Global Footwear Industry Overview
One of the largest segments of the global clothing and apparel sector, the footwear industry includes the manufacture, design, production and sales of shoes. The footwear industry can be segmented into athletic and non- athletic shoes, men’s, women’s and children’s shoes, and online and retail distribution channels.
The global footwear market was worth $259 billion in 2013, growing at a compound annual growth rate (CAGR) of 4% from $227 billion in 2010, according to estimates from the World Footwear Yearbook (WFY). The key driver of this growth was increased sales in emerging markets.
Sector Key Markets
China leads the global footwear market by volume with about 3.6 billion pairs sold in 2013, according to WFY.
The U.S. reclaimed second position from India in 2013, with sales of about 2.2 billion pairs.
Footwear Key Players
The global footwear industry is fragmented.
Nike (U.S.) is the largest footwear company with a 5.6% market share in 2013, followed by Adidas (Germany) with a 3.5% share. No other company has a share above 1.0% of the market.
Nike is a U.S.-based company engaged in the design, development, manufacturing and sale of footwear, apparel, equipment, accessories and services. Its sells products under various brand names, including Nike Golf, Nike Pro, Nike+, Air Jordan, Air Force 1, Nike Dunk, Foamposite, Nike Skateboarding, and through subsidiaries such as Converse.
Adidas, headquartered in Germany, designs and manufactures sports shoes, clothes and accessories for men, women and youths. The group markets its products under its own brand. It also sells other brands such as Reebok, TaylorMade, Ashworth, and Rockport through its retail outlets. Adidas is in the process of expanding its online sales model by allowing e-commerce players such as eBay and Amazon to sell its products if they adhere to certain criteria.
Industry Sales Forecast
Global footwear sales are projected to increase at a CAGR of 5% during 2013-2018 to reach $331 billion in 2018, according to estimates based on WFY data.
Key factors that will drive demand for footwear include population growth and the emergence in developing economies of a large middle class group with significant purchasing power.
Key Trends and Strategies for Growth in the Footwear Industry
Four trends will call for a response from footwear manufacturers.
Improved Design Technology is Being Used to Produce Customized Shoes
Significant innovations in the athletic footwear segment have been made by focusing on the anatomy of the foot and its movement. Advances in this segment have allowed the introduction of features such as temperature management, durability, extensive cushioning and lightweight fabric. There is a shift from a product-centric approach (mass production) to a customer-centric approach (mass customization) allowing customers to get involved in the development/design of the footwear.
Industry players should take cues from other industries in order to develop and design a unique athletic shoe. For example, Adidas’ Energy Boost, launched in 2013, was developed using ideas from the automobile industry.
Footwear Brands are Advertising Across Channels to Build Awareness
A fragmented consumer market, with each segment using different media channels for information, has made marketing tough for footwear manufacturers, especially small players. Therefore, companies are increasingly adopting an omni-channel marketing model, combining virtual and physical stores to connect seamlessly with consumers.
Footwear manufacturers should adopt an integrated marketing strategy – use a mix of traditional, social and digital media as well as innovative techniques such as crowd sourcing. This will personalize the consumer experience, helping to create a distinct brand identity.
Analytics are Being Used to Improve Sustainability
Footwear manufacturers are trying to improve their corporate image by being more environment-friendly. Analytics help companies to separate production techniques and to optimize their use of limited resources such as water and fossil fuels. For instance, Nike used analytics to reduce water wastage by developing a water-free dyeing technique, ColorDry, for its Flyknit shoes. It also found alternatives to cotton, a water intensive crop.
Footwear manufacturers should deploy analytics to improve production techniques and reduce environmental impact.
Footwear Sourcing is Becoming More Difficult as Low Cost Economies Evolve
A shortage of workers and rising labor costs in China are driving Western companies to seek to procure quality footwear supplies from alternative destinations in Asia such as Vietnam and Indonesia.
Manufacturers should develop a flexible supply chain, allowing them to use a wider range of suppliers. Additionally, sharing information from source to point-of-sales is needed to integrate all aspects of the supply chain, ensuring timely and quick responses to changing consumer trends.
Leading Industry Associations
- World Footwear
- American Apparel & Footwear Association
- British Footwear Association
- European Confederation of the Footwear Industry
- Footwear Distributors and Retailers of America
- National Shoe Retailers Association
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