World Footwear

World

Covid-19: situation worsens in Chile

May 13, 2020 Chile
Covid-19: situation worsens in Chile
The country seems to be entering in a critical stage of the diffusion of the disease. With many restrictions applied to the economy, footwear is being hit hard
As of the 12th of May Chile, registered 31 721 infections and 335 deaths from Covid-19, an increase of 54% and 24%, respectively, in the last 7 days. On the 11th of May Chile reached its highest number of infected people since the start of this pandemic in the country. In light of these figures, this week and the next should be key for the country.

In the Metropolitan Region the situation is very complex with the demand for hospitalization is growing by the day. The closure of the city of Santiago was determined. Besides the Metropolitan Area, the Regions of Valparaíso in the centre of the country, Antofagasta in the North and La Araucanía in the South have more than a thousand infected. The authorities continue to call for social isolation and the use of masks; appealing to disciplined quarantine; advising no visits to older adults and prompting those who have symptoms to look for assistance. And of course, regularly wash hands.

And how it the economy going to re-act to the sanitary crisis? “The next few months will be very hard socially”, tells us Fedeccal, the Chamber of Leather, Footwear and Allied Industries. They list some of the problems the country might be facing in the near future: increases in unemployment, decline in family income and projections of GDP for the April to June quarter of 2020 sharply going from -4.9% to -7.2%. Investment is also projected to fall and the Central Bank of Chile alerts to contained inflation. Private consumption is expected to fall by 3%, evidencing restrictions on domestic consumption.

According to figures from the Department of Studies of the National Chamber of Commerce as of March a sharp drop was registered in all categories of face-to-face sales, except those of supermarkets that were up by 6%. Footwear fell by 59.3% in real annual terms in 2019 compared to 2018. In the quarter from January to March 2020, compared to similar quarter in 2019, the decrease in footwear was 26.8%

Regarding online sales, there are different results according to the categories, where non-essential goods, such as Clothing and Footwear, registered falls of 24.6% and 12%, respectively; while Electrical and Home Line show increases of 43,5% and 43.1% each, given the high demand for teleworking and the implications of home confinement. However, internet penetration, despite having risen significantly in these categories in the month of March, is still an issue in the country.

The leather and footwear industry

In the last five years in Chile the major footwear players in Chile (with more than 200 workers and selling over 3.5 million dollars per year) have disappeared. Only micro, small and medium industries remain, 85% of which are concentrated in the Metropolitan Region, where 8 of the 19 million inhabitants of the country live. From 2016 to 2019 footwear sales have been falling steadily. With the social outbreak of October 2019, the situation worsened. The quarantine imposed by the Covid-19 suspended the sale of footwear in person. “Now only a few footwear players can keep up the business by selling digitally", Fedeccal tells us. "In this process, changes in consumption habits have accelerated in all means of sales, which forces us to offer competitive products with a rapid response, which requires great logistical capacity. Without a permanent virtual ecommerce presence, shoe producers and marketers are doomed to disappear. Some have tried to enchant their clients by applying large discounts, promoting attractive prices, applying promotion through social networks, helping themselves with occasional reports in the press and television media. These actions have not been enough to stop the fall of the sector, and only those who achieve something via e-commerce remain.”

What is next for Fedeccal? The need to underline the importance of adapting to new forms of sustainable production and an agile form of commercialization, preparing to enter the digital world. "Those who do not become digitized will become obsolete, and that the current situation constitutes a real opportunity", the Chamber alerts. In this scenario, the Fedeccal will focused on strengthening its small and medium industry. To this end, dual training centres and technological innovation centres will be created for their entrepreneurs to reach the level of competitive and sustainable production in the shoe industry 4.0. A shared strategy is being worked between the Latin American Leather and Footwear Sister Chambers.

Related Organizations

  • FEDECCAL - Chamber of Leather, Footwear and Allied Industries

    FEDECCAL - Chamber of Leather, Footwear and Allied Industries

    Chile
  • ACHIQTEC -  Association of Leather Technologists and Chemists in Chile

    ACHIQTEC - Association of Leather Technologists and Chemists in Chile

    Chile
  • ASINCUR - Professional Association of Tanning Industrialists in Chile

    ASINCUR - Professional Association of Tanning Industrialists in Chile

    Chile