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Footwear Industry In Us

The footwear Industry in US account for $34bn and it has a annual growth rate of 3.1% from 2010-2015.It provides Employment to 213,433 people in US.

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Definition / Scope

  • Footwear Industry basically include garments worn on the feet, for fashion, protection against the environment, and adornment. Some cultures choose not to wear footwear, at least in some situations especially before entering a home.
  • It include Flats, Bellies, Hells, Wedges, Stilettos, Peep Toes, Flip Flop, Sneakers, Loafers, Boots,Shoes (Sports, Casual, Formal), Sandals, Slippers, Flippers, Clogs etc.

Market Overview

  • The footwear sector is a very significant segment of the leather industry in US; rather it is the engine of growth for the entire US leather industry.
  • Footwear Industry in US account for $34bn and it has a annual growth rate of 3.1% from 2010-2015.
  • It provides Employment to 213,433 people in US.
  • Following revenue declines due to weak consumer purchasing power during the recession, the Footwear industry has recorded growth in each year since 2010. The rebound has primarily been fuelled by rising consumer sentiment and per capita disposable income. As the economy continues to recover and consumers loosen their discretionary budgets, the industry is anticipated to fare well. While competition will likely continue to intensify, participants in the Shoe Stores industry can effectively compete by offering exclusive shoe styles at low prices.
  • The footwear industry is mature and fragmented like the apparel industry, however its manufacturing base is waning. “According to the U.S. Department of Commerce, 78.9 million pairs of shoes were produced domestically in 2001, versus the 96.5 million pairs in 2000 (down nearly 20% year to year) and 498.3 million pairs in 1980 (down 84.2%).
  • About 23.8 million pairs of shoes produced in the United States, or about 30% of the total, were exported”. Imports of shoes totalled 1.4 billion pairs in 2002, which is worth an estimated $15.4 billion. “Exports of footwear produced domestically were down $520 million in 2002, from the $639 million in 2001” .
  • The footwear industry is truly global in scope, in that manufacturers can now sell different products that are produced in different countries and spanning many different continents. A multinational strategy is necessary to implement because it allows manufacturers to increase their revenues by focusing on selling their products in countries with rapidly growing economies. 

Key Metrics

Metrics Value Explanation
Base Year 2016 Researched through internet


Market Risks

Three type of Risk are analysed in Footwear Industry-:

  1. Structural Risk: Risk arising from within the industry itself
  2. Growth Risk: Risk arising from expected future performance of the industry.
  3. External Sensitivity Risk: Risk arising from the forces external to the industry.
  • The key indicator of Structural risk include Barrier to entry,Competition,Industry exports, Industry import, level of assistance, life cycle stage and volatility of industry.
  • Growth risk is basically calculated by amalgamating the score for recent industry growth and future industry growth.
  • The key indicator of External sensitivity risk is Exchange rate, interest rate, commodity price and government regulation. So with change in exchange rate and interest rate there is risk involved in footwear industry.

Market Drivers

  • These days, consumer demand is driving industry trends that affect footwear manufacturers. These trends “relate to the size of the various demographic groups, their particular wants, shopping patterns, and spending power. Changing styles in the workplace and leisure attire are also influencing retail and manufacturing operations”. Industry trends include shorter cycles, price deflation, offshore sourcing, diversifying to survive, and following the demographics.

Technology Trends

  • Technology has expanded operations of the footwear industries to a more global scale. It has also provided closer working relationships between retailers and manufacturers. Technology has improved efficiency and has reduced the amount of manual labor. “Rapid improvements in computer technology have helped to shorten the new product development phase from years to practically months, especially in the fashion/style/high performance areas.
  • Footwear marketers who are linked with retailers through quick-response programs and other technology go a long way toward making themselves indispensable to their customers.
  • EDI, or electronic data interchange, is a system that links both retailers and manufacturers and uses computer terminals that are interconnected throughout the manufacturing and sales systems. EDI collects information (such as the bar code that is attached to each item sold, the price of the product(s) sold, and details such as color and size) from the retailers’ checkout counter and relays the information back to the manufacturer. The data is then used for manufacturers to automatically reorder the stock of merchandise to replenish their shelves in a timely manner. EDI also makes distribution and shipping information more efficient.

Market Size and Forecast

  • The US is one of the largest markets for  footwear in the world. The footwear market in the US over the years has showcased an underlying potential on account of growing product categories and increasing preference amongst the population in the US.
  • In 2010, a surging demand was witnessed  for performance in  footwear due to the increasing number of athletes and the growing health awareness amongst the people of the US which led to the increased participation in varied fitness activities, especially running, training, biking and skating.
  • The athletic footwear market was valued at USD ~ million in 2010 which has grown at a positive CAGR of 0.8% in the last 5 years despite the negative growth in 2008 and 2009.
  • The footwear industry is mature and fragmented like the apparel industry, however its manufacturing base is waning. “According to the U.S. Department of Commerce, 78.9 million pairs of shoes were produced domestically in 2001, versus the 96.5 million pairs in 2000 (down nearly 20% year to year) and 498.3 million pairs in 1980 (down 84.2%).
  • About 23.8 million pairs of shoes produced in the United States, or about 30% of the total, were exported”. Imports of shoes totalled 1.4 billion pairs in 2002, which is worth an estimated $15.4 billion. “Exports of footwear produced domestically were down $520 million in 2002, from the $639 million in 2001” .
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Market Outlook

  • The future of the footwear market in the short run seems to be promising as the Olympic Games 2012, London and the European Football Tournament 2012 are approaching, following which the market is expected to witness a major demand for performance in the year 2011 and 2012. The personal consumption expenditure is expected to close the year 2011 at USD ~ million and is projected to reach USD ~ million by 2015.

Competitive Landscape

  • The market is largely penetrated with the presence of several global and domestic marketers of footwear such as NIKE, Adidas, Foot Locker, VF Corp., Under Armour, Asics and others competing to sustain themselves. Top 6 players contributed around ~% of the total footwear market revenue in the US in 2010. NIKE, the leading brand in the footwear market has gained a competitive edge over the years with its innovative marketing techniques and preference for performance in footwear. Moreover, a total number of store across the US has helped the company to penetrate the US market.
  • The footwear industry is truly global in scope, in that manufacturers can now sell different products that are produced in different countries and spanning many different continents. A multinational strategy is necessary to implement because it allows manufacturers to increase their revenues by focusing on selling their products in countries with rapidly growing economies.

The footwear industries are highly competitive and fragmented due to low barriers of entry. It is fairly easy for new companies to enter into the footwear industry, however most companies lack staying power mostly because resources are under capitalized or there is a “lack of broad-based global sourcing” . Most small companies who have entered the footwear market do not have the technology and systems infrastructure used by major retailers. “They also generally lack marketing muscle to give their products the exposure needed to build brand loyalty among consumers. These entrepreneurs often seek to be bought out by larger companies as a way to expand sales of their designs”

This figure show the value chain of footwear industry means how a pair of shoes is

produced
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Competitive Factors

  • Despite the turmoil of recent years in the footwear sector, and the difficult economic outlook, the overall view of footwear industry was quite positive. A number of different factors had contributed to this success. A key reason for the success of the US footwear industry in restructuring has been the close partnerships that exist within the industry and with the Government. A similar situation is found in Italy, with the cluster system still operating despite the effects of restructuring
  • Another key factor in successful restructuring has been flexibility in the face of changing market conditions. The manufacturing companies that have remained in business and been successful are those that were best able to adapt to the new requirements. For SMEs, this meant changing the focus of their operations from just production to design and quality and developing skills in marketing and distribution.
  • For larger companies, the ability to remain competitive has been linked to the flexibility provided by off shoring/outsourcing production. This has led to a very adaptable system, where production can be closely geared to market requirements. This flexibility is one reason why footwear companies appear to have been relatively resilient through the recession. The ability to differentiate their products has been an important factor in allowing US  footwear manufacturers to remain in business. Focusing on factors such as fashion, comfort and safety has enabled them to avoid direct competition with low cost competitors. The basis for differentiation varies between  the case study regions, although fashion is an important aspect for most markets. Ensuring access to sales channels, through developing marketing skills, acquisition of retail chains or opening their own stores has also been a key

factor in ensuring the success of companies.

References

 


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