Sustainability. Fashion. Cost. These are all anticipated concerns for consumers in regards to the footwear industry. The trends seen in this market are unique because there are established mature markets and emerging markets that each have unique challenges which must be met.
The global market for footwear is anticipated to reach $371.8 billion by 2020, with casual footwear the fastest growing segment within the industry with a 6.1% CAGR.
Although luxury brands are focusing on emerging markets, the US athletic footwear market is seeing some revenue growth that must be addressed as well. In 2015, the sector grew by 8% according to NPD, with a value of $17.2 billion, making it one of the best performances seen in recent years. Focusing on these footwear industry trends can help each market segment strive toward greater revenues as well.
Changing Styles Create Brand New Opportunities
- The Classics category, valued at $3.5 billion, saw a growth of 30% in 2015 alone and captured several shares from other major footwear categories. The category showed substantial sales increases among men (+26 percent), women (+69 percent), and children (+29 percent) alike according to data from NPD.
- Aging demographics are also creating new opportunities for the footwear industry to approach Baby Boomers and the Greatest Generation. Look for therapeutic footwear options to increase, especially extra-depth shoes that work well for those diagnosed with diabetes. Smart shoes with GPS technologies will also help those with Alzheimer’s disease, dementia, and similar mental health issues.
- The footwear industry will also look to target more women with Classics, athletic wear, and professional footwear as more women around the world gain economic independence. In mature markets, look for the industry to target women who make household spending decisions.
- By 2030, it is forecast that 3 out of 5 people will live in an urban environment. Products presented by the footwear industry will need to focus on design and functionality. This will also offer the potential for more shoe purchases per person, giving the industry the opportunity to potentially open more retail points of sale.
- Brands will also look at co-branding opportunities to reach more consumers with their message. This is already being seen with Adidas and Finish Line in Foot Locker and Macy’s respectively, with more sure to follow in the coming years.
- Consumers will continue to move away from animal-based products, such as leather, because of rising costs and ethical concerns. Look for footwear that is made from sustainable products like rubber or even plastics to gain a market share in the next decade.
- According to Hoovers, the US industry is concentrated: the top 50 companies account for about 80% of industry revenue. This means changes must start with these companies in order for the industry to see relevant revenues created.
- Look for the footwear industry to offer additional products which correspond with the changing styles of the consumer for an added revenue boost. This may include handbags, hosiery, and jewelry.
- Specialty marketers will also likely appear with more frequency in the footwear industry in the next 10-20 years and tastes change. Look for companies to begin specializing in demographic-specific shoes or specific activity shoes to compete with the mass marketed products from the industry’s major manufacturers.
Today, more than ever before, consumers are demanding accountability from footwear manufacturers. Reports on sustainability disclosures have risen to more than 3,000 annually from the 19 reports filed in 1999. Because non-renewable resources are more expensive, with an ethical desire to look for sustainability, changing styles will do more than give consumers fashion preferences. They’ll also be able to purchase footwear options that help them feel like they’re doing something to give back to the planet. Greener practices will grow to become the social norm and this will trigger a need for innovative alternatives in the next 10-20 years if the industry is going to be able to keep up with consumer preferences.
Emerging Markets and the Footwear Industry
- In 2013 Prada opened 27 new stores in the region, or approximately 35 percent of the brand’s total new stores worldwide that year, according to reporting fro Vamp Footwear.
- As of June 30, 2015, the Asia Pacific market represented 37.8% of Ferragamo’s total revenue for the year.
- By 2030, the majority of the world’s population is expected to be able to take advantage of expected wealth generation opportunities to become part of the middle class. Ernst & Young, which estimates the total number of people considered to be middle class to reach 4.8 billion by 2030 – an increase of 3 billion people in just 20 years if the forecast is correct.
- This influx of new potential customers will pressure the footwear industry to adapt to new preferences and needs, which means innovation to meet those needs must start today.
- Pricing strategies may need to be adjusted as well in the emerging markets because of the need to compete with local low-price manufacturers.
- E-commerce options will help to play a role in reaching the emerging markets, allowing manufacturers from mature markets the ability to receive and ship orders placed from virtually anywhere in the world.
- Sustainability will be a key factor in shoe selection, especially as people move away from extreme poverty. Younger consumers especially want easy ways to give back, so look for more brands to follow the lead of Toms in this area.
- Shoe manufacturers will also look to expand retail opportunities into emerging markets using location-specific marketing efforts. Women in India, for example, are being hired to walk door-to-door to sell shoes and earn shoes as part of their commission package.
- Emerging markets aren’t going to be location-based 100% of the time either. The footwear industry will look at emerging demographics, such as the LGBTQIAPK+ community. Let’s face it. Humanity is complex and identities are infinite, so there will always be an emerging market available for the industry to consider.
Emerging markets are an exciting opportunity for the footwear industry. The new preferences and needs which must be met will not only create innovative products for these markets, but they’ll also create opportunities for product growth within the mature markets as well. Interactive technologies that allow for footwear personalization may help to increase revenues as well, which would help the industry save money by being able to better predict consumer actions and needed inventory levels. Watch for more personalized recommendations through social media as a method of marketing as a way to begin this process.
Why Personalization is the Key Which Unlocks Everything
- According to Digital trends, 73% of consumers prefer to do business with brands that use their personal information in a way that makes their shopping experience more relevant.
- Infosys reports that 86% of consumers state that personalization is a key factor in how they make their purchasing decisions.
- 45% of online shoppers are more likely to make a purchase if there are products that offer personalized recommendation to them.
- 4 out of 5 consumers say they like to receive emails that offer recommended products based on what their past purchasing history happens to be. 61% of consumer even prefer receiving offers even if it results in them having less overall privacy.
- NIKEiD is a service which has already helped to embrace this trend, offering consumers the chance to personally customize parts of their shoe based on developed templates. It’s available to consumers in the United Kingdom, Italy, France, Japan, Spain, Germany, China , USA, Canada and Australia.
- More than half of all consumers say that they would be more inclined to use a retailer if it offered a more personalized experience.
- 3 out of 4 consumers report that they have left websites where they intended to make a purchase because of the appearance of promotions, offers, or advertisements that were not relevant to what they were doing.
- 2 out of 5 consumers will buy more from retailers who personalize the shopping experience across all channels.
- Yet despite over 90% of footwear retailers indicating that personalization is critical to the success of their industry, up to 70% of brands are not personalizing emails, 80% are not personalizing content across all channels, and 60% of marketers say that they are struggling to create personalized content in real-time.
The footwear industry is craving personalization, but it is virtually non-existent. Adidas and Nike have stepped up to the plate to offer these services among others, yet there is a large gap waiting to be filled. For those who can meet the needs of this footwear industry trend, the revenue potential is quite high – especially if those needs can be met in the emerging markets. Sure… there are roadblocks that stand in the way. CRM systems will need to be implemented. Resources may be scarce in new markets. Low-cost manufacturing might be a barrier to market entry for some. If those challenges can be met head-on and conquered, then the future looks bright indeed for the footwear industry as a whole.