What percentage of factories are in operation?
Out of approximately 400 workshops and factories, around 50 smaller workshops only work part-time, a few days a week. Medium factories are closed. The workshops produce very small volumes to serve digital, occasional sales, delivered at home or through their own owners.
What plans do the largest factories have?
Of the large and medium-sized factories that 5 years ago were about 50, it is estimated that 80% will not reopen their doors. Many of them will maintain their own product design and development centers to manufacture them in national or foreign workshops, with their own brands, quality and sustainability requirements of their value chain.
How is the situation in the commercial circuit?
The retail of own brand footwear with store chains and through large stores has been affected by the quarantine in a relevant way, from the second half of March to date.
At the beginning of August, only 15% of the country's large shopping centers are operating in southern Chile, in stores on the street, not in large malls.
Today, these stores are selling half of what they usually sold before the pandemic, because with the closure of food courts, restaurants and cinemas, they are not able to generate the necessary flow of buyers that promote the sales of the stores on the street installed in their environment.
The footwear trade has fallen by approximately 90% in physical sales, which have been partially compensated by Ecommerce virtual sales. Online transactions have doubled or tripled from one year to the next, and logistics systems have sometimes been exceeded. However, this new habit only compensates to a small extent for the large drop in face-to-face sales, due to the massive closure of stores throughout Chile.
In the midst of this situation, the footwear trade of multi-brand and exclusive brand stores today reaches only 30% of its normal sales.
What is projected into the future?
The reopening of shopping centers and the gradual return of physical sales are expected to begin in the third week of August. It is estimated that when stores reopen after the pandemic, customers will not buy again in the same way as they did before it started.
A very relevant drop in purchases is forecast for the Spring-Summer season that is about to begin, given the lower demand that is expected due to: the high level of unemployment, the lower flow of buyers to stores for fear of contagion, and the fall of consumption due to the economic contraction that will take place in the second half of 2020.
Are there credit policies to ease the situation?
There are aid through interest-free credits that can be accessed with demanding formalities that many small producers and marketers cannot meet. There are also minor subsidies with tough requirements.
Credit needs are aimed at solving insolvency problems generated by the forced closure of stores and indebtedness without a payment solution due to lack of income and by the continuity of fixed expenses that are impossible to avoid, among the most important, those of personnel.
This situation will change when the stores are reopened step by step and the purchasing power of citizens is restored.
There is also aid aimed at mitigating the loss of family income to satisfy basic needs of the population, focused mainly on the low-income population.
And the labor front?
For workers with no or partial activity, use is being made of the Solidarity Severance Fund, promulgated by the employment protection law, which establishes percentage of salary charges depending on the case.
Companies with financial and savings capacity have legally terminated contracts, paying all rights to their workers and have only kept the essential workers on the payroll.
Most of the factories or workshops that continue to work are very small, and their main workforce is their own owner and family, or at most, supported by a few dependents hired at fees, without dependency ties, that is, without obligation to pay social security.
