market trends in us and european footwear july 8 2017
TRANSCRIPT
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July8,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
1) IntheUSandinEuropeancountries,athleisureandhealthandwellnesstrendsbuoyedfootwearsalesgrowthin2016.Nike,Adidas,PumaandJDSportsFashionallposteddouble-digitpercentagesalesgrowthratesintheirlatestrespectivefiscalyearresults.
2) TrendsinthefootwearmarketcloselymirrorthoseoftheapparelfashionmarketinthatspecialtyfootwearretailersintheUSandtheUKthatoffersports-inspiredfootwearstylesarethriving.
3) Weexpectglobalfootwearsaleswillbedrivenbythecontinuationofathleisureandhealthylifestyletrends,theriseofe-commerce,productinnovationandtheevolvingopportunitiesprovidedby3Dprintingandcustomization,aswellasAmazon’scontinuedpenetrationoftheapparelandfootwearcategories.
Market Trends in US and European
Footwear
Deborah Weinswig
Managing Director,
Fung Global Retail & Technology
US: 917.655.6790
HK: 852.6119.1779
CN: 86.186.1420.3016
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July8,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Introduction:TheUSandEuropeanFootwearMarketsInthisreport,weexplorefootwearretailingintheUSandleadingEuropeanmarketssuchastheUK,FranceandGermany.Ouranalysisconsiderscontinuingandemergingtrendsinfootwearretailing.
WehaveobservedthattrendsinthefootwearmarketcloselymirrorthoseoftheapparelfashionmarketinthatfootwearretailersintheUSandUKthatoffersports-inspiredfootwearstylesarethriving.Consequently,webelievethatintheUSandinEuropeancountries,athleisureandhealthandwellnesstrendsbuoyedfootwearsalesgrowthin2016.
Globalfootwearsaleswillbedrivenbythecontinuationofathleisureandhealthylifestyletrends,theriseofe-commerce,evolvingopportunitiesprovidedby3Dprintingandcustomization,aswellasAmazon’scontinuedpenetrationoftheapparelandfootwearcategories.Finally,likeapparelretailers,footwearmanufacturersarealsostrivingtospeeduptheirsupply-chaincyclestobringproductfromdesigntomarketatafasterrate.
AthleisureTrendInlinewiththeathleisuretrend,consumersareincreasinglyseekingdesignersneakersandshoesthatincludeelementsofsportsdesign.Acontinuedshifttoamoreactivelifestyleisdrivingsportsfootwearsalesincreases,asdepictedinthefollowingchart.
Figure1.Year-over-YearGrowthinSportsFootwearSales,2016(%)
Source:Euromonitor/FungGlobalRetail&Technology
SportsfootwearsalesincreasedatafasterratethantotalfootwearsalesintheUKandtheUSin2016.
• UK:TotalUKfootwearvaluesalesincreased6.2%yearoveryearin2016toreach£10.7billion($14.4billion),accordingtotheOfficeforNationalStatistics(ONS).Althoughthisgrowthratewasstrongerthanthatforclothing,itwastheslowestyear-over-yeargrowthrecordedbytheONSinthepastthreeyears.
• US:IntheUS,totalfootwearsalesincreasedonly2.8%toreach$76.6billionin2016,accordingtotheBureauofEconomicAnalysis.
10%9%
8%
UK France US
IntheUS,totalfootwearsalesincreasedonly2.8%toreach$76.6billionin2016.
TotalUKfootwearvaluesalesincreased6.2%yearoveryearin2016toreach£10.7billion($14.4billion),representingtheslowestgrowthinthepastthreeyears.
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July8,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Reflectingtheathleisuretrend,in2016researchfirmMintelreportedthat,forthefirsttime,moreUKwomenboughttrainersthanshoeswithheels:some37%ofUKwomenboughttrainersintheyearendedMay2016comparedto33%buyingheels.
Athleticandlifestylefootwearbrandsfigurestronglyinthetop-fivefootwearbrandsineachcountry.Below,wechartfootwearbrandmarketsharesintheUSandtheUK.
USNikecontinuestoholdtheleadingmarketshareinUSfootwearsalesin2016,representing17.9%ofretailvaluefootwearbrandsales,accordingtoEuromonitor.
Figure2.US:FootwearMarketSharebyBrand,2016(%)
Source:Euromonitor/FungGlobalRetail&Technology
EuropeIntheUK,FranceandGermany,Nike’smarketshareislower.
UK:IntheUK,NikeandAdidasholdsecondandthirdplace,respectively.
Figure3.UK:FootwearMarketSharebyBrand,2016(%)
Source:Euromonitor/FungGlobalRetail&Technology
17.9%
3.5% 2.6% 2.4% 2.0% 2.0% 1.6% 1.4% 1.4% 1.2%
10.9% 10.6%
3.8%2.7% 2.7% 2.3% 1.8% 1.8% 1.8% 1.7%
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July8,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
France:InFrance,VivarteheldthehighestmarketshareintheFrenchfootwearmarketat11%in2016.Thiswasfollowedwith7%eachbyNikeandAdidas,whichbothregisteredthehighestfootwearvaluemarketshareincreasesin2016,accordingtoEuromonitor.
Germany:InGermany,localplayerDeichmannheldthehighestbrandmarketshareat13.1%in2016,accordingtoEuromonitor.NikeandAdidasfollowedinsecondandfourthplace,withmarketsharesof5.7%and5.0%,respectively,in2016.
Inadditiontoleadingmarketshares,salesofmultinationalathleticfootwearmanufacturers/brandsaresoaring.
• Nike:Globalfootwearrevenuesincreased15%yearoveryearatconstantcurrenciesinFY16.
• Puma:FootwearsalesinFY16increased12.6%yearoveryearatconstantcurrencies.
• Adidas:CEOKasperRorstedstatedonthecompany’slastearningsresultscall(1Q17)thatthefootwearcategorywasstillvastlyoutgrowingapparelintermsofsales.Otherwise,thecompanydoesnotseparatelybreakoutsalesoffootwearandapparel.
• JDSportsFashion:TheUKsportsfashionandoutdoorgoodsretailerreportedrevenuesincreasedby31%yearoveryearinFY16.Althoughthecompanydoesnotbreakoutfootwearsalesseparatelyfromapparelorsportingequipment,webelievethatfootwearsalestrendswereinlinewiththeSportsFashionbusiness.
TheSneakerCultureSneakershavebecomepartofeverydaystyleandincreasinglymoreyoungconsumersarefollowing,buyingandcollectingsneakers.Sneakerresellinghasevolvedintoabillion-dollarindustry,boostedbytheriseofathleisureandthesneaker“culture.”AfootwearstockmarketcalledStockXhasevenbeenestablishedtoallowbuyersandsellerstotransactatfairmarketvalues.Sneakeraficionadosarepurchasingnewly-launchedsneakerswiththeintentofresellingthemthroughconsignmentshopssuchasFlightClubandStadiumGoods,appssuchasStockXandGOATandsocial-mediaplatforms,particularlyInstagramandFacebook.Thesneakerresalemarketisgrowingsteadilyandexpandingandattractinginvestment.
• StadiumGoods,asneakerandapparelresalemarketplacewithaNewYorkstoreraisedover$4.6millioninequityfundinginJanuary2017.
• GOAT,anappdedicatedtoresellingsneakersraised$25millioninfundinginFebruary2017.
Connected/SmartFootwearFootwearmanufacturersandretailersseecommercialpotentialinactivitymonitoringandsmart,connectedfootwear.
• UnderArmour:ThesportwearbrandlauncheditsfirstsmartshoemodelsinFebruary2017.Theshoesproviderunnerswithautomatic
TheglobalfootwearrevenuesofNikeandPumaincreasedby15%and13%,respectively,infiscalyear2016.
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July8,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
trackingcapabilitiesandinsightsonmuscularfatigue.UnderArmourplanstodoublethenumberofconnectedfootwearmodelsitoffers.Thethreesmartshoemodelswillretailfor$140–$160.
• Nike:Thecompany’sself-lacingsneakersapparentlygeneratedastrongresponsefromathletesandconsumers.Thetrainersusecablesandpressuresensorstodeterminehowtightlytheyneedtobelaced.
Source:news.nike.com
SpeedingUpSupplyChainsLikefast-fashionapparelretailers,footwearretailerssuchasNikeandAdidasareworkingonspeedinguptheirsupply-chaincyclestoreducedesign-to-markettimelines.
• Nike:TheExpressLaneisaNikeinitiativethatrevolvesaroundmanufacturingandsupply-chainspeed.Theinitiativefocusesonrestockingproductmorerapidlyaccordingtoconsumerdemand,basedonsell-throughdatainsight,aswellasincreasingthespeedofcreatingnewproductsfromscratchandbringingthemtomarket.Thewholeend-to-endprocessisbeingcutinhalffromsixmonthsonaveragetothreemonthsorless.Nikebelievesthecustomerwantsshoesthatcombineperformanceandstyle.Nikeisalsousingmoreadvancedautomationtechnologies,localizingsourcingforfastermaterialleadtime.Thecompanyisalreadyseeingapositivegrossmarginimpactandweexpectthattocontinuetoaccelerate.
• UnderArmour:UnderArmourisalsoworkingonspeedtomarketandreducingtimeframeofdesigntomarketcycles.
3DPrintingMajorsportswearbrandsareadopting3Dprintingtechnologyinfootwearproduction.Nike,NewBalanceandUnderArmourhavealllaunchedlimitededitionsof3Dprintedfootwear,whilstAdidasplanstorolloutits3Dprintedshoes.FootwearretailerDSW,alsolaunchedapop-upstorefeaturingcustom3DprintedfootwearcompanyFeetz.
Likefast-fashionapparelretailers,footwearretailerssuchasNikeandAdidasareworkingonspeedinguptheirsupply-chaincyclestoreducedesign-to-markettimelines.
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July8,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Source:feetz.com
Ittypicallytakesabout9–18monthstoproducefootwearfromconceptualizinganewdesigntostoreshelves.3Dprintingtechnologycouldshortenthetimeperiodtojust3–6months.
Inthemediumtolongterm,theinnovationof3Dprintingwillmeantheabilitytomanufacturenewproductsthatpreviouslywouldhavebeenimpracticaltoproduce,aswellasashifttomovemanufacturingclosertocustomermarkets.
• Zalandoisthinkingaboutintroducing3Dprintingforsmallerandmedium-sizedfashionlabels,asitwouldbeespeciallyeconomicallybeneficialtousethetechnologytoreprinttop-sellingtrainers.
• Adidasisalreadybuilding3D-printingfactories,called“Speedfactories”inGermanyandAtlantawhereitwillbeabletoproducegoodsondemand.Adidashasnotstatedhowmuchits3Dprintedshoeswillcost,onlythattheywillbepricedasa“premium”product.Adidasexpectstohaveshippedabout5,000pairsof3Dprintedsneakersbytheendof2017andover100,000bytheendof2018.
• Nikehasstatedthatitsshoescouldonedaybe3Dprintedin-storeorevenathome.
CustomizationFootwearretailersareshowingstronginterestin3Dprintingtechnology,asthisinnovativetechnologycanhelpnotonlytospeedupproduction,butalsoallowthemtocapitalizeontheneedforcustomization.Customizationiskeyforfootwear,duetothenatureoftheproduct,consumerexpectationsforaperfectfitanddemandforfunctionality.
• UnderArmourisalsoworkingonsneakerpersonalization,withcustomizationcapabilitiesforconsumerstobeabletobuildtheirfootwear.
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July8,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
E-commerceE-commercegrowthinfootwearisincreasingrapidly.TheUKhadthehighestinternetretailingfootwearpenetrationat27%in2016,accordingtoEuromonitor.
Figure4.FootwearInternetRetailPenetrationbyCountry,2016(%)
Source:Euromonitor/FungGlobalRetail&Technology
AmazonIntermsofpure-playonlineretailers,AmazonhasevolvedintoamassiveselleroffootwearthroughZappos.com,third-partybrandedandprivate-labelfootwear.
• AccordingtoasurveyconductedbyProperInsights&AnalyticsinJuly2016,USrespondentsindicatedthatAmazonwasthemostshoppedretailerforfootwear.
Figure5.US:RetailersWhereRespondentsShoppedforFootwearinthePast90Days(%)
SurveyscarriedoutinJulyofeachyearSurveyBase:6,809adultsaged18+Source:ProsperInsights&Analytics
27%
16%13%
UK US France
7.9%
8.8%
8.9%
9.0%
11.9%
12.7%
16.2%
35.3%
0.0% 10.0% 20.0% 30.0% 40.0%
Macy’s
JCPenney
PaylessShoeSource
Target
Kohl’s
Walmart
Amazon
NotShopped
2016 2015 2014
TheUKhadthehighestinternetretailingfootwearpenetrationat27%in2016.
Intermsofpure-playonlineretailers,AmazonhasevolvedintoamassiveselleroffootwearthroughZappos.com,third-partybrandedandprivate-labelfootwear.
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July8,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Amazon’stotalshopperpenetrationratesareboostedinparticularbymillennials:almostone-quarterofUSmillennialshadshoppedatAmazonforshoesinthe90dayspriortothelatestsurvey.Targetseesasimilarjumpformillennials,buttheotherleadingretailersseemoreevenparticipationratesacrossagegroups.
Figure6.US:TopRetailersShoppedforFootwearinthePast90Days,bydemographic,July2016(%)
Millennialsdefinedasthosebornbetween1983and1998;GenXersdefinedasthosebornbetween1965and1982;BabyBoomersdefinedasthosebornbetween1946and1964.SurveyBase:6,809adultsaged18+Source:ProsperInsights&Analytics
• Amazonhaslaunchedprivate-labelfootwearlinessuchasthemen’sprivate-labeldressshoebrandFranklin&Freeman.In2017,Amazonbegantrialingitsfirstprivate-labelfashionrangesspecificallyfortheUKmarket—althoughthesedonotyetincludefootwear.Moreprivate-labelfootwearlinescouldfollow.
• Amazonpurchaseda3DstartupfocusedonshoefittingcalledShoefitrin2015.
• AmazonFashionannouncedthelaunchofadedicatedsneakerstoreof2,500brandsonitsIndiaplatform,includingtopsneakerbrandssuchasVans,Converse,Adidas,Puma,Reebok,NewBalance,FilaandAsicsamongothers.
WalmartInJanuary2017,WalmartpurchasedonlinefootwearretailerShoeBuyfor$70millioninamoveaimedtohelptheretailerbettercompetewithAmazon’sZappos.
• ShoeBuy’sonlinecatalogueoffersshoesfrom800footwearandclothingbrands.ShoeBuywasfoundedin1999inBostonasoneofthefirstonlinesellersoffootwearalongwithZappos.
16.2%
12.7% 11.9%
9.0% 8.9%
24.4%
17.1%14.5%
16.6%
13.4%
18.8%
15.2% 14.6%
10.3% 9.9%10.4%8.8% 9.2%
3.9%6.2%
Amazon Walmart Kohl’s Target PaylessShoeSource
AllAdults18+ Millennials GenXers BabyBoomers
InJanuary2017,WalmartpurchasedonlinefootwearretailerShoeBuyfor$70millioninamoveaimedtohelptheretailerbettercompetewithAmazon’sZappos.
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July8,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
ProductInnovationisKeyFootweargiantssuchasNikeandAdidashaveastrongmedium-andlong-termproduct-innovationpipeline.
• Innovativefeatures/materials:Productinnovationareasincludenewcushioning,lightweightperformancematerialsanddigitally-integratedproducts.Designersandretailers,suchasAdidas,arealsoexperimentingwithnewmodelsandstylesproducedoutofinnovativeandsustainablefabricssuchasrecycledoceanplastic.
• Collaborationswithdesigners:SportsweargiantsNike,AdidasandPumacontinuetocollaboratewithhigh-profiledesignerssuchasAlexanderWangandStellaMcCartney,aswellasartistssuchasKanyeWestandavarietyofathletes.
KeyTakeaways• Theathleisuretrendisstrengtheningunderlyingdemandfor
footwear.Consumersareseekingtoincorporatesport-styleddesignsintotheireverydaywardrobe.
• Trendsinthefootwearmarketcloselymirrorthoseintheapparelfashionmarket.SpecialtyfootwearretailersintheUKandtheUSthatoffermoresports-inspiredfootwearstylesarethriving.Consequently,intheUSandinEuropeancountries,athleisureandhealthandwellnesstrendsbuoyedfootwearsalesgrowthin2016.
• Theglobalfootwearmarketwillbeshapedbythecontinuationofathleisureandhealthylifestyletrends,theriseofe-commerce,theevolvingopportunitiesprovidedby3Dprintingandcustomization,aswellasAmazon’scontinuedpenetrationoftheapparelandfootwearcategories.
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July8,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comEvaKubickaSeniorResearchAssociate
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