud, two of the largest commerce companies in Latin America, both posted improved profitability in 2025, reporting earnings of US$419 million and US$1.485 billion respectively. However, this financial improvement came alongside a reduction in workforce size, signaling a broader trend of operational adjustments within the sector. Both companies are responding to evolving consumer behavior, increased automation, and a changing regulatory environment.

Financial Performance and Workforce Reduction

Falabella, linked to the Solari, Del Río, and Cúneo families, ended the year with 79,848 employees across its operations in Chile, Peru, Colombia, Argentina, Brazil, Mexico, and Uruguay. This represents a 1.2% decrease – equivalent to 1,030 fewer positions – compared to 2024. The company’s peak employment reached 104,802 in 2017, meaning a reduction of nearly 25,000 jobs since then. Cencosud, controlled by the Paulmann family and operating in Chile, Argentina, Peru, Colombia, Brazil, and the United States, reported 117,170 employees, a 4% decrease or 4,354 fewer workers than the previous year. Cencosud’s highest employment level was in 2012, with 157,967 employees, a difference of over 40,000 positions compared to 2025. Combined, these two companies have reduced their workforces by more than 65,000 positions from their historical peaks.

The Rise of E-Commerce and Operational Shifts

Like major retailers globally, Falabella and Cencosud are heavily investing in e-commerce, which reduces the require for in-store personnel. The growth of self-checkout options, the closure of underperforming stores, and the automation of processes are likewise contributing factors to the workforce reductions. Falabella specifically attributes its changes to operational improvements and the implementation of new technologies. According to the company, the evolution of its teams is a natural process within an organization becoming more effective through technology and optimized processes. Falabella is undergoing an internal transformation that includes modifications to its store structure, as reported by Diario Financiero.

Falabella’s “Future Store” Model

Falabella has been restructuring roles within its stores since 2021, responding to changing operational needs and customer experiences. This restructuring is centered around a model called the “Future Store.” The company engaged in presentations and collaborative function with federations, unions, and internal teams to evaluate the new structure. Analysis revealed inconsistencies in remuneration schemes for roles with similar functions, prompting a move towards a more uniform design. Since 2023, some stores, including Falabella Alto Las Condes, have implemented the “SAE Store” model. This model eliminated positions like Salesperson, Cashier-Packer, and Purchase Advisor, consolidating their responsibilities into a new role: Customer Advisor.

This shift also introduced a variable, primarily group-based, compensation system, differing from the individual commission-based system previously used for salespeople. Falabella states this change aims to foster teamwork and efficiency within each store, aligning incentives with overall company objectives and enhancing the customer experience.

Cencosud’s Operational Adjustments

Cencosud has also been adapting its operational model in response to evolving consumer patterns and expectations. The company explains that changes in the retail landscape have necessitated adjustments to maintain its competitive position. Diario Financiero reports that Cencosud undertook a review of its internal structures and procedures, driven by regulatory changes and a more challenging retail environment. A significant factor was the implementation of Law 21.561 (Law 40 Hours) in Chile, which gradually reduced the weekly work schedule starting in April 2024, requiring reorganization of shifts and staffing without impacting wages.

Cencosud also redesigned personnel structures, strengthened attendance controls, and explored micro-shifts and temporary support for weekends and holidays. The increase in the minimum wage in Chile to 500,000 pesos in 2024 and 529,000 pesos in 2025 further increased pressure on labor costs. Simultaneously, Cencosud has been advancing its digitalization and omnichannel strategies, redefining roles and skillsets towards technological and logistical competencies.

Rationalization and Productivity

Cencosud characterizes these measures as a “rationalization of workers,” a gradual restructuring process aimed at improving productivity per hour worked. The company asserts that each business unit now operates with staffing levels adjusted to meet requirements, and the financial and labor figures for 2025 reflect the effects of these transformations, which are framed within broader operational and regulatory changes.

Labor Disputes and Restructuring

Both Falabella and Cencosud are currently facing labor lawsuits in Chile alleging unfair dismissals. In response, legal counsel for Falabella has indicated that the company has been implementing a restructuring of store positions since 2021. Cencosud has explained that the evolution of commerce nationally has prompted significant changes in consumer patterns and expectations, necessitating adjustments to its operational and commercial model.

Looking Ahead

The workforce reductions at Falabella and Cencosud reflect a broader trend of adaptation within the Latin American retail sector. Continued investment in e-commerce, automation, and streamlined operations are likely to drive further changes in staffing levels and job roles. The ongoing labor lawsuits will be a key factor to watch, potentially influencing future restructuring efforts and labor relations. The companies’ ability to successfully navigate these changes while maintaining profitability and customer satisfaction will be crucial for their long-term success.