Talking Business: The next step for footwear sourcing

Tim Cooper

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Over the past 25 years we have seen significant changes in the origin of footwear sold in the lower- and middle-market footwear sectors. In the mid 1980s the majority was sourced in Europe, with a significant proportion made in the UK.

The later years of that decade witnessed an initial move towards countries with lower labour costs,  mainly Taiwan and South Korea.

But as costs in these countries increased, production moved to Vietnam, Thailand and Indonesia. Europeans stayed away from China for most categories until the late 1990s. China became more significant with the removal of quotas in 2005.

These movements have reduced factory costs over the past 25 years, leading to lower prices at the tills.

However, in the past 18 months we have seen price rises at factory gates for the first time in 20 years, due to anti-dumping duties, the increase in the cost of raw materials, and increases in labour costs.

While some of these costs can be mitigated by moving to either lower-cost areas of China or new cheaper countries such as Cambodia and Bangladesh, this brings its own logistical issues and can only be a short-term solution.

The reduction or abolition of anti-dumping duty, which is due for review this October, would be a great help in bringing stability to the market, which at the moment has problems on both the supply side and the demand side.

Footwear has always been at the forefront of global sourcing trends because of the higher proportion of labour costs in relation to product.

It will be interesting to see what happens next given the huge changes in supply and demand, and whether or not this is just a footwear issue.

Tim Cooper is managing director of footwear supplier OPS