THE BACKGROUND
Despite a boost from fashion-conscious women seeking to replicate the look of Hollywood stars, the sector is, to some extent, struggling. Ferocious competition has forced manufacturers to keep prices low, driving down margins and leading to a market sustained only by consumers buying greater numbers of shoes to keep up with the latest trends. However, the impending credit crunch could put the brakes on such frivolity and by 2012 volume growth is expected to have slumped by 7% from 232m pairs of shoes sold last year to 216m pairs.
From Christian Louboutin's trademark red-soled high heels, gracing the feet of many a Hollywood star, to Sex and the City's Carrie Bradshaw and her love affair with her Manolo Blahniks, shoe designers are enjoying the limelight as never before.
However, it is not just the luxury end of the market that has captured consumers' imagination. Last summer, the nation's feet were adorned with brightly coloured plastic as Crocs fever gripped the UK. It followed a similar fad during the winter when women opted for the warmth and comfort of the ubiquitous Ugg boot. In the children's market, the hybrid shoe and roller-skate combination - Heelys - has been popular.
While the top end of the footwear market might grab the headlines and glamour, and innovative shoes may spark a trend, the mass market is under pressure. Footwear is intensely competitive, with falling margins and limited growth. But it does benefit from the fact that shoes are now seen as a fashion accessory. This means the latest styles are sought out each season, with women, in particular, keen to regularly update their look.
In 2007, the footwear market was worth 拢4.5bn, according to Mintel. Value has been hit by price deflation - the average price of products continues to fall and is now less than 拢20 - but volume growth has sustained the market. While value has increased only 3% since 2002, volume has risen from 209m pairs of shoes to an estimated 232m last year.Prices have been pushed down by low-cost sourcing from Asia and, in particular, China, and fierce competition from clothing retailers.
The market comprises both manufacturer and retailer brands, which often expand into each other's territory; Nike has its own flagship stores, and retailers such as Office stock their own brands as well as those from other manufacturers. Stores such as Marks & Spencer and Primark are also expanding their ranges.
At the value end of the market, supermarkets, including Asda and Tesco, are getting in on the act by extending their clothing brands into footwear.
Clarks is the top retailer in the sector with a share of almost 10%, followed by Marks & Spencer, according to Verdict. Overall, however, it is a highly fragmented market and one that is likely to become more so as the number of entrants rises.
Women's footwear drives the sector and takes the biggest share in value terms. Men tend to be less fashion-conscious when it comes to shoes and so change their styles less often. The children's market, on the other hand, has a higher turnover because of the speed at which youngsters' feet grow and the need for well-fitting shoes. Companies such as Clarks, which ensure they correctly measure and fit children's shoes, can often justify higher prices on the basis of service and product quality.
Despite being best-known for its children's shoes, Clarks is also active in adult footwear, especially in ranges aimed at over-35s, with a focus on comfort with a cursory nod to fashion. In May last year Clarks appointed Abbot Mead Vickers BBDO to its 拢12m ad account with the task of creating global campaigns.
Other specialist footwear retailers include Stylo shops, trading mostly as Barratts or PriceLess, Stead & Simpson, Belgium-based Brantano, which focuses on big out-of-town stores, and Faith, the fashion-focused mid-priced retailer; Dolcis is currently in administration.
In terms of categories, sports-shoe manufacturers have benefitted from an increase in consumers' participation in physical exercise. The market is dominated by brands such as Nike, Adidas and Puma. Nike has a strong presence in the UK through wide distribution of its shoes and its aforementioned stores, and continues to expand; it has put in a bid for sportswear manufacturer Umbro, which is expected to be completed this month.
Online retailing in the sector has been slow to take off because of the inherent difficulty in buying shoes without trying them on first. But some retailers have successfully gone down this route such as Kurt Geiger and Office, both of which offer transactional websites.
The footwear market is predicted to decline over coming years, as a slowdown in the economy limits consumer spending, leading them to cut back on discretionary and impulse purchases.
By 2012, the sector is expected to have reached a value of 拢4.6bn, representing real-term growth of only 3%, according to Mintel.
Volume sales, meanwhile, are forecast to drop by 7% to 216m pairs over the same period. The decline will be exacerbated by the changing demographics of the UK population as the 15- to 24-year-old band decreases.
FOOTWEAR CATEGORIES BY VALUE AND SHARE
2007 (est) 2005 2003 % chng
pounds m % pounds % pounds m % 03-07
1 Sports footwear* 1410 31 1396 32 1390 31 1.4
2 Casual shoes 880 19 830 19 810 18 8.6
3 Boots 750 16 700 16 680 15 10.3
4 Formal shoes** 658 14 680 15 740 17 -11.1
5 Sandals 390 9 360 8 330 7 18.2
6 Slippers 75 2 70 2 88 2 -14.8
Other children's
footwear 370 8 360 8 350 8 5.7
Other adult footwear 31 1 25 1 25 1 24.0
Total 4564 100 4421 100 4413 100 3.4
* Includes children's and specialist sports footwear
** Including women's court shoes
Source: Mintel
FOOTWEAR SEGMENTS BY VALUE AND SHARE
2007 (est) 2006 2005 2004
pounds m % pounds m % pounds m % pounds m %
Women's 2008 44.0 1968 44.0 1945 44.0 1920 43.6
Men's 1597 35.0 1570 35.1 1547 35.0 1545 35.1
Children's 958 21.0 940 21.0 928 21.0 935 21.3
Total 4564 100.0 4474 100.0 4421 100.0 4400 100.0
Source: Mintel
FOOTWEAR PURCHASING BY GENDER
ALL ADULTS MEN WOMEN
2007 2003 2007 2003 2007 2003
% % % % % %
PURCHASERS
Shoes 66.9 73.4 57.6 65.7 75.8 80.7
Boots 33.8 22.6 22.6 7.8 44.4 36.7
Trainers* 44.4 - 47.1 - 41.8 -
Sandals* 34.1 - 16.1 - 51.0 -
NON-PURCHASERS
Shoes 33.1 26.6 42.4 34.3 24.2 19.3
Boots 66.2 77.4 77.4 92.2 55.6 63.3
Trainers* 55.6 - 52.9 - 58.2 -
Sandals* 65.9 - 83.9 - 49.0 -
Base: adults aged 15+
* Please note in 2007 respondents were asked about sandals and trainers
separately
Source: GB TGI, BMRB, Mintel
ANALYST COMMENT - JULIET STRACHAN, SENIOR PARTNER, HPI RESEACH
In many ways, footwear occupies a safe haven within the world of bricks-and-mortar retail. As anyone who has bought two pairs of the same shoe will tell you, sizing can be haphazard, which makes online shopping perilous. So, while high-street clothing retailers are continually looking over their shoulders, shoe retailers can rest at comparative ease.
However, the minimal online threat does not leave the sector immune to other pressures. The high street has become extremely competitive for shoe retailers, particularly on price, where the supermarkets have carved a niche with discounted offerings. The influence of fashion is also outstripping practicality, necessitating frequent line changes to accommodate a more disposable mentality among consumers.
That said, there remains a strong appetite for practical, reliable staples and the crossover of fashion with this has led to the huge success of the Croc and Birkenstock brands in particular. Elsewhere, the flat pump has dominated the women's sector for the past two summers, emphasising the appetite for versatile, fashionable shoes.
Environmental issues have also affected the market. A rise in average winter temperatures has meant a declining market for sturdy all-weather shoes that could withstand the wet and windy British winters of old. Green issues mean that consumers are becoming more aware of where and how their shoes are manufactured.
Finally, age is becoming less of a differential in purchasing behaviour, with a broad section of the market appealing to a wide range of segments and consumers unwilling to be pigeonholed.