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Footwear: Market analysis

As fashion multiples continue to steal market share from specialists, those in footwear retail are having to up their game when it comes to both product and etail - which could be good for the sector’s future.

Barratts falls into administration. Shoon is bought by footwear veterans Ken Bartle and Peter Phillips. British comfort brand Hotter is snapped up by private equity. Ex-Aldo UK managing director Claire Burrows launches a premium women’s shoe label, Air & Grace. And Platform, a footwear show in London, set up by a retailer, steps into the market.

These are just some of the events affecting footwear brands and retailing that have caught the headlines over the past three months - and it’s not over yet. However, according to footwear insiders, these are positive changes for a sector that had become stagnant, with ecommerce central to its future success.

Ken Bartle, former co-owner of Jones Bootmaker, bought 10-store premium footwear retailer Shoon with his former Jones partner Peter Phillips in January.

Pavers Shoes has bought 14 Barratts stores out of administration

Pavers Shoes has bought 14 Barratts stores out of administration

“I would be bullish about the prospects of the footwear business in this country over the next three years,” says Bartle. “The UK footwear and manufacturing sectors are very resilient and these changes will strengthen the business. As far as Shoon is concerned, Peter and I will bring industry expertise to the company and the financial backing needed to develop the premium business. The changes at Barratts are all positive moves as well; [Harvey] Jacobson and [Michael] Ziff will take the online business in the right direction, while Stuart Paver [managing director of Pavers Shoes, which has bought 14 Barratts stores out of administration] will bring strength to the retail side that wasn’t there before.”

Likewise David Short, country managing director for out-of-town retailer Brantano and Jones Bootmaker - which was bought by Brantano owner Macintosh Retail Group for £40m in 2011 following a five-month sale process - says the changes are “very positive” for the industry: “It’s encouraging to see new activity in a sector that is traditionally focused. All the new players bring new ideas that will stimulate the footwear market and help move us forward.”

Short says the internet will be “instrumental” in the sector’s development. “Knowing who buys your product is essential, but the way in which you sell to them is evolving. You constantly have to respond and invest to meet customer expectations. To be successful, brands have to embrace a strong product core as well as delivering a seamless service to customers,” he says.

“Online, click-and-collect, availability, choice of delivery time and location are all critical to attracting and keeping customers, as well as meeting their growing expectations. We still need to catch up with the wider fashion sector.”

Andy Hewat, UK and Ireland country manager for Timberland, says a strong online offer is needed for the “squeezed middle market” to pull through. “There is room for a successful middle market business though; they just need to look at how they do things differently. Online and click-and-collect are essential at the moment and whoever reacts to that will be successful,” he says.
Bartle, who joined forces with David Rist, former managing director of Hush Puppies UK, in January to launch the footwear line of US Polo Assn (USPA) in the UK and Ireland, agrees: “If you want to survive in this industry you must have a strong internet offering and you need to invest heavily in that to keep up to date with customers.

“The majority of shoppers still want to see and feel the product, but there is no doubt the percentage share of internet sales will grow. For US Polo, that’s one of the areas we’re looking at. We will establish a US Polo site [or sell the brand via Shoon’s branded offer online] for our autumn 14 launch, which will go live in July,” he says.

Another footwear veteran who is investing in footwear online is Harvey Jacobson, chairman of supplier Jacobson Group, who together with Ziff bought Barratts’ website and intellectual property on December 20 for £300,000.

“Retailers that are good online operators and have good reliable distribution are doing very well at the moment. Online sales are integral to the market, it’s now about a fifth of all business,” says Jacobson.

One retailer that has strongly developed selling footwear online is New Look. Rob McKenna, head of merchandising for women’s footwear, credits the retailer’s online sales for its continued overall strength in footwear. “While stores remain critical to our success, we are continuing to focus on growing our multichannel business in response to new patterns of shopping that the customer is demanding. As a result, [total online footwear] turnover has grown 60% across the past 12 months.”

However, other industry sources point to the growing dominance of clothing multiples such as New Look in terms of footwear market share as one of the most significant challenges facing the sector.

Shoe scuffle: Schuh

Shoe scuffle: Schuh

Phil Whittle, head of store operations at Schuh which has 98 stores in the UK and Ireland, says clothing retailers have had a “huge impact” on some areas of the market, particularly women’s branded party footwear. “Ten years ago consumers would have had no problem spending £60 on a pair of going out shoes, but the market has shifted. They are now happy to spend £15 or £20 on a pair of shoes they will wear once. Fashion multiples like Topshop and New Look are a force to be reckoned with. You have to be fast and keep the product fresh to keep up,” he says.

John Saunders, sales and marketing director at trade body the British Footwear Association, agrees: “One of the most significant changes has been the growth of footwear within the clothing multiples, particularly within young fashion. It’s a challenge for both the footwear multiples and the independents, although there are great operations like Schuh that have made their mark and become destination shops.”

However, Short praises clothing stores’ footwear offers. “They do a great job on sourcing and design and have forced footwear retailers to raise our game to compete. That being said, there will always be room for footwear multiples as they have a greater width of service. It’s not just seasonal product stocked in store, they have a wider range of product and, more importantly, knowledge of the product they sell.”

He adds: “There will be a resurgence of people going back to footwear specialists as they can deliver the premium quality and comfort customers demand. Particularly with kids’ footwear, people are beginning to reinvest. It’s essential to have children’s feet fitted properly and parents want a quality shoe that won’t damage the foot. I think it will be the first area to benefit.”

Jacobson agrees, saying that traditional shoe shops are “holding their own” as some consumers are now more willing to pay for better quality product. “There is a future for them as the customer is loyal and will come back for the service. Clothing multiples will never have that kind of service. It’s not a case of prices increasing, but of people paying more; they want a better quality product and are willing to spend a bit more to get it.”

According to figures from Kantar Worldpanel for the 24 weeks to December 22, 2013, UK sales of footwear increased 2.4% year on year to £3.1bn. Footwear chains experienced a 0.8% rise in sales to £761m for the period, while the sale of footwear by clothing multiples also edged up 0.9% to £461.2m. The remaining sales were across other footwear retailers.

The sector is growing, but in order to gain market share Bartle believes specialist footwear retailers need to ensure product is at the heart of their strategy: “Product is key. Those struggling need to be better at stocking, selling and obtaining the product that the customer wants. Presentation and good locations in the high street are also important, but they need to concentrate primarily on getting the product to the quality level the customer needs, as well as making sure they have a good website.”

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