financial crisis / footwear business

not sure if this has been asked somewhere else…
wondering how the economic crises is affecting the footwear industry in your area, in terms of job security, its impact on the job etc. i know adidas recently cut back on staff significantly…
the factories i visited in china last couple of weeks were talking about a 50% reduction in orders from the US compared to this time last year. Europe apparently not so bad but still dramatically declined business. this is a pretty big deal. huge amounts of factories are going out of business in china right now.
what kind of changes are people on here noticing / what do you think this means for the industry in the future? (aspiring footwear designers especially take note)

Very tough times ahead,

I have seen a real cut back in orders & development work. I work in the own label area, supplier based design.

Customers are asking for the most rediculous lead times I have ever heard off, last week we had one email saying what can you get done for us in 1 week .

I full sample in 1 week are you having a laugh. its just not that simple.

plus add the fact that they dont want to pay much also really ****s things up big style. A complete piss take of the industry, I cant wait to leave this area behind.

the fact that we have just hired a new account manager that doesnt know anything about footwear development+buying+marketing+pricing anything apart from taking a bag of samples and saying what do you fancy., and seems to be jut riding the storm by getting with a big company and not grafting (hard work) for the business. I hate people that are chancers
just a jumped up salesman on 50K, company BMW, travel expenses all paided for. its an outrage. THINGS NEED TO CHANGE.

I really cant see how we have hired this guy, you expect someone of 45+ to bring something to the table in terms of leads or contacts, but he brings nothing!!! NOTHING.

Im very upset about the way things are going. its tuff/difficult climate to be creative in, when peoples demands are just to rip - off an other companies design.

Things will & already are changing.

I cant wait to see what things are like in 10 years time… bring it on.

Hotmix6

GREAT TOPICE K.E

THANKS FOR LETTING ME VENT MY SPLEEN

HOTMIX6

ouch, so young, yet already disillusioned.

Yep, it’s not easy times now for the economy or the footwear business in general.

a
perfect storm" of factors all contributed- (in no particular order):

  1. seasonal changes (ie. less snow, bad for boot business, colder summer, bad for other categories)
  2. decrease in value of USD
  3. increase in value of RMB (and changes that make it not fixed to the USD)
  4. increase in oil prices which leads to increase material costs and shipping
  5. changes in Chinese labor laws which increase prices
  6. changes in Chinese economy which move labor and other factors from manufacturing
  7. overall economic climate leaving less disposable income in the hands of consumers and in turn less purchasing by customers

Certainly, there is no one solution, but no-doubt things will change. Surprisingly, despite (or perhaps in light) of these changes, I’m seeing more and more new start-up brands enter the market. Maybe it’s a shift from the larger brands (which consumers have typically paid an increased value for on the basis of brand name), to newer brands which offer actual innovation/quality, or maybe it’s just an opportunity as seen by these small brands.

What will be interesting to see, is indeed also how the decrease in price points and the market affect different level of brands. I’m no economics major, to be sure, but I would think the hardest hit would be the house/private label brands such as you mention, Hotmix. These typically offer the lowest value (but perhaps highest perception of value), with lower priced product and less differentiation. Kinda squeezed in the middle, if you will, between the larger brands and the truely no-name, commodity products.

My suggestion - differentiation through innovation and branding. If more can be done on the design/development side to increase the actual value of the product (through innovations in materials, construction, function, etc.) and more can be leveraged through branding (thus increasing perceived value), i think most companies will make it out alright.

R

I can’t remember it ever being so bad in the UK. Even stores such as Shellys (an employer of mine in its heydey) have gone. The middle market has all but disappeared, leaving brands and value market.

It’s very very tough.

I’m still owed alot of money by a factory that didn’t pay me last year. They owe several of my friends several thousand euros too. This sadly, isn’t that unusual.

Literally swathes of factories have closed, in Europe and also lots in China. Along with some agents. One of my agents has retired, another one has, I suspect gone bust.

It’s caused me alot of problems - I’ve had to delay the launch of a brand because I’m suddenly without an agent.

One of my clients went into liquidation (thankfully he paid me - I was one of only two creditors that he did pay - I’m very grateful).

A large proportion of styles I developed for someone else are cancelled because the Chinese factory went into liquidation.

I’m actually busier than I’ve ever been in my career, though.

I agree private label is taking an absolute pasting - especially the agency stuff. But as a freelancer, I find I now get employed by the companies that used to use agents - they now go direct to factory. They suddenly need designers. The work I’m getting for private label is nowhere near as dull as it used to be. It’s not so much knock off anymore - there is no point in simply knocking off what everyone else knocks off. Someone somewhere will always be doing it cheaper than you are and you’ll fail. I’m actually getting asked for original designs this can only be a good thing.

The consumer is bored. The good thing about fashion is that people will buy if the product is good enough.

bottom line, at least everyone still needs shoes… it’s not like we are in the typewriter design business circa 1980 :slight_smile:

R

since ive been in the industry (a measly 1.5 years now), all i keep hearing is how “it never used to be like this”, so i dont know whether to be happy that i came into the industry during turbulent times (nowhere to go but up right?) or to be generally concerned about my career.

Although working for a business where the US market is only a piece of the entire business helps, even though things are really bad on the US front, we have booming business elsewhere in the world. All in all the more senior co-workers of mine are concerned about the factory issues, but seem to have a sense of ‘seeing the light at the end of the tunnel’, so that helps morale for sure.

shoenista,
I hear news from our UK team about how stores that have been around and good customers forever, staples of retail over there even, are closing down. Having never been over there it doesn’t really hit home for me but it is something that is concerning.

Its actually quite interesting to see how the downfall of the economy and rising costs in the far east plays out among the various pricepoints in the market, how it affects the entry pricepoint guys versus the premium. Im still not sure who is taking the hardest hit, maybe its just everyone.

Well. I am not in the shoe busines, but I love shoes.

Situation:

  • financial markets go bust.
  • values disappear
  • jobs get lost
  • disposable income drops to minimal


Prediction:

As the median household income in the US and Western Europe shrinks and house prices drop our habbits and values will be completely revalidated.
The shoe industry was one of the earliest and biggest winners of globalisation and “marketing V.S.1.0” but now will take a deep hit.

I can’t see teenagers of 2011 spending 150,- bucks on a shoe, only because Beckham whore it. All bullshit will be blown out of the window, if folks still need shoes but don’t have more than 20,- for a pair for the winter.

Anybody who offers a simple solution to that problem will have a winner on his hands:


Solution
“Grace- space - pace and value for money.”

A slogan that William Llyons founded Jaguar Cars Ltd. on.
(in the 1930ies)

Think of clever solutions that make the needed simplicity not a necessity, but an elegant and beautiful statement.

We have lots of new materials and production methods on our hands.
Use it! Create those winter shoes for 20 € and create a better sales chanel through web 2.0 as well.

Live happily ever thereafter and make a small contribution to my hut after
succeeding with the plan.

all the best

yours mo-i

P.S.: Making worn shoes a fashion statement is not an alternative!