THE BACKGROUND - From furry boots to kitten heels, fashionable footwear is big business. Sex and the City helped popularise the notion that what you wear on your feet can be just as stylish - not to mention expensive - as the rest of your clothes, and women in particular are beginning to buy pairs of shoes for every occasion. Clothes retailers have been quick to catch on, producing footwear to create complete ensembles. The result has been that specialist outlets such as Clarks and Barratts have struggled to grow as fast as the overall shoe market - but now they are starting to fight back.
Carrie Bradshaw has a lot to answer for. The heroine of Sex and the City has done more than most to encourage the idea that shoe shopping can be impulsive entertainment, rather than a once-a-season activity.
Thanks to Bradshaw's Manolo Blahnik obsession, as well as changes in UK fashion trends that have increased the variety of footwear women own, shoe retailing has been a relatively buoyant market over the past few years. Sales rose by more than 4% in both 2002 and 2003, with the market worth an estimated £5.2bn in 2004, according to Mintel.
There is a definite gender split in the sector. Men still tend to buy shoes only when they need to replace a worn-out pair; indeed, 17% of men did not buy any shoes in the year to March. And when they do buy a pair, they are most likely to do so from a sports or outdoor shop.
Women, however, are increasingly viewing footwear as almost disposable, according to James Lovell, marketing manager at Barratts. 'They will buy a pair of shoes to match an outfit, wear them a few times, then move on to the next pair,' he says.
Footwear is now regarded as a fashion item in its own right and can generate pages of editorial in women's magazines in the same way as clothes. There is a practical element too: rising numbers of working women mean they buy a wider selection of smart shoes.
Boot bonanza
The market has recently been boosted by the popularity of boots, which came back into fashion in 2002. These offer retailers a highly profitable revenue stream, since boot prices are on average double those of shoes.
Last winter the trend for Australian boot brand Ugg helped to swell the market again, as did a resurgence in skirt-wearing, which led to women buying more shoes to fit with various outfits.
According to Mintel, the market is polarising into smart and sporty shoes as women move away from all-purpose casual shoes, sales of which have dropped as a result.
Specialist chains such as Clarks, Ravel, Barratts and Faith are still the most likely destinations for shoe shoppers, along with Marks & Spencer.
But the growth in the market has attracted many non-specialist retailers to diversify into shoes. Value chains including Matalan, TK Maxx and Primark have made sizeable inroads into the market over the past few years, with 8% of consumers buying footwear from these outlets in the year to March.
The big story in this sector over the past few years has been the impact of high-street clothing chains such as New Look and Top Shop, which have sold shoes and boots that complement their clothing ranges. New Look hired cult Mayfair shoe designer Georgina Goodman to design a range for its spring and summer 2004 collection, while Top Shop has proved it can transfer its talent for translating designer clothing into cheaper high-street wear to the shoe sector. The chain unveiled its first footwear range two years ago, and last month opened its first dedicated shop, Shoes by Top Shop, in Manchester, with plans to roll out the format nationwide. In its main stores, this season's Top Shop Unique shoe range adopts the fashionable vintage look, with 40s styles inspired by designer Marc Jacobs.
Supermarkets have also become players in the shoe market, and have proved particularly popular with 25- to 44-year-olds in the C1 and D socio-economic groups. About 10% of women bought shoes at a supermarket in the year to March 2004, nearly as many as did so in sports shops.
It has been the specialist stores that have lost out as a result of the incursion of supermarkets and clothing chains. Sales at specialists rose 2.7% in 2002 and 4% the following year - much slower than the sector's overall growth. This reflects the falling number of specialist outlets: there were 3860 shoe shops in 2003, down 29% from 1998.
Shoe store resurgence
Now the specialist chains are starting to fight back. According to Barratts' Lovell, the comprehensive shoe offering of clothing chain River Island has become the footwear retailer's main threat. Barratts has responded by focusing on fashionable footwear designed for its (and River Island's) key demographic of 18- to 35-year-old women, rather than trying to cater to everybody. The chain is in the process of introducing new fascias to establish its positioning as a fashion shoe retailer.
Clarks, meanwhile, has managed to reassert its market leadership over the past few years with the help of a complete change of image. Ads using the slogan 'Life's one long catwalk', coupled with sharper buying and an overhaul of stores, have helped Clarks to appeal to 35- to 45-year-olds, rather than the average 50-year-old shopper that used to buy its shoes.
Mintel tips Office, Hobbs, Sole Trader and LK Bennett as chains likely to see future growth. LK Bennett has only 31 sites, but has developed a profile to match its much bigger rivals through consistent magazine advertising.
Vasek Jelinek, chief operations officer at Jones Bootmaker, believes that the market is polarising into stores such as Jones and LK Bennett, which focus on quality, and brands such as Priceless and Shoe Zone, which trade on their low prices. 'ABC consumers are predicted to grow from 48% of the population to 52% over the next few years, and we can only gain from the trend,' he says. 'We exist for consumers who demand more in terms of quality and service.'
SPECIALIST SHOE SHOPS BY NUMBER OF OUTLETS
Brand Positioning No. of shops
1 Clarks Family/fashion 392
2 Shoe Zone Value 330
3 Shoefayre Family 320
4 Barratts Family/fashion 254
5 Stead & Simpson Family 236
6 Dolcis Mainstream fashion 188
7 Nine West Fashion 180
8 Brantano Family 129
9 Priceless Value 101
10 Jones Bootmaker Fashion/quality 65
11 Foot Locker Sports 59
12 Scholl Comfort 57
13 Faith Fashion 55
14 Ravel Fashion 47
15 Russell & Bromley Fashion/quality 42
16 Schuh Fashion 38
17 Sole Trader Designer fashion 33
18 LK Bennett Fashion/quality 31
19 Dune Fashion 30
20 Office Fashion 23
Source: Mintel
SOURCES USED FOR BUYING FOOTWEAR BY OUTLET IN 12 MONTHS TO MARCH 2004
Brand All Men Women
1 Clarks/Ravel/K Shoes 25 18 32
2 Marks & Spencer 18 14 22
3 Sports/outdoor shops 14 19 11
4 Other specialist shoe shops 14 13 14
5 Department stores 10 8 13
6 Next 10 8 12
7 Barratts/Priceless 8 4 11
8 Value retailers 8 8 9
9 Supermarkets 8 7 10
10 Other high-street clothing shops 8 7 8
Source: Mintel
ANALYST COMMENT - Maureen Hinton Senior analyst, Verdict Research
Baugur's acquisition of a 20% stake in Shoe Studio, Bridgepoint Capital's discussions to buy Faith, Lloyd's TSB Scotland's backing of a management buy-out at Schuh and private investor Jack Petchey's decision to buy a 12.6% share of Stylo have one thing in common: at a time when debt is still relatively cheap, they represent a chance to cash in on a sector growth story.
Verdict believes the trend that has seen footwear sales outstrip clothing sales in the past two years will continue over the next five years. The market will grow at an average annual rate of 3.7%, as shoe shopping increases across age, socio-economic group and gender.
This growth has been spurred by a change in the way consumers shop for shoes. Fashion has become as important for footwear as for clothing, with both sexes buying into the idea of different shoes for different social occasions. Retailers have responded by shortening their buying cycles, refurbishing stores and opening flagships that create a destination for shoppers.
The shoe sector is extremely fragmented and likely to remain so. Barring the proposed merger of Shoefayre and Stead & Simpson, which will provide greater buying power and an improved store network, most of 2004's deals will not lead to consolidation.
But there is evidence that the market is starting to change, with the rise in popularity of smaller players such as Faith, Office and Jones.
The scale of these retailers prevents them from seriously challenging the market leaders. But the trend suggests that as customers make fashion more of a priority when buying shoes, small, style-oriented retailers can attract customers from the mainstream players.
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