Footwear Laces, Insole & Accessories Shoes are meant for the protection of our feet and with the passage of time have gained so much significance with respect to looks that it takes forever to shop for just one pair. In the last few years the sales of footwear have reached great heights and growth and not to forget the long list of categories that follow. Industry Trends The footwear market across the world is worth millions of dollars. Its exact worth in 2008 $192.3 billion which was a growth of 2% compared to 2007. In the year 2014 the global revenue of the industry was more than a trillion dollars with footwear accessories being the second major revenue generating product. There are many brands in the United States which are representing the total sales of the industry. Their combined revenue was more than $93 billion in that year. These companies rely heavily on their sales outside US such as India. In the year 2014, Nike managed to gather its 56% of the entire revenue from regions outside North America such as China, Western Europe and other emerging markets. US remains the largest market in the footwear and its accessories industry and most of the products are imported from outside US. According to a stat given by “American Apparel and Footwear Association” (AAFA), more than 985 of the footwear that were sold in America were manufactured in China. China accounts for 8 of every 10 footwear worn in US. In the same year Adidas worked almost 340 independent companies out of which more than 80% were situated in Asia, China being at the top with 27%. India seems to be heading in the right direction in the footwear industry with a worth of 160 billion INR or around $4 billion being the second largest producer in the world after China. India accounts for more than 14% of the entire world production in the footwear industry with manufacturing 14.52 billion pairs annually. The market in India is expected to grow to a worth of 475 billion INR by the year 2025 with a yearly compound growth of 7%. Currently it is growing its export at a rate of 18% per year and it is accounted around $1212.79 million. This accounts for the leather trade of India as its major chunk with almost 41%. Surprisingly the industry is dominated by the men’s segment because usually in areas of apparels and fashion, women are usually up front leading. Almost 60% of the entire market is comprised with the men segment while the remaining is divided between ladies and kids. In this segment the kids have almost 50% of the share. This is again a very surprising figure due to the fact the major production in the world of footwear is in the ladies footwear. This is one of the better opportunities for the ladies footwear industry to grow more. Despite its outstanding growth, Indian footwear industry currently is much unorganized and needs a lot of tweaks. Especially the manufacturing sector which is entire unorganized and has no major manufacturer. India is behind China for the main reason that it does not have the state of the art technology that can meet the demands of the industry. These are some of the factors that have a huge impact on sales and the supply chain process. The companies who order a certain product receive it at a delay of 60 days which means they cannot make any midseason corrections in that process as there is always a new collection in the market every 3 months seasonally. Future Prospects Along with China India is also expected to move forward in its production of footwear and its accessories in the next few decades and might become one of the largest consumers of footwear accessories in the world. As far as the consumption rate of India goes it has more 95% production for meeting the demands that are domestic. Hardly any leader goods are exported by India which defines why there is a low share their leather export trade. Target Market In the last decade the footwear industry has seen its high and lows. Their sales have risen slightly but the growth annually has slowed a little. This is because of the changes in the behaviour of consumers and brands not being able to cope up effectively. Even though on many occasions the importance for brands to have a better understanding of the behaviour of men and women and to see them distinctly is shown time and again. When it comes to fashion, men and women have a different approach which makes their priorities distinct while choosing footwear. According to a statistics published by the United States Bureau of Labour in the year 2009, it was shown that compared to men, women tend to spend more on footwear. Also, numerous studies have shown that when it comes to shopping for fashion goods men are least likely to initiate the purchase. This doesn’t imply the fact that men are not into keeping up with the latest trends of the fashion industry. Many studies have shown significant growth of men’s interest in fashion. The consumer behaviour of mature customers has not been researched widely compared to young consumers. Young customers, especially teenagers tend to buy expensive footwear which is also high fashionable as them ten to show their uniqueness and personality in social gatherings. A study conducted in 2003 gave a very precise statement regarding footwear shopping in teenagers. It states that, “through shoes young adults work out issues of identity, individualism, conformity, lifestyle, gender, sexuality, ethnicity, and personality”. Key Market Players In India footwear and its accessories are categorized into classes where the brands are located such as in the category of luxury brands there is Louis Vuitton and Gucci; in the non leather premium section there is Charles and Keith, Catwalk, ALDO and etc.; then there is Active Sports where brands like Adidas, Nike, Reebok, Puma etc exist. Other categories involve premium leather, mass market and the segment for the middle class. Legislation and Regulations In the United States the regulations that are created along with the rest of the world are there in order to keep formal boundaries of the companies and their operations intact. These are meant for addressing the externalities that are created by the business. Other than the formal regulations, there are certain self regulatory efforts which make a social contract between the society and the business. The United States government in 2008 signed an Act called “Consumer Product Safety Improvement Act” in their law. This was implemented in the regulations in order to prevent the use of harmful substance that may get used in the footwear and its accessories and to make sure than footwear go through a testing phase before they get delivered in the market. The European Union also implemented certain legislations meant for the restriction of harmful goods used in the product. It was called the REACH legislation which is an acronym for “Registration, Evaluation, Authorization, and Restriction of Chemicals”. The REACH legislation gave a list of banned materials which are not allowed to be used. It also implements a “burden of proof” on the brands that function in the market of the EU for determining the human health and environmental risks from chemicals that are hazardous and used in products. Such regulations do not absolve those companies from where the product is imported. Companies nowadays are facing a much bigger scrutiny level in terms of their supply chain. As a response to the developing concerns coming from the regulators and consumers regarding human trafficking and slavery in the corporate sector, for this purpose California passed a Supply Chain Act in the year 2010. This law was in effect in the year 2012 which placed a requirement over the heads of companies making more than a $100 million to report their actions taken against human trafficking and slavery in the supply chain. Impact of Technology Technology is growing in every industry which has made designing and creativity to enter any market possible. In the latter half of the last decade we have heard the name of virtual reality time and again where something that does not exist can be made and played with. The main idea of virtual reality is to make something possible even if that product is only in the form of an idea in the mind of the designer. VR is used in many companies for many purposes such as making new designs for their footwear and accessories and if that design is good enough they can use that idea for the manufacturing process this eliminates the time that is consumed in used material just for the testing purpose. Next innovation is 3d printing which allowed companies to add new features into their footwear and then make a product out of it. One example of this are the shoes that were made through 3d printing where spikes were added in the shoes to increase the performance of the runners.
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