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*Following the IADS CEO meeting in Mexico City last May, where IADS members were able to visit the latest developments in El Palacio de Hierro’s flagships, the IADS had the opportunity to travel to Salvador to discover the Almacenes Siman stores. The purpose was to discover the market, know more about the company and meet with the leading team.

Siman is a 102-year-old company, operating in 4 countries with 15 stores, in addition to an e-commerce channel. It is almost fully covering the Chortis Block, the continental fragment where Honduras, Nicaragua, El Salvador and Guatemala are located (even though the company does not operate in Honduras but in Costa Rica instead).

Through an astute mix of clever business steering, opportunistic alliances and smart investments, the company managed to become the largest department store company in Central America throughout its history. As Siman is currently involved in a strategic business transformation in order to address the 21st-century challenges in the best position possible, the timing was perfect to discover this company which has become with time a driving force in the region and intends to stay the same in the coming years.

We review our store visit below to better understand this retail giant which is quietly growing on highly dynamic albeit not on the world map markets.*

Company history and background

Almacenes Siman was founded as a small shop in 1921 by J.J. Simán, an immigrant from Palestine, in downtown San Salvador. The business grew quietly with time, as Simán’s sons joined him in the development of the company, which incorporated into a limited company during the 60s under its current name. During that decade the company turned into a department store business, with the development and opening of the largest department store in Central America in 1970, downtown San Salvador (the store remained operational until its relocation in 2010). This 7,000 sqm location was the first store to display an escalator in the whole of Central America.

The company was dynamic, the store expanded and was equipped with a parking lot in 1974. A second location opened in 1983 in Metrocentro, the largest shopping centre of El Salvador at the time and outside of San Salvador city centre. Due to the 1986 earthquake, which damaged the original store in the city centre, a temporary location opened, La Casona which was by then a historic house located in the Escalon neighborhood of San Salvador. This location, which was originally temporary, was never shut down, and a real department store opened into a mall literally build all around the house, the Galerias Escalon shopping mall, in 1994.

The third department store opened in Santa Ana, the second-largest city in El Salvador, on an original surface of 1,500 sqm, in 1990. It was relocated to the Santa Ana Metrocentro shopping mall eight years later. The third-largest city in the country welcomed a Siman branch in 1994.

The coverage of El Salvador continued with time, especially with the opening of La Gran Via location, a large location in an open-air mall, which was a premiere for the country when it opened in 2004.

International expansion started in 1993 with the opening of a store in Guatemala City, followed by Nicaragua where the company bought an entire mall in 2002 to open a department store branch there. Both countries expanded: 3 stores were built in Guatemala in 2003, 2008 and 2015, and a second location opened in Nicaragua in 2008. Costa Rica operations started in 2009 where 2 stores are currently operating.

As of today, Almacenes Siman operates 15 stores in 4 countries, including 6 in El Salvador itself. In terms of stores, they represent on average a surface area of 10,000 sqm, with the smallest units ranging in the 5,000-8,000 sqm area. As a whole, the department store company welcomes 80m visitors a year, including 60m in their e-commerce channel, and reaches a turnover of $400m a year, of which 13% is achieved via e-commerce (composed of 8% of sales via infinite aisle systems available in stores, 5% of sales via the website, and 4% via WhatsApp). Usually, the website is the privileged destination for the Salvadorian diaspora living abroad (2M people, representing a third of the Salvadorian population) while WhatsApp is a channel for locals.

Interestingly, the Siman group is not only about department stores, as, in its natural evolution, the company tackled other types of business (the diversification came much more naturally than for similar companies in Chile, for instance, where expansion was financially motivated). This is why Grupo Siman also includes:

•    A real estate branch involved in developments now independent from the department store activity (the Galerias Escalon mall which Siman built is now the only one owned by the company),
•    Financial services with a credit card system, Credisiman,
•    Non-department store-owned retail activities, such as La Curaçao, Artefacta specialty stores chains, XClaim multibrand beauty chain or Prisma Moda, a down market Zara-like format of 1,800 sqm selling fashion and cosmetics,
•    Franchised partnerships, such as MAC cosmetics (9 stores in the region), or Inditex: it operates as a franchisee the Zara, Pull & Bear, Berksha, Massimo Dutti and Stradivarius in the whole region (18 stores in 5 countries including Honduras where there are no Siman department stores).

Of course, this gives the group a significant edge in terms of negotiation leverage with mall locations, which is completed by the number of private labels they operate also often available in free-standing stores in the country, such as Sabrina, Orange or Nicole. For instance, in the Multiplaza mall, one of the only upscale malls in El Salavador where Siman does not have a location, 25% of the mall offer are Siman’s private labels’ free standing locations, and a higher proportion of the brand offer also relates to Siman’s controlled brands portfolio: in total, in all Multiplaza malls of the region, Siman rents 70,000 sqm of retail space (including the Inditex locations).

Almacenes Siman also took great care to be perceived as an attractive and trustworthy name in the region, and not simply a place to shop. This is why the group made partnerships with regional artists and singers in order to promote a modern and socially-minded image of the company as early as 2010, especially by insisting on women’s rights, which should not be taken for granted in this part of the world.

Visiting the Almacenes Siman store in Galerias Escalon

Galerias Escalon is the only real estate property owned by Almacenes Siman for the last 30 years, as the company decided then to focus on the retail part of the business rather than on property development. It is the only mall in the world which has been built around a house, La Casona, which dates back to the 30s. La Casona used to be a temporary Siman store following the 1986 earthquake and was then restored while the mall was built all around, to be today a cultural place with exhibitions.

The mall now spans over 115,000 sqm and hosts 133 retail units, after a renovation which started in 2006, adding a fourth floor and a cinema theatre. The new Millenium Plaza 24 floors-high tower, which is connected to Galerias Escalon and includes offices, apartments and a hotel, has been built recently and is about to be inaugurated (Siman is involved in this new development).

There are now 2m inhabitants in San Salvador (out of 7m in the country) which explains the lack of large international luxury labels such as Chanel or Dior. The most high-end available in the country would be brands such as Carolina Herrera, in which operations Siman is involved.

The Siman department store spans over 4 floors and 11,000 sqm. 100% of the business is done in the wholesale model with the exception of some jewelry brands and the café / deli operators.

The ground floor is dedicated to cosmetics and accessories. Cosmetics are displayed in classical black-and-white, low-rise stands, with a few exceptions such as Elizabeth Arden. Accessories are displayed in 2 separate zones surrounding the cosmetics part, with the men’s section on the right and the women’s section on the left (a curiosity according to Siman as it would normally be the contrary). All accessories stands are built with the brand concept, be them large international ones, or private labels (70% of the men’s offer, with a price-conscious approach). Shoes are in the centre and more space is planned to help their development as the category is growing. The floor is dotted with Creditsiman stations allowing to access the credit card account on-site and managing operations.

The first floor is dedicated to fashion, from high-end to contemporary, for men and women. More accessories and shoes are available here. Also, private labels represent a significant share of the business and mix heavy branding with accessible prices on all product categories (polos are sold at $20). Design is made in-house and then produced abroad. They also consider other companies’ private labels as international names, such as El Corte Inglés’ Sfera, which boasts a 70 sqm space. Special categories (petite, maternity, curvy) are perfectly integrated in the shopping journey.

The second floor leads to a gourmet section and a deli (operated in concession), linking to the street entrance, which is not on the same level as the atrium where La Casona and the main entrance are located. This allows to direct the traffic to the nearby kids’ section, nicely set up with décor, and which allows to also push forward Orange, a private label addressing babies, kids and teens.

On this floor, customers have access to tactile screens giving access to more stock than what is displayed in the kids, sports and furniture categories. It works: 4% of the store sales are achieved via this channel (the target is 8%) with variable results from one category to another (kids are 2%, furniture is 10%).

The floor also hosts the Click & Collect space, including the front desk but also the back office, which houses the company’s WhatsApp sales team and the gift wrapping unit (the WhatsApp team was located in this store and in these premises as, since Siman owns the real estate, they do not cost as much as they would do in terms of lost retail space in a rented store). An astute system allows to serve 200-300 customers per day (in the Gran Via location there are 400 daily click & collect orders picked up).

The third space hosts the home & décor category, domestic appliances, sports and toys. A small café neighbours the “club bodas” and the “club de regalos”, two service points where customers can organize their weddings and parties.

The Credisiman options are heavily advertised in the furniture section, where the Customer Service desk is also located. 70% of the total customer service activity is dedicated to Credisiman.

Visiting the Gran Via mall

Gran Via is located on the Panamericana highway (which goes on the whole continent from North to South), next to two other malls, Cascadas (which is successful thanks to its Dollar City point of sale) and Multiplaza, as smaller location with a strong F&B and mid-range offer (Lacoste, Kenneth Cole, Mango, CH..) traction, where Siman does not operate a department store but many of its private labels and direct retail operations (such as Prisma Moda). A Sears is also nearby, operated by Mexican billionaire Carlos Slim.

While both Gran Via and Multiplaza opened in 2004, they are extremely different as Multiplaza insists on entertainment (with a giant slide in its entrance) while Gran Via is an open-air mall, giving the feeling to stroll in a new part of the city, and tends to be more perceived as a “lifestyle” centre.

The Siman store is currently extending on 2 floors and 10,000 sqm but an extension project, currently ongoing, will add 4,000 sqm extra within November 2023 (900 sqm retail space for each floor, more stock space for shoes, accessories and women’s fashion, and a set of new offices which will be built on an entirely new floor). In addition, a brand-new entrance will be built, with a completely new façade. This should change the dynamics of the store's traffic, as, for now, 20% of the traffic only goes through the entrance on the open-air part of the mall, and the rest from the inside, especially from the parking access.

In terms of general approach, the original store was built with a set customer path, materialized by the flooring and fixed lamps. It has been decided that the path should disappear, in order to let the traffic flow infuse in the store, which also implies that the whole store has been re-lamped in a totally new way. All product displays will be removable and flexible, in order to encourage mobility and rezoning when needed.

The whole ground floor will be dedicated to cosmetics (14% of the business), beauty and women’s universe, with the full fashion range from young adult and contemporary to high-end. Here again, private labels will be emphasized, as Sabrina will be displayed on 120 sqm, as much as the space dedicated to El Corte Inglés’ Sfera.

The first floor is dedicated to Men’s, kids, home & décor including appliances and furniture (home and electro domestics represent altogether 30% of the business) where El Corte Inglés private label is also displayed, and electronics, as well as a café, La Barrica.

In this store, the click & collect section is almost adjacent to the customer service, both located in the furniture section (click & collect pickers roam the store to fulfil their orders and can be recognized with their specific outfits).

In terms of services, the infinite aisle shopping service represents 4% of the furniture category turnover. Customers also have access to automated machines allowing them to access the website’s e-commerce section. In the electronics section, some experts are here to give advice on Apple’s Genius bar model.

Going further: what is next for Siman?

Siman has identified the following 5 challenges for the coming years:

*-    The regional challenge: how to thrive in Guatemala and Costa Rica, where the store coverage is significant but lower than in Salvador, therefore not bringing in the scale synergies one could expect,

•    Talents: similarly to IADS members who have decided to dedicate the 2023 Academy program to this topic, Siman is aware that they will need to attract new talents (sometimes in new areas) in order to remain competitive, and this will imply many organizational changes (which started with the appointment of the first CEO not coming from the family, Mr. Juan Pablo Galvez, last June).
•    The need to double down on Siman’s strength, Creditsiman and how to increase its penetration.
•    Some categories have to be addressed: shoes as their growth potential in terms of topline contribution is obvious, but also electronics, in order to contribute to the development of Credisiman. In the same way, the private labels business could also contribute to either the top line (by selling them to other companies) or the bottom line (by purchasing private labels from other companies such as El Corte Inglés).
•    The need to refurbish 5 stores which are all 20 years old in the coming 5 years.*

As a consequence, in order to tackle these highly interconnected challenges, the secret will lie in the combination of resource allocation and capability to innovate, both in terms of systems (a new POS system is being implemented, and new OMS and CRM systems are planned, in order to address the 500k customers in Siman’s database – another area of potential progress -), and organizational mindset, which is why Siman has signed a partnership with the IEM in Madrid to foster innovation within the 6,000-large team.

In a country that had been riddled by a civil war not so long ago, and where the crime rate used to be very high, the good fortune of Siman is impressive, as nothing is taken for granted and there is a constant preoccupation to make sure tomorrow’s challenges are addressed. Given the growth potential that is expected in the region in the coming years, chances are that Siman as a name will become more familiar to international players in the future.

Credits: IADS (Selvane Mohandas du Ménil)