The impact of social unrest and COVID-19 on Chile’s retail sector

  • book T-ROC Staff
  • calendar May 29, 2020
  • clock 3 mins read

Since Friday, October 18, 2019, there has been unprecedented social unrest since the return to democracy in Chile. What started with the massive evasion of the Santiago Metro, in response to the fare increase of 30 pesos, was followed by an attack on dozens of underground train stations, with damage estimated to be 500 million pesos (US $700,000). This led to the state of emergency decree, and unleashed massive mobilizations. In addition to the protests, there were serious acts of violence, such as looting and fires, which have affected public and private buildings, as well as a large part of the trade, which had to close its doors and reduce working hours, with serious repercussions to the country’s economy.

Supermarkets, retailers and commerce were the focus of serious excesses and acts of terrorism. Although the bases of the social unrest were mainly based on inequality between social classes, abuse by large companies, and price collusions in sectors such as pharmaceuticals and food, much of the violence came from drug trafficking groups, left-wing organizations and common vandals, who ultimately sought to destabilize the government and commit crimes.

Finally, the fatal effect it had on the population—due to the closure of shops, reduced hours of operation, looting of supermarkets and department stores, fires and more—was catastrophic. More than 300,000 jobs were lost, especially in the commerce sector, including retail, restaurants, supermarkets and small mom & pop stores.

When it was thought that, after the summer recess in the southern hemisphere—which occurs January through February—that commerce would begin to reactivate in March, the COVID-19 pandemic hit. On March 26, a state of emergency was declared, commerce was closed, leaving only supermarkets, warehouses and pharmacies open, again causing a catastrophe in employment and the economy. It’s estimated that another 300,000 jobs will be lost in retail and commerce, which highlights the serious crisis that this sector is going through in Chile.

We believe that in the short term, this sector will require a very efficient operational reactivation, clearly limited by the sanitary restrictions that the government and the companies themselves will impose—in addition to the restrictions and limitations that the consumers themselves will impose. The challenge then is adapt to this new way of buying and selling—offering retail services that cover different channels and ways of sale and customer service, both face-to-face and physical.

Marcos Vitis is the Country Manager for Chile and Peru for T-ROC, a global retail solutions provider. For more insights about how retailers can plan for post COVID-19 recovery, you can reach Marcos at [email protected].

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