Last week, Chile surged past Spain to become the 6th worst-hit country with 319,493 COVID-19 cases, now with 15,794 more cases than Spain and 15,058 more than Mexico. Like other countries with spikes in new cases, Chilean retail has been severely impacted, but for the most part, pure e-commerce has performed well, despite civil unrest, unemployment, and a recession that started even before the pandemic hit. Here’s how Chile got to where it is today.
In mid-March, after more than 50 mayors called for an official national quarantine, President Sebastian Piñera declared a “state of catastrophe.” Unemployment peaked at 11% between March and May. Then the central bank predicted that GDP would drop by as much as 7.5% for the year, the worst Chilean GDP in 35 years.
In April, the government provided testing, quarantined the worst-hit neighborhoods, and imposed one of the strictest stay-at-home policies. In those first few weeks, the country maintained a flatter infection curve and a lower death rate than neighbors Brazil, Peru, and Ecuador. By the end of the month, the country was managing the pandemic so well that the government started planning how they’d reopen the country, which Chile did on April 30th.
But new cases increased in May, prompting the government to shut down entire cities instead of neighborhoods. This kicked off food shortages in Santiago suburbs where middle and low income has steeply declined. However, the second shutdown was too late. By June, Chile was averaging 5,000 to 6,000 new cases a day.
On July 2nd, Chile had the highest per capita infection rate in the world (13,000 cases per 1 million people), 10 times greater than Argentina and twice the rate of Brazil, which has also been hit hard by COVID-19.
As we’ve seen in just about every country, a rise in new cases immediately impacts retail. The flip side is that spikes can also boost e-commerce, as shown in the following chart.
E-commerce started rising at the beginning of March and hit over 200% revenue growth on April 12th. Coinciding with a rise in new cases, e-commerce plunged at the end of May and the beginning of June, but since then, Chilean pure players are seeing between 150% and 200% revenue growth YoY.
On July 5th, President Piñera announced a $1.5 billion package of financial stimulus (on top of two other packages worth 12% of GDP), mainly for Chile’s middle class who are having trouble now paying rent and mortgages.
But will these measures boost the overall economy?
For now, President Piñera is extending a more ambitious lockdown across the country. For example, non-essential workers in Santiago are only allowed to leave home twice a week. That’s including shopping for groceries, which may be an opportunity for online grocery shopping and curbside pickup or delivery.